Commentary for Friday, Sept 20, 2024 (www.golddealer.com) – Today gold closed up $31.90 at $2619.90, and silver closed up $0.09 at $31.18. Both gold and silver surged Thursday and Friday as traders and momentum players jumped on the higher prices created by lower interest rates and a solid technical outlook. So, the theme this week might pose a simple question. Have these latest record prices discouraged the physical markets? Perhaps they have in the short term is the safe answer. Investors usually show caution at record high prices. But the case for owning gold remains strong considering its pricing chart this past year. In November of 2023 the price of gold was $1823.00. By September of 2024 it had topped $2600.00, and this aggressive climb has not abated. This week’s whopping 50 basis point interest rate cut by the FOMC has only fueled this monetary mess. And if interest rates have peaked further declines will encourage the bulls. The bottom line being that lower interest rates and a powerful technical picture support higher prices in the longer term. Last Friday gold closed at $2581.30 / silver at $30.70. On the week gold was $38.60 higher, and silver was higher by $0.48.
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On Monday the price of gold remained choppy, between $2588.00 and $2576.00, finishing the day roughly unchanged. Everyone will of course be waiting for the Fed stance relative to interest rates as the FOMC meets on Tuesday and Wednesday of this week. And we will get another chance to listen to Fed Chief Powell on Wednesday.
The technical picture for both gold and silver remains strong so traders will likely take advantage of any price weakness. But for now, this has turned into a “wait and see” trade, with a positive bias. The Dollar Index drifted lower by a full point since last Thursday, a plus for the bulls. And gold remains supported by the expectation of weaker interest rates in the near term.
FXEmpire (Vladimir Zernov) – Gold Tests New Highs As Dollar Retreats – “Gold tested new highs as traders focused on U.S. dollar’s pullback and falling Treasury yields. RSI is close to the overbought territory, and it looks that some traders are willing to take profits off the table near historic highs. Silver – Silver made an attempt to settle above the $31.00 level but lost momentum and pulled back amid profit-taking. In case silver declines below the $30.50 level, it will head towards the psychologically important $30.00 level. Platinum – Platinum pulls back as traders take profits after the strong rebound from September lows. A move below the support at $975 – $985 will push platinum towards the 50 MA at $950.”
On the day gold closed down $0.90 at $2580.40, and silver closed up $0.07 at $30.77.
On Tuesday the price of gold moved between $2585.00 and $2565.00 with a mild downward drift, finishing the day in the red. There is some caution in this trade as the FOMC meeting begins today and ends with comments by Fed Chair Powell likely after the markets close on Thursday. But there is reason to believe that lower interest rates are in the making so gold prices will likely remain at least firm and may trend higher if and when rates trend lower. There are other outside factors which also support gold prices like continued Middle East tension.
FXEmpire (James Hyerczyk) – Market Bets on 50-bp Cut – What’s Next for Gold? – “Gold prices edged lower on Tuesday, following a record high on Monday, as traders turned their attention to the Federal Reserve’s interest rate decision. The market has shifted focus to the Fed’s two-day policy meeting, which concludes on Wednesday, with traders anticipating a potentially aggressive rate cut. At 10:51 GMT, XAU/USD is trading $2571.73, down $10.94 or -0.42%. Market Expectations for a Fed Rate Cut – There is a growing consensus that the Fed could announce a 50 basis point (bp) cut, with market participants now assigning a 67% probability for this larger-than-expected reduction, compared to only 34% last week. The prospect of this aggressive easing was fueled by media reports over the weekend. If the Fed delivers the anticipated 50-bp cut, gold prices could surge past $2,600 per ounce, with projections ranging between $2,649.43 and $2,660.90. However, if the Fed opts for a more modest 25-bp cut, some market analysts warn of potential disappointment among bullish traders, which could trigger profit-taking. In such a scenario, gold prices may retreat towards the former high of $2,531.77. Lower interest rates generally favor gold by reducing the opportunity cost of holding non-yielding bullion. Gold’s Recent Rally Fueled by Fed Expectations and a Weaker Dollar – Gold soared to a new all-time high of $2,589.72 per ounce on Monday, driven by a weakening dollar and the mounting expectation of a significant Fed rate cut. Goldman Sachs remains bullish on gold, reiterating its price target of $2,700 per ounce by early 2025. The investment bank noted that central bank demand, coupled with the Fed’s dovish stance, continues to support gold prices. Goldman also highlighted that ETF demand for gold is rising, as Western capital flows into gold-backed exchange-traded funds (ETFs). These ETFs, fully backed by physical gold, reduce the available physical supply in the market, further bolstering prices. Broader Economic Indicators to Watch – While the Federal Reserve’s decision takes center stage, traders will also be closely monitoring U.S. economic data due this week. Retail sales figures for August are expected to show a 0.2% decline, while additional data on housing starts, building permits, and existing home sales could provide further clues about the health of the U.S. economy. The Bank of England and Bank of Japan are also holding policy meetings this week, adding to the potential market volatility. Gold Prices Forecast – If the Fed delivers a 50-bp rate cut and signals further easing, the outlook for gold remains bullish, with potential gains above $2,600. Conversely, a smaller 25-bp cut could see gold temporarily dip on profit-taking, although long-term support remains strong due to central bank demand and continued ETF inflows. Traders should brace for potential volatility around the Fed announcement and upcoming U.S. economic data.”
