Dollar strength wanes, gold pops to $1954 but quickly retreats from high

Gold futures opened at $1943.80 then rose to $1954 in one hour beginning at 9 o'clock EDT. This rise was not sustainable with gold giving back those gains and trading to a low of $1940 before slightly recovering. As of 5 PM EDT gold futures basis the most active December contract is currently fixed at $1942.60 which is a net gain of $0.10.

However, today's price range marks the first time that gold has gained on the day (although fractional) this week. Gold will finish fractionally higher on the day but lower on the week. There is however solid technical evidence that a support level was tested on Wednesday and Thursday and at least this week has held.

Gold finds possible technical support at the 61.8% Fibonacci retracement

Gold's short-term corrective cycle began after a high of $1980 was reached on Friday of last week and then traded lower for three consecutive days on Tuesday, Wednesday, and Thursday. The weekly low at approximately $1940 occurred on Wednesday, September 6, and although gold has traded to a higher low yesterday and today it remains close to the weekly lows.

Yesterday we spoke about a potential technical level of support that occurs at $1939.20 which is based upon a Fibonacci retracement of 61.8%. The short-term data set used for this retracement begins at $1914 and concludes at last Friday's high of $1980.

A 61.8% price correction is an acceptable but deep retracement for a market in a bullish scenario. However, gold has been in a defined corrective period since the beginning of May. This means that on a technical basis, gold must challenge and take out the most recent high that occurs just above $2020 before we would get technical confirmation that this week's low marks the end of a correction and a bullish key reversal.

According to the CME's Fedwatch tool, there is a 93% probability that the Federal Reserve will not implement another rate hike at the FOMC meeting later this month. Recent bearish market sentiment is the result of dollar strength and uncertainty as to how long the Federal Reserve will maintain the current elevated interest rates.

Earlier this week one of the more hawkish Federal Reserve officials Fed Governor Christopher Waller remarked about how recent data suggested that their monetary policy tightening has had a strong effect on inflation saying, "There is nothing that is saying we need to do anything imminent anytime soon… We can just sit there and wait for the data."

Market participants are now waiting for the CPI index report which will be published on Wednesday. They will look for information to see if the current level of inflation confirms that the U.S. economy can withstand interest rates at this elevated level. More importantly, they will look to see how inflation is responding to the Fed's restrictive monetary policy to determine whether recent steps have put inflation on a trajectory to reach its target of 2%.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

Tim Moseley

Last week gold jumped close to the psychological threshold of $2,000 before slowing down on Thursday and Friday, while the US dollar showed recovery signals. Despite this time, the price of bullion remained above $1,950. Overall, the trend for the gold price still appears positive. Investors are, once again, in a wait-and-see mode. Indeed, we have just entered a week with a very busy macroeconomic agenda that could break the recent low volatility scenario.

The focus will be on central banks, starting with the FOMC meeting on Wednesday, at which the Federal Reserve is expected to announce a rate hike from 5.25% to 5.50% after last month’s pause. On Thursday, the European Central Bank will likely move in the same direction, raising rates from 4.00% to 4.25%, while on Friday morning, the Bank of Japan will hold its traditional conference. Any dovish surprise, particularly from the Fed, could be positive for gold, with good chances of seeing a new attack to the $2,000 mark. Vice versa, if the US central bank opens the door to new raises (after the one already expected by the markets), stocks and gold could be negatively impacted.

The week’s busy agenda also includes the preliminary release of the US Q2 GDP and the initial jobless claim. Analysts expect GDP growth of 1.8% (compared to the previous +2.0%), while the jobless requests should remain steady or slightly grow. These data will be strictly monitored by the Fed for its next monetary policy decision and, of course, by gold traders looking for new catalysts that could help bullion continue its rally.

Time to Buy Gold and silver

Tim Moseley

Gold price firmer in quieter trading; U.S. CPI next focal point

Gold prices are firmer and silver prices near steady in more quiet early U.S. trading Friday. More mild short covering is featured in gold futures, along with some perceived bargain hunting following recent losses. December gold was last up $4.80 at $1,947.30 and December silver was up $0.050 at $23.29.

