Gold – Surprisingly Quiet
Commentary for Friday, Jan 19, 2024 (www.golddealer.com) – Today gold closed up $7.90 at $2026.50, and silver closed down $0.10 at $22.57. This was a week where the market struggled with conflicting data and speculation with the center player in this dilemma being the Fed. Not long ago sentiment shifted to the dovish side favoring an interest rate cut in March. Today, that cut is still in the cards, which supports current pricing. But insiders believe the Fed has enough faith in the improving economic data to wait until the summer months before circling a number. It’s time to get out your Worry Beads. The March interest rate decision may be moved to June. And the price of gold and silver will hang in the balance. Last Friday gold closed at $2046.70 / silver at $23.16 – on the week gold was down $20.20 and silver was down $0.59.
Please note that FedEx is no longer asking for delivery signatures. They are scanning IDs. We have complained to FedEx, but they remain resolute. Scanned identification is safer, but if you have a problem with this decision, please make your feelings known to FedEx. Unfortunately, the present delivery time for the USPS alternative is 2-3 weeks.
Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on a new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.
We were closed Monday, Jan 15th for Martin Luther King Day. Banks, the Post Office and commodity markets were closed on this national holiday.
On Tuesday the price of gold moved between $2045.00 and $2025.00 with a downward drift in the domestic trade. This is the first day in a short trading week and we are off to a slow start, which is surprising considering gold’s technical picture remains encouraging. An example of a stronger dollar holding sway was reflected in the Dollar Index moving from 102.20 Friday through 103.31 today. And the reason for weakness in the price of gold. Fresh problems in the Middle East provide support and safe haven. Insiders expect continued back and forth patterns.
Reuters (Anushree Ashish Mukherjee) – Gold dips on strong US dollar, yields as Fed insights awaited – “Gold prices slid on Tuesday, pressured by a firm U.S. dollar and Treasury yields, while investors eyed remarks from several Federal Reserve officials this week to assess the likelihood of the central bank’s interest rate cuts in the year. Strong gains in the U.S. dollar index are pressuring the gold market as well as a rise in U.S. Treasury yields today on this first day back from the three-day holiday weekend,” said Jim Wyckoff, senior analyst at Kitco Metals. “However, one could argue that losses in gold are not bad compared to how strong the dollar is as tensions in the Middle East is keeping a floor under the prices.” The dollar index rose 0.5% to a more than one-month high, making bullion less attractive for other currency holders, while yields on the benchmark U.S. 10-year Treasury notes also gained. Fed Governor Christopher Waller is scheduled to deliver a speech on the economic outlook before the Brookings Institution at 1600 GMT, with at least other six officials due to speak this week. “Fed officials probably will keep a neutral guidance, keeping all options on the table based on incoming data. So to see gold prices tick higher, we need to remain on a soft landing path,” said UBS analyst Giovanni Staunovo.” he U.S. central bank is widely expected to hold its policy rate steady at the end of its Jan. 30-31 meeting. Traders see a 70% probability of an interest rate cut in March, according to the CME Fedwatch tool. Elsewhere, European Central Bank officials pushed back against market expectations for rapid rate cuts this year. Spot silver fell 0.3% to $23.12 per ounce, platinum declined 1.4% to $902.36, and palladium slipped 3.2% to $939.95.
On the day gold closed down $20.70 at $2026.00, and silver closed down $0.23 at $22.93.
On Wednesday gold opened with typical “up and down” pricing chop but settled on lows for the day. This makes for two consecutive daily losses of $20.00 and sets the tone for this trading week. This second loss was also fueled by the dollar which remains steady at weekly highs.
Solid US economic activity reported this morning also weighs on the metals. It allows the Fed broader interest rate options if the FOMC believes an immediate recession is no longer on the table. Traders, however, believe that the continued grind of higher interest rates will take its toll, continue to slow the economy and hurt the price of gold.
In December the price of gold was $2010.00, it reached recent highs ($2080.00) two weeks later as bullish optimism surged over the possibility of a March interest rate reduction. Still, FOMC insiders warned against too much optimism and their comments weakened a promising rally.
