Gold – Gaining Momentum
Commentary for Friday, May 10, 2024 (www.golddealer.com) – Today gold closed up $35.20 at $2367.39, and silver closed up $0.15 at $28.28. As they say, you can’t argue with success, and today’s “break” to the upside in gold reinforces its technical picture and the notion that the Fed is moving away from its 2% inflation target embracing dovish monetary policies. I would not however bet the ranch here on the short term for two reasons. First, this bullish story has come in and out of favor over the past few years. And second, this decoupling process will take time to work out the obvious problem of a still hawkish FOMC stance relative to inflation. And while gold and silver bullion still have a few obstacles in their way the bearish clouds are clearing up nicely for the longer term. Last Friday gold closed at $2299.00 / silver at $26.45 on the week gold was higher by $68.39 and silver was higher by $1.83.
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On Monday the price of gold again opened the week in a choppy fashion, moving between $2312.00 and $2330.00 with an upward bias, managing to finish the day nicely in the green. There is fresh talk that is helping gold by suggesting that the Fed will cut interest rates earlier than expected based on the weakening jobs report. And the World Gold Council claiming strong central bank buying – 16 tons of gold in March also helps the bullish scenario. There seems to be some confusion over Hamas and the ceasefire from Egypt and Qatar as far as Israel is concerned so look for continued safe haven demand.
Keep in mind that gold’s fading technical picture is creating mild bearish crosswinds. Still, the fact that the price of gold seems to be happy above $2300.00 is a plus for bulls.
FXEmpire (Christopher Lewis) – Gold Continues to See Strength – “The gold market continues to see a lot of pressure to the upside, as the gold markets are being used to protect wealth against devaluation, and of course geopolitical issues around the world. Technical Analysis – The gold market initially pulled back just a bit during the trading session on Monday, dipping below the 2,300 level, only to turn around and show signs of life. The market right now is looking at $2,320 as a little bit of a barrier, but I think given enough time, we probably go higher. You will of course have to pay close attention to interest rates in the United States due to the fact that the Federal Reserve is still very much in the picture. And of course, people are worried about inflation, but at the same time that can actually help gold. You also have to keep in mind the geopolitical issues around the world, which can help gold. And quite frankly, just looking at the momentum on the chart helps gold. So, all things being equal, I think we are still very much in an uptrend when it comes to the gold market and therefore it’s a one-way trade you don’t want to be short of the gold market. Above we have the $2360 level and it’s a short-term barrier, but if we can break that, then I think we go looking to the $2400 level rather quickly, while underneath we have the 2280 dollars level offering significant support. The 50-day EMA sits just below there as well and that of course comes into the picture for support and therefore I think it remains buy on the dip from a technical analysis standpoint as well. Quite frankly, fiat currencies around the world are being eviscerated as we just spend, spend, spend and that includes the US dollar. Yes, the US dollar is stronger than other currencies but that’s just in relation to other currencies. So, with that being said, the market looks like one you are still looking to buy.”
On the day gold closed up $22.60 at $2321.60, and silver closed up $0.92 at $27.37.
On Tuesday the price of gold traded lower closing mildly in the red. This is a small disappointment for the bulls in that gold failed to capitalize on yesterday’s nice finish in the green. The Dollar Index lost more than a point these past 5 trading days but has settled around 105 helping tap down bullish sentiment. The point being that gold is once again subject to positive and negative crosswinds creating mild up and down cycles in trading. This is not news, but it suggests that prices are settling which is good for the metals in the longer run.
FXEmpire (James Hyerczyk) – Gold Price Adjustment Amid Strengthening Dollar – Gold is edging lower on Tuesday as the U.S. dollar strengthened, creating a less favorable environment for gold investors using other currencies. This movement came ahead of further remarks expected from Federal Reserve officials, which traders are closely monitoring to gauge future monetary policy directions. Impact of the Dollar and Treasury Yields – The U.S. dollar index, which compares the dollar to six major currencies, rose slightly by 0.1% to 105.23. This increase is part of a broader pattern where the dollar has gained nearly 4% this year, despite a recent dip of almost 1% following the Federal Reserve’s pause on rate hikes. Concurrently, U.S. Treasury yields saw a decrease, with the 10-year Treasury dropping 3 basis points to 4.459%. This suggests a cautious investor sentiment towards the evolving economic environment and monetary policy. Federal Reserve’s Stance and Market Reactions – Recent statements from Federal Reserve officials, including Richmond Fed President Tom Barkin, emphasize a wait-and-see approach regarding interest rate cuts, advocating patience until more definitive signs of inflation easing appear. This stance was reinforced by weaker economic indicators, such as the April jobs report which showed an unexpected rise in unemployment from 3.8% to 3.9%, prompting speculation about the timing and extent of future rate cuts. Investor Outlook and Gold’s Position – Despite the current consolidation in the gold market, underlying factors such as geopolitical tensions and potential banking stresses continue to provide support. The precious metal hit a record high of $2,431.29 on April 12, bolstered by strong buying from central banks and increased demand from Chinese retail investors. This suggests that while short-term profit-taking may dampen price spikes, long-term drivers remain bullish for gold. Short-Term Forecast – Looking ahead, the market’s attention will remain fixed on upcoming comments from Fed officials, including Neel Kashkari of the Minneapolis Fed. Investors are adjusting their expectations, with current Fed funds futures indicating a 67% likelihood of rate cuts starting in September. Considering these elements, the outlook for gold remains cautiously bullish as it continues to serve as a hedge against macroeconomic uncertainty and currency fluctuations. Technical Analysis – XAU/USD is edging lower on Tuesday, but the market remains at the upper end of a short-term consolidation zone, suggesting a developing upside bias. The intermediate and long-term trends remain well intact with the former providing strong support at $2245.99. The short-term trend is down. A trade through $2352.64 will change the short-term trend to up, while a trade through $2277.34, reaffirms the downtrend.