Asian and European stock markets were mostly weaker overnight. U.S. stock indexes are pointed to slightly weaker openings when the New York day session begins. Traders and investors are waiting for the next major U.S. data point, which will likely be the consumer price index report for August, out next Wednesday. Trading may remain quieter until that time.

The key outside markets today see the U.S. dollar index slightly down but not far below this week’s six-month high. Nymex crude oil prices are firmer and trading around $87.50 a barrel—not far below this week’s 10-month high. The benchmark U.S. Treasury 10-year note yield is presently fetching 4.24%.

  China buys 29 tonnes of gold in August, stretches buying spree to 10 months

U.S. economic data due for release Friday is light and includes monthly wholesale trade inventories and consumer credit.

Technically, the gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the September high of $1,980.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at Wednesday’s high of $1,954.50 and then at $1,965.00. First support is seen at this week’s low of $1,940.00 and then at $1,925.00. Wyckoff's Market Rating: 3.5

The silver bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at this week’s high of $24.655. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at $23.50 and then at $24.00. Next support is seen at this week’s low of $23.13 and then at $23.00. Wyckoff's Market Rating: 3.5.

By

Jim Wyckoff

For Kitco News

Contact jwyckoff@kitco.com

www.kitco.com

Time to Buy Gold and silver

Tim Moseley

The gold market could hit $2,600 as U.S. dollar index falls below 104 – DeCarley Trading's Carley Garner

The U.S. dollar continues to dominate the gold market; however, momentum in the greenback could be running out of steam as the Federal Reserve is unlikely to continue to maintain its aggressive monetary policy stance through year-end, according to one market strategist.

In a recent interview with Kitco News, Carley Garner, co-founder of the brokerage firm DeCarley Trading, said that gold, as it holds critical support levels, is in a good position to hit new all-time highs when the U.S. dollar's momentum starts to fade.

Garner said she expects the U.S. dollar index to hold resistance below 105 points. Ultimately, she sees the U.S. dollar eventually retesting support at 99 points.

"If we break below that support level, we are probably going back towards the mid-nineties and if that's the case, that's a game changer for gold," she said. "Suddenly, we are not looking at $2,000 gold but new all-time highs."

Garner said a breakdown in the U.S. dollar could eventually push gold prices to $2,600 an ounce.

Garner said that one of the reasons why she sees so much potential in gold is because of how resilient it has been in the last few months. While bond yields in the U.S. remain near 15-year highs above 4%, gold has held critical support around its 20-day moving average.

A peak in long-term yields would remove another headwind for gold, she said.

"We are basically sitting on the biggest net short in bonds on record and at some point, that is going to unwind itself," Garner said. "This trade will be unwound and that is going to push interest rates lower. When positioning is this extreme, it's just a matter of time."

One factor that could spark a selloff is if the Federal Reserve shifts to a more neutral monetary policy stance, leaving interest rates unchanged through year-end. According to the CME FedWatch Tool, markets see a more than 90% chance of no rate hike later this month and only a 50/50 chance of a rate hike in November.

  Rising bond yields drive outflows from gold ETFs, but long-term support remains

While Garner is bullish on gold, she added that the market could remain volatile in the near term, with prices potentially retesting support around $1,900 an ounce. She said that if bearish momentum picks up, she would not be surprised to see prices fall to $1,980 an ounce.

"I wouldn't give up on it unless maybe we broke below, let's say $1,800," she said.

Although Garner is bullish on gold, she does not have the same enthusiasm for silver. She said that she would rather play a breakout in the precious metals through gold.

"Eventually, silver will outperform gold, but I don't think it's going to happen now," she said. "I think the only thing I can say is that on a shorter time frame, silver is usually a buy around $20."