Today we are back to monthly lows approaching $2000.00 and traders fear lower prices are right around the corner. Whether the price of gold is higher or lower between now and the March FOMC meeting will in large part depend on the Fed’s still uncertain interest rate policy. This is not a revelation; it is the same reasonable thinking that has been in place for months. But for some reason many prefer speculation and rumor which creates this jittery trading pattern.
Reuters (Anushree Ashish Mukherjee) – Gold retreats to over one-month low after data dims rate-cut hopes – “Gold prices fell to a more than one-month low on Wednesday as strong economic data strengthened dollar and Treasury yields and lowered market expectations of a U.S. rate cut in March. Spot gold was down 0.9% at $2,008.89 per ounce as of 11:33 a.m. ET (1633 GMT), lowest since Dec.13. It fell 1.3% in the previous session in its biggest single-day decline since Dec. 4, 2023. U.S. gold futures fell 0.9% to $2,011.80. U.S. retail sales increased more than expected in December, keeping the economy on solid ground heading into the new year. The U.S. dollar (.DXY), opens new tab hovered at a one-month high following robust retail sales data. While yields on the benchmark U.S. 10-year Treasury notes also gained. “The markets are having doubts about interest rate cuts if the Fed can cut sooner than later, which is pressuring gold prices. With the dollar being strong and cuts taking time, it is hard for gold to hold a rally,” said Bob Haberkorn, senior market strategist at RJO Futures. “However, geopolitical risk will keep providing a base to prices and hold them around $2,000.” Fed Governor Christopher Waller’s on Tuesday said that the central bank should not rush to cut rates until lower inflation can be sustained. Traders are now pricing in around a 57% chance of a rate cut in March, according to theCME FedWatch tool, opens new tab. “Technically gold is at a little bit of risk here, if we close below $2,020 it signals that the sideways range has broken to the downside,” said Tai Wong, a New York-based independent metals analyst. Spot silver fell 1.5% to $22.57 per ounce, and platinum declined 1.8% to $879.09. Palladium slipped 1.8% to $919.14, marking its lowest since 2018. The rate at which platinum is displacing palladium in the production of autocatalysis is slowing due to the sister metals approaching price parity.”
On the day gold closed down $23.40 at $2002.60, and silver closed down $0.41 at $22.52.
On Thursday the gold bulls got some breathing room. With gold down in the domestic market Tuesday and Wednesday traders took advantage of the weakness and bought the dip in today’s trade. This is not a big deal, prices today ranged between $2208.00 and $2222.00 but anything to the upside as gold challenged $2000.00 helps bullish sentiment. The fact that gold finished the day close to highs is noteworthy considering the dollar remains around weekly highs.
Our sales volume picked up considerably yesterday, which suggests public interest remains steady, likely helped by safe haven demand. But the Fed still holds all the cards. A continued dovish response to interest rate policy in March will push gold prices higher. Anything less will encourage the bears. Still, I can’t imagine shorting gold at these levels. That trade is fraught with peril, as the world faces big problems in the Middle East and the Ukraine.
Reuters (Anushree Ashish Mukherjee) – Gold drifts higher on softer dollar, safe-haven inflows – “Gold prices firmed on Thursday, aided by a retreating dollar and safe-haven demand amid the Middle East conflict, while investors looked out for further clarity on the U.S. Federal Reserve’s future interest rate path. Spot gold rose 0.4% to $2,012.89 per ounce by 9:56 a.m. ET (1456 GMT) after hitting a five-week low in the previous session. U.S. gold futures also gained 0.4% to $2,015.50. The dollar (.DXY), opens new tab fell after climbing a five-week peak in the previous session. While yields on the benchmark U.S. 10-year Treasury notes also declined. Geopolitical tensions are unintentionally coordinating efforts to keep gold in the $2,000 range as there is so much uncertainty, said Daniel Pavilonis, senior market strategist at RJO Futures. The U.S. on Wednesday put the Yemen-based Houthi rebels back on its list of terrorist groups, as the militants attacked their second U.S.-operated vessel in the Red Sea region this week. A weaker dollar makes bullion cheaper for overseas buyers, while high-interest rates dent non-yielding bullion’s appeal. At least two Fed policymakers – Atlanta Fed President Raphael Bostic and Fed Governor Christopher Waller – have spoken against cutting rates too fast. Traders are pricing in a 57% chance of a March rate cut, according to CME’s Fed Watch tool. Gold investors are analyzing how much of a negative impact delayed interest rate cuts might have on prices, though a bunch of U.S. data misses could help gold’s cause, said Fawad Razaqzada, market analyst at City Index, in a note. Data showed jobless claims fell last week to the lowest level since late 2022, suggesting job growth likely remained solid in January. Spot silver was steady at $22.53 per ounce. “We forecast a 2024 price of $24.33/oz; ETF (exchange traded funds) demand may recover from liquidation; we anticipate deficits to buoy prices,” HSBC said in its 2024 outlook. Platinum climbed 1.8% to $898.99, and palladium gained 2.4% to $937.39.”
On the day gold closed up $16.00 at $2018.60, and silver closed up $0.15 at $22.67.
On Friday gold moved to highs on the day ($2036.00) but traders sold the rally and prices dipped to $2022.00. The price of gold moved reasonably lower on two occasions this week, but the interest created was subdued. This may suggest that either the bulls need a rest to gather themselves or this market needs fresh information to rally its base. The answer to this question might be found in gold’s moving averages. The 100 Day Moving Average is $1994.00, and the 200 Day Moving Average is $2012.00. That makes for a slim $12.00 pricing spread over a long period of time, which translates into a “ho-hum” trade in need of fresh information.
Reuters (Anushree Ashish Mukherjee) – Gold set for biggest weekly fall in six as rate cut optimism dulls – “Gold firmed on Friday but was poised to record its biggest weekly decline in six as comments from Federal Reserve policymakers through the week lowered expectations of an early rate cut. Spot gold rose 0.3% to $2,029.19 per ounce by 10:05 ET (1505 GMT) but was down 1% so far in the week. U.S. gold futures rose 0.5% to $2,030.80. The dollar index (.DXY), opens new tab dipped 0.1% but was up 1% for the week. A stronger dollar makes greenback-priced gold more expensive for foreign currency holders. Over the week, the markets have been speculating about the Federal Reserve’s timing for rate cuts, which has reflected in gold prices, said Bart Melek, head of commodity strategies at TD Securities. Chicago Fed President Austan Goolsbee said on Friday that the Fed needs more inflation data in hand before any rate cut judgment could be made. Atlanta Fed President Raphael Bostic on Thursday said the baseline for cuts to start was in the third quarter. Traders now expect about a 53% chance of a rate cut in March, down from 71% last week, according to CME’s Fed Watch Tool. “The longer-term price outlook is positive for gold,” said independent analyst Ross Norman, adding that gains will be deferred as markets try to get a handle on likely U.S. rate cuts and the possible trajectory of the dollar and gold. Lower interest rates decrease the opportunity cost of holding bullion. On the physical side, gold buying in India was lackluster this week as a correction in local prices failed to attract consumers. Spot silver fell 0.5% to $22.63 per ounce but was down about 2.7% for the week so far. Spot platinum lost 0.3% to $904.26, and palladium was down 0.1% to $937.34.”
On the day gold closed up $7.90 at $2026.50, and silver closed down $0.10 at $22.57.
Platinum closed down $6.00 at $897.30, and palladium closed up $4.90 at $941.80.
Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the overall near-term technical advantage but are fading a bit. Prices are still in a three-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at this week’s high of $2,062.80. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at $2,040.00 and then at $2,050.00. First support is seen at today’s low of $2,022.20 and then at Thursday’s low of $2,007.70. The silver bears have the overall near-term technical advantage. Prices are in a choppy, five-week-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the November low of $22.26. First resistance is seen at $23.11 and then at this week’s high of $23.50. Next support is seen at this week’s low of $22.52 and then at $22.26.”
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