On the day gold closed down $6.40 at $2315.20, and silver closed down $0.07 at $27.30.
On Wednesday the price of gold moved between $2304.00 and $2316.00 continuing gold’s steady trade and finishing the day almost unchanged. Most analysts see this consolidation as constructive in the longer term. Across our trading desk through mid-week the public does not seem worried about buying gold and silver bullion at the higher end of their current trading ranges. In fact, selling has pretty much dried up suggesting the average buyer has turned patient. Although traders are looking for gold and silver to test support, most professionals see this test as healthy and expect higher prices by year end. Still, fresh news from the US Bureau of Labor like next Wednesday’s Consumer Price Index will be watched carefully and could create waves.
FXEmpire (James Hyerczyk) – Gold Market Update – “Gold prices are mixed on Wednesday in a thinly traded session as the interaction of rising US Treasury yields and a stronger US dollar outweighed the benefits from safe-haven demands. This shift occurs against a backdrop of increasing geopolitical tensions and the evolving economic conditions influenced by Federal Reserve policies. Treasury Yields and Federal Reserve Signals – The Treasury yields observed a modest increase, with the 10-year Treasury note rising more than 1 basis point to 4.479% and the 2-year Treasury also up by over 1 basis point to 4.839%. This uptick reflects investor reactions to the recent comments from Federal Reserve officials, which provide insights into the potential direction of interest rates. Notably, Federal Reserve officials have indicated a cautious approach to rate cuts, awaiting more definitive signs of inflation aligning closer to the 2% target. Statements from Minneapolis Fed President Neel Kashkari and Richmond Fed President Tom Barkin suggest a steady rate policy until clearer disinflation trends emerge. Dollar Strength and Impact on Gold – The US dollar maintained strength, dampening the appeal of gold for holders of other currencies. This situation is critical as gold’s pricing in dollar terms affects international demand. Additionally, higher interest rates pose an increased opportunity cost for holding non-yielding bullion, further challenging gold’s position. Geopolitical Concerns and Safe-Haven Demand – Despite the pressures from monetary policies and yield changes, gold continues to benefit from its status as a safe-haven asset. Ongoing geopolitical risks, particularly concerning the Middle East and Ukraine, have sustained a degree of support for gold prices. The potential escalation involving NATO and Russia introduces additional uncertainty, reinforcing gold’s appeal during times of geopolitical strife. Short-Term Forecast – Considering the current economic indicators and geopolitical context, the outlook for gold remains mixed. While the safe-haven demand provides some support, the strengthening dollar and potential for steady or higher US interest rates may limit upward movements. Traders currently see a 65% chance of a Fed rate cut by September, but this could shift rapidly with new economic data or geopolitical developments. As such, investors should prepare for possible volatility in gold markets, with a cautious eye on further economic indicators and central bank cues. The near-term forecast appears bearish, given the prevailing economic conditions and market sentiment. Technical Analysis – “The current daily chart pattern suggests trader indecision and impending volatility. The trigger point for an acceleration to the upside is $2336.41. Its counterpart for a short-term meltdown is $2277.345. Traders are just waiting for a catalyst before they make their move. The nearest major support is the up trending 50-day moving average at $2251.70.”
On the day gold closed down $1.60 at $2313.60, and silver closed up $0.06 at $27.36.
On Thursday the price of gold moved higher, testing $2335.00, which is a bit surprising since it has been trending downward since Monday. But traders bought weakness suggesting underlying strength in this transition period as US weekly jobless claims jump to six month highs and the Dollar Index lost half a point in the early trade. On the short term I believe higher prices for gold will be capped to some degree because interest rates may remain high. In the longer term there is plenty of room for higher prices and wider investor interest in gold and silver bullion.