By

Neils Christensen

For Kitco News

Contact nchristensen@kitco.com

www.kitco.com

Time to Buy Gold and silver

Tim Moseley

Gold, silver down as USDX rallies, U.S. Treasury yields up-tick

Gold and silver prices are solidly lower in midday U.S. trading Tuesday, as a strong U.S. dollar index and rising U.S. Treasury yields have the metals market sellers in charge on this day. December gold was last down $14.00 at $1,953.10 and December silver was down $0.582 at $23.975.

The metals market bulls were also discouraged as China reported some more downbeat economic data. Its Caixin services purchasing managers index (PMI) came in at 51.8 is August versus 54.1 July and was below expectations of 53.5. The Caixin composite PMI was 51.7 versus 51.9 July. Recent weaker China economic data suggests less demand for raw commodities, including the metals.

Asian stock markets were mostly lower in overnight trading. U.S. stock indexes are mixed at midday. History shows the months of September and October can be rocky for the stock and financial markets.

Meantime, the Australia’s central bank kept its monetary policy unchanged but said further interest rate hikes may be necessary.

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The key outside markets today see the U.S. dollar solidly up and at a six-month high. Nymex crude oil futures prices are solidly up and trading around $87.75 a barrel. Brent crude oil futures rose above $90 a barrel today. The benchmark U.S. Treasury 10-year note yield is presently fetching around 4.2%.

Technically, December gold futures bears have the overall near-term technical advantage. However, prices are still in a fledgling uptrend on the daily bar chart, but just barely. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at $1,965.00 and then at today’s high of $1,972.60. First support is seen at $1,950.00 and then at $1,940.10. Wyckoff's Market Rating: 3.5.

December silver futures bulls have lost their overall near-term technical advantage. A price downtrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at last week’s high of $25.425. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at today’s high of $24.655 and then at $25.00. Next support is seen at today’s low of $23.815 and then at $23.50. Wyckoff's Market Rating: 5.0.

December N.Y. copper closed up 20 points at 385.40 cents today. Prices closed nearer the session high. The copper bulls and bears are back on a level overall near-term technical playing field. However, prices are starting to trend up. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the August high of 403.75 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 367.00 cents. First resistance is seen at today’s high of 387.25 cents and then at last week’s high of 390.85 cents. First support is seen at 380.00 cents and then at last week’s low of 378.00 cents. Wyckoff's Market Rating: 5.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold, silver correcting – buy the Labor Day dip?

As I write on this Labor Day Monday, silver is now 4% off last week's $25 high, with the price back at $24 right now, as gold is 0.5% off its $1950 high of last week, currently trading at $1940.

The Daily gold chart:

If you made the flip from silver to gold at $24.20 (when I first suggested it) or higher, then you are still in a nicely profitable trade and have likely preserved your mental capital, which may come in handy for the flip from gold back into silver.

The daily silver chart below:

I'm not sure the time to flip into silver is now, and I still believe (as I have suggested since I initially spotted this trade opportunity) that one should be nimble in this market and be ready to be in and out (and vice versa) at the drop of a dime if trying to put on trades.

A look at the gold/silver ratio shows that it has found support as metals have run into resistance.

Prudent traders, in fact, would not be wrong to take profit altogether, in my opinion. It seems very plausible to me that the ratio will find its way back to the top of the range denoted by the yellow rectangle, which will pressure metals further.

Yet another opportunity to add to physical stacks at lower prices looks to be on the horizon.

By

Jonathan Da Silva

Contributing to kitco.com

Time to Buy Gold and silver

Tim Moseley

Both analysts and retail investors see higher gold prices next week

Gold climbed higher this week, with prices rising over 1.25% as Friday's nonfarm payrolls report showed an increase in the unemployment rate and the ISM Manufacturing Index indicated continued weakness in U.S. industry.

The latest Kitco News Weekly Gold Survey shows that over two-thirds of retail investors expect gold prices to post gains during the shortened week ending September 8. And after weeks of caution and divided opinions, market analysts are just as bullish as Main Street heading into the Labor Day long weekend.