On the day gold closed down $16.10 at $2564.30, and silver closed down $0.15 at $30.62.
On Wednesday the price of gold moved between $2595.00 and $2550.00 a very radical market reacting to Powell’s guidance. This crazy type of action is worrisome so stand back and consider what has just happened. Gold’s closing price before the Powell comments was mildly in the green for the day. After the Fed cut interest rates by a half point, gold soared reaching $2595.00. but just as quickly traders sold this rally and the price of gold tumbled, the aftermarket closing in the red by more than $20.00. So, this market is more jittery than you might expect, even as it is supported by escalating bad news in the Middle East and reprisals by both Isreal and Hezbollah.
This suggests that while recent record prices in gold are the result of this anticipated lower trend in interest rates, it would be a mistake to assume that $2700.00 gold is right around the corner. If traders buy this dip between now and Friday, the bulls will be vindicated. But this pricing picture is complicated, and you might expect continued settling in both gold and silver.
FXEmpire – Gold Is Mostly Flat As Traders Wait For Powell’s Comments – “Gold settled below the resistance at $2580 – $2590 as traders waited for Fed decision, which will be released soon. In case Powell is dovish, gold will have a good chance to move above $2590 and test the $2600 level. Silver is losing ground as the gold/silver ratio moved back above the 84.50 level. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum. A move below the $30.00 level will open the way to the test of the support at $28.75 – $29.00. Platinum pulled back below the $975 level as traders focused on the strong sell-off in palladium markets, which are down by more than 5% in today’s trading session. If platinum settles below the $960 level, it will head towards the nearest support at $935 – $940.”
On the day gold closed up $6.40 at $2570.70, and silver closed down $0.28 at $30.34.
On Thursday gold traders were interested in buying yesterday’s aftermarket dip in prices. And again, this latest rally was sold shy of $2600.00. Yet on the day the drift was to the upside. It appears that gold is trying to find that middle ground scenario between bullish and cautiously bearish. The idea here is a bit controversial. Why did the Fed yesterday make such a large adjustment in interest rates? Not an easy question but some may be getting an uncomfortable feeling that the FOMC is again behind the learning curve. Yes, the expectation continues to be for higher prices in gold and silver, but not having the answer to the “learning curve” question may introduce volatility of the type we saw in yesterday’s aftermarket.
FXEmpire (Christopher Lewis) – Gold Continues to Show Strength After Fed Rate Cut – “The gold market initially rallied during the trading session on Thursday, as traders around the world continue to react to the Federal Reserve interest rate cut of 50 basis points. The question now is whether or not that is actually a good thing, because frankly, you have to keep in mind that the Federal Reserve has a long history of being wrong all the time, and they generally find themselves in a situation where when they’re cutting 50 basis points, something horrific is about to happen. The last two examples were the Great Financial Crisis and the tech bubble bursting, although in fairness, it doesn’t necessarily have to be that way this time. However, it is worth noting that the Wednesday session initially saw gold skyrocketing only to give back the gains. The question now is, are the other reasons for gold going higher going to hold? The first one, of course, is the fact that several Asian central banks and Russia are buying gold, and that certainly doesn’t hurt. Furthermore, we have a lot of geopolitical concerns, and at this point, World War III is a very serious conversation. So, with all of that coming together, it does make a certain amount of sense that people are buying gold. The $2,530 level is an area where we’ve seen a lot of resistance in the past, so I would anticipate a certain amount of market memory in that area if we pulled back to offer support. I do like the idea of buying dips, but gold certainly seems to be very choppy in this region. We’ve had the British hold still in the Bank of England. And now we have the Bank of Japan coming up Friday morning, could move the market a bit. But at the end of the day, I think a lot of people are trying to sort out what does a 50 basis point rate cut look like. Gold, although a safety asset, sometimes gets sold off in those situations because people have to raise liquidity and by doing so, or by needing it, they have to sell winners. So sometimes gold gets sold off quite rapidly all of a sudden when you wouldn’t think it would happen. Be cautious, I get the feeling volatility is only going to get worse than most markets.”
On the day gold closed up $17.30 at $2588.00, and silver closed up $0.75 at $31.09.
On Friday the price of gold held up nicely so the question on everyone’s mind is not complex. Will the old overhead resistance at $2600.00 become the new support level as traders anticipate $2700.00 gold? It is tough to argue against this stubborn bull when you consider the positive factors. A powerful technical picture, fundamentals continuing to support safe haven and central bank demand, an uncertain election may create fresh first time buyers, and a deteriorating geopolitical picture grows worse. It’s also difficult to imagine where we are going with new technical innovations in the creation of war. Keep your eye on the bigger picture, today’s record highs might well seem cheap in a decade, fueled by the continued creation of fiat currency.
FXEmpire (James Hyerczyk) – Record High Gold at $2,615, is $2,700 Next? – “Gold surged to a new record high on Friday, reaching $2,615.26 per ounce, supported by renewed market expectations of further U.S. interest rate cuts. This milestone places gold in a strong position to test higher levels, with the next targets in the $2,649.43 to $2,660.90 range. Support is expected at $2,546.86, and stronger backing lies at $2,477.18, where the 50-day moving average offers intermediate support. At 11:38 GMT, XAU/USD is trading $2612.94, up $26.03 or +1.01%. U.S. Rate Cuts Boost Gold’s Appeal – Gold’s rally was driven by the Federal Reserve’s recent decision to cut interest rates by 50 basis points, with projections pointing to further cuts by year-end and into 2025. With interest rates dropping, the opportunity cost of holding non-yielding assets like gold is reduced, enhancing gold’s appeal as a safe haven during economic uncertainty. “Gold is significantly under-owned in Western markets and remains one of the few assets that can counter fiscal threats,” remarked Ryan McIntyre of Sprott Asset Management. He emphasized that alongside rate cuts, ongoing U.S. dollar debasement and uncertain fiscal policies across Western economies are driving increased interest in gold. As the U.S. dollar weakens, non-dollar investors find gold more attractive, further supporting the metal’s rally. Gold has gained over 26% so far in 2024, bolstered by geopolitical tensions in the Middle East and Europe, adding layers of uncertainty that traditionally benefit gold. Retail Demand Eases in Asia Despite Price Surge – Although institutional demand remains robust, high gold prices have tempered retail demand in Asia, where price sensitivity is higher. China’s recent halt in gold imports from Switzerland – its first in over three years—alongside discounts in India, highlights the strain on demand in these major consumer markets. Despite softer demand from Asia, financial analysts remain optimistic about gold’s future. “Gold could push towards $2,700-$2,800 in the next 12 months,” said Kyle Rodda of Capital.com, citing a buy-the-dip sentiment that continues to dominate the market. Bullish Outlook – With interest rate cuts likely to continue and fiscal uncertainties lingering, the outlook for gold remains bullish. Technical indicators suggest that if gold maintains its support above $2,546.86, a push towards the $2,650-$2,700 range is probable. Traders should watch for dips as buying opportunities, particularly as the dollar weakens further. Longer-term, gold may test the upper levels of $2,800 if economic and geopolitical risks remain elevated.”
On the day gold closed up $31.90 at $2619.90, and silver closed up $0.09 at $31.18.
Platinum closed down $12.50 at $981.60, and palladium closed down $20.50 at $1079.90.
Jim Wycoff (Kitco) – “Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,750.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,500.00. First resistance is seen at $2,650.00 and then at $2,675.00. First support is seen at $2,625.00 and then at today’s low of $2,608.70. December silver futures bulls have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the July high of $32.46. The next downside price objective for the bears is closing prices below solid support at $29.00. First resistance is seen at $32.00 and then at $32.46. Next support is seen at $31.00 and then at $30.50.”
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