FXEmpire (James Hyerczk) – Gold Continues to Look Bullish – “The gold market has shown itself to be somewhat noisy during the Thursday session, but we have seen a little bit of a boost higher as the jobs report in the United States came out a little worse than anticipated. That being said, this is a market bullish anyways due to the fact that we have been in such a huge uptrend. All things being equal, this is a market that I look at through the prism of buying the dip. The market is more likely than not going to continue to see upward momentum and eventually a move to the recent highs at $2,400. Whether or not we can break above there remains to be seen, but it would not surprise me at all due to the fact that there are a whole plethora of reasons why we could go higher. The first thing of course, would be that central banks are more likely than not to cut interest rates going forward. But we also have geopolitical concerns that continue to have people jumping into this market. The $2,300 level continues to be an area that people pay close attention to as it previously had been supported. The 50-day EMA is reaching the $2,300 level. And given enough time, I think that also comes into the picture to attract a certain amount of buying. You could make a little bit of an argument for a bullish flag, although it’s not the most textbook example one, but regardless, we are in an uptrend, and I don’t think that changes anytime soon. Silver Price Forecast – Silver Continues to See Buyers – “The silver market has rallied a bit during the early hours on Thursday, as the weekly Unemployment Claims number in the United States came out hotter than anticipated, suggesting that perhaps the employment situation in America is starting to deteriorate. Technical Analysis – “Silver rallied a bit during the early hours on Thursday to break above the $27.50 level. At this point, it looks like the market is going to try to get to the $28.50 level, but I would prefer to buy a dip if I get the opportunity. I don’t necessarily want to chase silver because silver is notoriously volatile and quite frankly, dangerous most of the time. Short-term pullbacks will certainly attract a lot of attention and inflows with the $27 level underneath offering support, followed by the $26 level, where the 50-day EMA sits just above. Whether or not we can break out to the upside remains to be seen, but really at this point in time, all I can tell you is that historically speaking, the area between $28.50 and $30 is typically very difficult to get beyond. In general, this is a market that I think will have the occasional pullback that you can buy into based on value and selling based on the idea that we get a little too far to the upside. With this, I think we’re a little too far to the upside to try to find value. I anticipate that we will probably go sideways between $26 and $28.50 for the foreseeable future due to the fact that there are geopolitical concerns out there that could continue to push silver higher. That being said, keep in mind that this is a market that can punish you if you are wrong, so you don’t necessarily want to jump in with a huge position, keeping silver is a very small part of your overall portfolio.”
On the day gold closed up $18.50 at $2332.10, and silver closed up $0.77 at $2813.
On Friday the surge in the price of gold was not unexpected, just looking for a trigger. The idea that the US will cut rates is an old and reliable bullish scenario. But the “when and how” is still very uncertain. If our economy is slowing down investors can look forward to higher prices in gold as the Fed gets more serious about cutting interest rates.
But you might find that all things considered we are not slowing down, which gives the Fed more hawkish options. The fact that the price of gold is above $2300.00 is a big plus for the bulls so enjoy this ride. Smart money will keep their options open. If you look at the bigger picture nothing much has changed. Russian military aggression, inflation, mounting government debt and a troubled world all portend higher prices for both gold and silver bullion.
The movement to monetize gold and silver bullion is gaining strength nationwide, and there are already some states which have eliminated capital gains on these unique assets!
Reuters (Daksh Grover) – Gold at more than two-week high on US rate-cut bets – “Gold prices strengthened on Friday and were on track for their best week since early April, as weak U.S. employment figures fueled bets of interest rates cuts by the Federal Reserve this year. Spot gold gained 1.1% to $2,372.46 per ounce by 1203 GMT, hitting its highest in more than two weeks. Prices have risen over 3% so far in the week. U.S. gold futures jumped 1.7% to $2,379.30. On the gold market, “focus is likely to be on the development of consumer prices in the U.S. after progress in the fight against inflation has been considered insufficient in recent months and interest rate hopes have been scaled back,” Commerzbank said in a note. Gold extended gains after jumping 1% on Thursday in response to data showing the number of Americans filing new claims for unemployment benefits increased more than expected last week. Investors are now looking forward to the U.S. producer price index and consumer price index data due next week for fresh clues on the Fed’s rate trajectory. According to the CME FedWatch Tool, opens new tab, traders are pricing in about a 68% chance of a Fed rate cut in September. Lower interest rates reduce the opportunity cost of holding non-yielding gold. However, there is “considerable” uncertainty about where U.S. inflation will head in the coming months, San Francisco Federal Reserve President Mary Daly said on Thursday. Meanwhile, Palestinian residents reported about Israeli forces bombarding the city of Rafah in the Gaza Strip on Thursday, while an Israeli official confirmed the end of indirect negotiations with Hamas. “The next target for the gold can be seen in the region of $2,380,” De Casa said. Spot silver rose 0.8% to $28.56, platinum firmed 1.7% to $990.73 and palladium added 1.9% to $985.81. All three metals were up for the week.
On the day gold closed up $35.20 at $2367.30, and silver closed up $0.15 at $28.28.
Platinum closed up $16.40 at $1001.10 and palladium closed up $10.40 at $980.80.
Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the solid overall near-term technical advantage. A price downtrend on the daily bar chart has been negated and prices have just seen a bullish upside “breakout” from the recent trading range. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $2,400.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at today’s high of $2,385.30 and then at $2,400.00. First support is seen at $2,365.00 and then at today’s low of $2,352.00. The silver bulls have the firm overall near-term technical advantage and have gained good power this week. Silver bulls’ next upside price objective is closing July futures prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at $27.00. First resistance is seen at today’s high of $29.00 and then at $29.37. Next support is seen at the overnight low of $28.47 and then at $28.00.”
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