Adrian Day, President of Adrian Day Asset Management, sees gold prices increasing in the near term. "The tide seems to be turning for gold," he said. "Economic news in the U.S. and elsewhere is mixed, but the preponderance is suggesting a weakening global economy. The market is already pricing in the end of rate hikes in the U.S., though "tighter for longer' is still tightening."

Daniel Pavilonis, Senior Commodities Broker at RJO Futures, sees gold hitting a hard ceiling in the short term.

"I think gold is actually going to continue to be capped under the highs, and possibly continue to move lower," Pavilonis said. "The rationale behind that is some of the data is still coming out relatively strong. You look at core services, non-housing services, there's some labor indicators that are still pretty strong, in terms of inflationary."

Pavilonis said that yields are moving higher the further out you look across the curve, "so it's not so much of a front-end issue or a temporary issue."

"I think inflation is starting to be quote-unquote "confirmed,' that this is going to be around a lot longer," meaning the Fed is unlikely to cut rates before the end of 2024, he said. "I think that's really what's capped the metals market from moving higher."

This week, 11 Wall Street analysts participated in the Kitco News Gold Survey. Seven experts, or 64%, expected to see higher gold prices next week, while three analysts, or 27%, predicted a drop in price. Only one analyst, or 9%, was neutral on gold for the coming week.

Meanwhile, 534 votes were cast in online polls. Of these, 360 respondents, or 67%, looked for gold to rise next week. Another 101, or 19%, expected it would be lower, while 73 voters, or 14%, were neutral in the near term.

Wall Street

Bullish64%

Bearish27%

Neutral9%

VS

Main Street

Bullish67%

Bearish19%

Neutral14%

The latest survey shows that retail investors expect gold prices to trade around $1,962 per ounce next week.

The coming week will see a few significant economic data releases, with the ISM Services PMI for August and jobless claims the highlights.

Marc Chandler, Managing Director at Bannockburn Global Forex, expects gold to build on this week's performance. "I like gold higher again next week, especially if it can close above the $1950-53 area [on Friday], which is about where I have a trendline off the May and July highs coming in. It is also a retracement objective," he said. "The US jobs data will not change views on the US economy, and that the labor market is becoming less tight. The 2-year yield has been rebuffed again as it pushed above 5.0%."

Chandler said his next target for the yellow metal is $1975-85 based on the spot market.

Sean Lusk, Co-Director of Commercial Hedging at Walsh Trading, is still cautious about gold's short-term prospects, but sees it trending downward next week amid DXY and stock market strength and mixed messages from the data.

"We traded back through some support levels this week, but as it stands right now, the jury's still out on whether there's going to be a continuation rally in the next week," Lusk said.

"With higher equities and higher dollars, it's simply going to mean lower gold prices. In my view, this recent turnaround in gold was due to the stock market being a little on its heels, and therefore, you have the possibility of some further pullback in the metals should we continue in that environment. I'll bull up longer-term, but it doesn't mean we can't swing and retest $1900 as the downside again."

Frank McGhee, Precious Metals Dealer at Alliance Financial, also sees gold trending lower next week as concerns over the impact of a slowing economy, and "with the Fed not giving any indication of the long-dreamed-about pivot, rather "higher for longer' starts to bite."

Adam Button, Chief Currency Analyst at Forexlive.com, believes the pivot is in play. "There is a small chance left of a Fed rate hike in November, but that will be priced out in short order, and the focus will shift to when the first rate cut is coming," Button said. "As that focus shifts, gold will shine."

And Kitco's Jim Wyckoff sees an uptrend beginning to form for the precious metal. "Steady-higher as gold prices are now starting to trend up on the daily bar chart," he said.

Gold prices are currently up 1.25% on the week, with spot gold last trading at $1940.75 an ounce at the time of writing.

By

Ernest Hoffman

For Kitco News

Time to Buy Gold and silver

Tim Moseley

The second week of gains in gold futures confirms a piercing line

Gold futures had a respectable gain this week opening on Monday at approximately $1944, and today closing at approximately $1966. The weekly trading activity resulted in a gain of approximately $22. But most significant is that this week’s price gain follows the prior week's gains. This results in two consecutive weeks of price advances in the precious yellow metal, and the confirmation of a simple bullish reversal pattern based upon Japanese candlesticks.

Japanese candlestick patterns have been used by Japanese market technicians since the 1600’s as a powerful technique to identify pivot or turning points effectively. Several simple two-candlestick patterns can be found on daily, weekly, or even monthly time frames.

Two of the stronger bullish reversal patterns are known as an engulfing bullish and piercing line. The criteria for these patterns begin with the same three rules:

Rule One – The pattern must occur after a defined price correction.

Rule Two – The first candlestick in the pattern must be a large red candle (which is created when the closing price of the time sequence is below the opening price), which trades at a lower low than the previous candle.

Rule Three – The second candlestick in the pattern must open below the prior large red candle.

However, this is where the two candlestick pattern types differ based on where the candle closes. To create an engulfing bullish the large green candle must close above the real body of the prior red candle. In the case of a piercing line although it opens in the same manner as the engulfing bullish it must close at the midpoint or higher.

Both patterns require a confirming candle on the following cycle which is a green candle with a higher high and a higher low.

On a weekly chart of gold futures, we can identify a piercing line that was confirmed this week.

The chart above is a weekly candlestick chart of gold futures. A rectangular box highlighted the last three weekly candlesticks of which candles one and two create the piercing line and candle three identifies the confirming candle. Based on the pattern we conclude that gold could challenge $2000 per ounce based on the highs during the week of July 17 and July 24. During those two weeks, gold traded to a high of $2028 and $2020. Therefore, it is not unreasonable to assume that gold could trade to and move above $2000 or higher during this calendar month.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and silver

Tim Moseley

Gold, silver weaker as USDX rallies

Gold and silver prices are modestly lower in midday U.S. trading Thursday, on downside corrections following this week’s gains and amid a solid rally in the U.S. dollar index today. December gold was last down $4.60 at $1,968.50 and December silver was down $0.254 at $24.855.

The U.S. data point of the day Thursday was the personal income and outlays report for August, including the closely watched PCE inflation readings. The core PCE reading for August came in at up 4.2%, year-on-year, which was right in line with market expectations and compares to up 4.1% in the July report. Markets showed no significant reactions to the as-expected report.

The busy U.S. data week is highlighted by Friday’s employment situation report for August from the Labor Department. The key non-farm payrolls number is expected to come in at up 170,000, compared to a rise of 187,000 in the July report. Downbeat U.S. data released so far this week has many thinking Friday’s jobs report will be in line with market expectations, or a bit weaker.

U.S. stock indexes are mixed at midday. The stock index bulls are having a good week and hit three-week highs overnight.

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The key outside markets today see the U.S. dollar index solidly higher on a corrective rebound from recent selling pressure. Nymex crude oil futures prices are higher and trading around $82.50 a barrel. The benchmark U.S. Treasury 10-year note is presently fetching 4.08%.

Technically, December gold futures bears have the overall near-term technical advantage. However, prices are starting to trend up. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at this week’s high of $1,977.10 and then at $1,985.00. First support is seen at Wednesday’s low of $1,962.80 and then at $1,950.00. Wyckoff's Market Rating: 4.0.

December silver futures silver bulls have the overall near-term technical advantage. Prices are trending higher on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $25.82. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at today’s high of $25.06 and then at this week’s high of $25.425. Next support is seen at today’s low of $24.745 and then at $24.555. Wyckoff's Market Rating: 6.5.

December N.Y. copper closed down 215 points at 382.25 cents today. Prices closed near mid-range. The copper bears have the slight overall near-term technical advantage. However, prices are starting to trend up. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the August high of 403.75 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 367.00 cents. First resistance is seen at this week’s high of 385.05 cents and then at 388.00 cents. First support is seen at this week’s low of 378.00 cents and then at 375.00 cents. Wyckoff's Market Rating: 4.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley