Gold needs weak economic data as a catalyst to push prices higher next week

The gold market maintains its resilience in the face of significant headwinds; however, precious metals are in desperate need of a catalyst to push prices out of their current downtrend, according to some analysts.

After four weeks of losses, gold is heading into the weekend with a modest gain. December gold futures last traded at $1,9410.90 an ounce, up 1.27%. Despite the gains, analysts note that the gold market is generally stuck in a “wait-and-see” mode and next week’s economic data could create some critical volatility.

U.S. economic data continues to play an essential role in the sentiment in the gold market. The Federal Reserve has said that it will maintain interest rates higher for longer as healthy economic activity continues to support the tight labor market.

Federal Reserve Chairman Powell reiterated that stance Friday in his prepared remarks during the central bank's annual retreat at Jackson Hole. Although Powell provided little new information, he reiterated the central bank’s stance to bring inflation down to its 2% target even as it remains data-dependent.

“We are navigating by the stars under cloudy skies. In such circumstances, risk-management considerations are critical. At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks,” Powell said in his remarks.

Phillip Streible, chief market strategist at Blue Line Futures, said weak data with a focus on Friday’s nonfarm payrolls report could breathe some new life into the precious metal, providing an early signal that the central bank’s tightening cycle has ended; however, he added that the market has some significant hurdles to clear.

“Even if the market does turn around, investors might still hesitate to jump back in. Investors are going to take a more conservative stance on gold and silver in the near term. Prices need to get over $1,971 just to turn neutral, but prices are not even able to break above resistance at $1,951.”

While some analysts have described Powell’s statement as “dull,” they point out that the status quo remains a complex environment for gold.

Craig Erlam, senior market analyst at OANDA, said that gold’s upside momentum could be limited in the near-term.

“Comments from Powell have not put traders' minds at ease and the traders are increasingly being forced to come to terms with rates remaining higher for even longer, strengthening the dollar and weighing on gold again today. It remains above $1,900 currently, but only just. The Fed is clearly far from convinced that the job is done,” he said in a note.

While gold’s upside appears to be limited in the near term, so could its downside. Christopher Vecchio, head of futures and forex at Tastylive.com, said that with bond yields holding near a 15-year high, gold prices should be a lot lower.

He said that he suspects growing economic uncertainty in China and the threat of stagflation in Europe is helping to support safe-haven demand in gold.

“The Chinese government is going to have to throw a lot of good money at bad investments. This uncertainty is helping to raise the floor price for gold and silver,” he said. “I think the worst days for gold and silver are over. The market is not ready to run higher, but I expect we could trend around $1,900 for a while,” he said.

Some analysts point out that silver has already experienced a modest short squeeze as prices look to end the week with a 2.4% gain.

Vecchio added that any signs of economic weakness could convince the U.S. central bank that it doesn’t have to raise interest rates any further.

While the main risk event will be Friday with the release of the U.S. August employment report, several high-profile reports will be on the docket next week.

Next week's data:

Tuesday: U.S. Consumer Confidence, JOLTS job openings

Wednesday: ADP private payrolls, Preliminary Q1 GDP, pending home sales

Thursday: Core PCE, personal income and spending, weekly jobless claims

Friday: Nonfarm payrolls report, ISM manufacturing PMI survey

By

Neils Christensen

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Powell leans hawkish, as expected; markets show no significant reactions

The highly anticipated speech by Federal Reserve Chairman Jerome Powel at the annual Jackson Hole, Wyoming Fed symposium has so far had no major impact on the marketplace. Powell struck a hawkish tone on U.S. monetary policy, saying the inflation fight is not finished and the Fed “has a long way to go” to get inflation tamed to where the Fed wants it to be. Powell said the U.S. economy may not be cooling down like the Fed wants to see in order to choke off inflationary pressures. He said the U.S. central bank is prepared to raise interest rates further, if warranted. “We are in a position to proceed carefully,” said Powell. Some Fed watchers are saying Powell leaned hawkish, but maybe not as hawkish as some in the marketplace expected. Thus, the so-far muted reactions by the markets. December gold was last up $0.50 at $1,947.40.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold, silver steady-weaker as Powell Jackson Hole speech awaited

Gold and silver prices are steady to slightly lower in quieter midday U.S. trading Thursday, as traders are awaiting the marketplace event of the week, if not the month: the annual Federal Reserve symposium held in Jackson Hole, Wyoming. The meeting gets under way Thursday evening. This meeting usually produces some market-sensitive news from world central bankers’ comments, including Fed Chair Jerome Powell. Powell is scheduled to speak at the confab on Friday morning at 10:05 a.m. EDT. December gold was last down $0.70 at $1,947.40 and September silver was down $0.152 at $24.245.

U.S. stock indexes are lower at midday, despite Nvidia’s knockout earnings and guidance reports Wednesday afternoon. Said Nigel Green, the CEO of deVere Group: “AI (artificial intelligence) is not just the future, it’s the present, and all investors need some exposure to it – but there’s much more than just this one California-based mega tech company.” The chipmaker beat estimates and said sales will jump another 170% this quarter due to soaring demand for AI chips. Shares in Nvidia jumped 6% on the earnings and guidance, which came after the closing bell Wednesday. “Nvidia is the darling of the AI boom – of this there is no doubt – and with robust guidance we expect this to continue for most of the rest of the year,” said Green. “Investors who are serious about building their long-term wealth need exposure to this pivotal driver of innovation, competitiveness, and profitability across almost all industries. We’re still at the beginning of the AI age and investors should not miss out on having an early advantage. Almost everyone should have investment exposure to AI as part of the mix.”

The marketplace is taking note of the BRICS (Brazil, Russia, India, China and South Africa) meeting this week. China President Xi Jinping was a no-show for a scheduled speech at the confab. Broker SP Angel says in an email dispatch: “We wonder what economic disaster Xi was having to address while missing his speech.”

The key outside markets today see the U.S. dollar index solidly higher, while Nymex crude oil futures prices are slightly up and trading around $79.25 a barrel. The benchmark U.S. Treasury 10-year note is presently fetching 4.227%.

Technically, December gold futures bears still have the overall near-term technical advantage. However, a four-week-old downtrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close above solid resistance at $1,980.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,963.50 and then at $1,975.00. First support is seen at today’s low of $1,939.20 and then at Wednesday’s low of $1,926.20. Wyckoff's Market Rating: 3.5.

September silver futures bulls have the overall near-term technical advantage. Prices are starting to trend up. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $25.475. The next downside price objective for the bears is closing prices below solid support at the August low of $22.265. First resistance is seen at this week’s high of $24.43 and then at $24.75. Next support is seen at $24.00 and then at Wednesday’s low of $23.475. Wyckoff's Market Rating: 6.0.

September N.Y. copper closed down 360 points at 377.25 cents today. Prices closed nearer the session low. The copper bears have the overall near-term technical advantage. However, a downtrend on the daily bar chart has been negated. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 362.70 cents. First resistance is seen at this week’s high of 381.55 cents and then at 385.00 cents. First support is seen at Wednesday’s low of 375.70 cents and then at 371.60 cents. Wyckoff's Market Rating: 3.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Solid gains for gold, silver as Jackson Hole looms

Gold and silver prices are solidly up in midday U.S. trading Wednesday, boosted by a weaker U.S. dollar index and a dip in U.S. Treasury yields at mid-week. More short covering by the futures traders and perceived bargain hunting are featured in the two precious metals. The technical posture for silver has significantly improved this week, which is inviting chart-based speculators to the long side of that market. December gold was last up $20.60 at $1,946.60 and September silver was up $0.91 at $24.36.

Traders and investors are anxiously awaiting the Kansas City Federal Reserve’s annual symposium held in Jackson Hole, Wyoming late this week. Fed Chairman Jerome Powell and European Central Bank President Christine Lagarde are set to give speeches. The speeches are expected to provide insights into the future monetary policy direction of their respective central banks. The ECB is expected to pause its recent tightening cycle at its September meeting, while U.S interest rates are expected by most to remain elevated for an extended period due to still-significant upward inflationary pressures. The marketplace will be listening closely for a potential shift in the Fed’s inflation goal. An upward revision to the Fed’s present target of around 2% annual inflation could have major implications for the U.S. bond market, particularly longer-dated U.S. Treasuries, likely increasing Treasury yields which are already at the highest levels since 2007.

The Wall Street Journal today reported general U.S. annual inflation has dropped to 3.2%, from a peak of 9.1%. While the Federal Reserve has forced about two-thirds of the problematic inflation genie back into her bottle, there’s still more work to do. That will very likely be the theme of Powell’s speech in Jackson Hole on Friday. Powell cannot err on the side of loosening monetary policy too quickly and potentially reigniting inflation that would likely become even worse than the latest surge. Thus, he’ll lean hawkish on U.S. monetary policy in Friday’s speech. ECB President Legarde is also likely to sound modestly hawkish, but probably less so than Powell.

The key outside markets today see the U.S. dollar index modestly down, while Nymex crude oil futures prices are lower and trading around $79.00 a barrel. The benchmark U.S. Treasury 10-year note is presently fetching around 4.2%.

Technically, December gold futures were up $19.20 at $1,945.30 in midday trading and near the session high. Short covering was seen after prices hit a five-month low Monday. Bears still have the overall near-term technical advantage. However, a four-week-old downtrend on the daily bar chart is in jeopardy. Bulls’ next upside price objective is to produce a close above solid resistance at $1,980.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,950.00 and then at $1,965.00. First support is seen at today’s low of $1,926.20 and then at this week’s low of $1,913.60. Wyckoff's Market Rating: 3.5.

September silver futures were up $0.89 at $24.335 at midday and near the session high. Prices hit a three-week high today. The silver bulls have the overall near-term technical advantage and have momentum. A four-week-old downtrend on the daily bar chart has been negated and prices are now starting to trend up. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $25.475. The next downside price objective for the bears is closing prices below solid support at the August low of $22.265. First resistance is seen at $24.50 and then at $24.75. Next support is seen at $24.00 and then at today’s low of $23.475. Wyckoff's Market Rating: 6.0.

September N.Y. copper closed up 485 points at 380.55 cents today. Prices closed nearer the session high. The copper bears have the overall near-term technical advantage. However, a downtrend on the daily bar chart has been negated. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 362.70 cents. First resistance is seen at today’s high of 381.55 cents and then at 385.00 cents. First support is seen at today’s low of 375.70 cents and then at 371.60 cents. Wyckoff's Market Rating: 3.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold slightly up as marketplace looks forward to Jackson Hole

Gold prices are slightly up and silver prices are solidly up in midday U.S. trading Monday, with gold poking to another five-month low in overnight trading. Short covering, corrective rebounds are featured in the two precious metals. However, rising U.S. Treasury yields to start the trading week and still-bearish charts are limiting the upside for gold and silver. Trading may be more subdued this week, ahead of the late-week annual Federal Reserve symposium held in Jackson Hole, Wyoming. This meeting usually produces some market-sensitive news from world central bankers’ comments, including Fed Chair Jerome Powell. Powell is scheduled to speak at the confab on Friday. December gold was last up $1.80 at $1,918.40 and September silver was up $0.442 at $23.175.

In overnight news, the People's Bank of China cut its one-year loan prime rate (LPR) by 10 basis points to a record low of 3.45%, while unexpectedly holding steady the five-year rate at 4.2%. Most economists had predicted a 15 basis-point cut. Monday’s move came after a surprising reduction in both short-term loan rates and the medium-term rate by the central bank last week, as it seeks to strike a balance between helping the economy and stemming further depreciation of the Chinese yuan. The Hang Seng stock index declined, headed for its lowest close since November. Reads a Wall Street Journal headline today: “China’s 40-year boom is over, raising fears of extended slump.”

The key outside markets today see the U.S. dollar index slightly higher, while Nymex crude oil futures prices are firmer and trading around $81.75 a barrel. The benchmark U.S. Treasury 10-year note is presently fetching 4.338%.

There is no major U.S. economic data due for release Monday.

Technically, December gold futures were up $1.70 at $1,918.20 in midday trading and nearer the session low. Prices hit another five-month low today. Bears have the firm overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,980.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at today’s high of $1,927.90 and then at $1,938.20. First support is seen at today’s low of $1,913.60 and then at $1,900.00. Wyckoff's Market Rating: 3.0.

September silver futures were up $0.437 at $23.17 at midday and nearer the session high. The silver bears have the overall near-term technical advantage. However, a four-week-old downtrend on the daily bar chart is now in jeopardy. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at today’s high of $23.36 and then at $23.75. Next support is seen at today’s low of $22.71 and then at $22.50. Wyckoff's Market Rating: 4.0.

September N.Y. copper closed up 105 points at 371.65 cents today. Prices closed nearer the session high. The copper bears have the firm overall near-term technical advantage. Prices are in a downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 390.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 356.50 cents. First resistance is seen at last week’s high of 374.90 cents and then at 378.00 cents. First support is seen at today’s low of 368.45 cents and then at the August low of 362.70 cents. Wyckoff's Market Rating: 2.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

Mixed sentiment highlights difficult environment for gold as bond yields remain elevated

Rising bond yields as the Federal Reserve looks likely to maintain its aggressive rate hikes are creating a challenging environment for gold Gold prices, and the mixed sentiment in the marketplace does not point to significantly higher prices anytime soon.

The latest Kitco News Weekly Gold Survey shows that Wall Street analysts are significantly bearish on gold in the near term, while sentiment is roughly balanced among retail investors.

According to analysts, rising U.S. bond yields, which hit a new 15-year high Thursday, remain a significant headwind for gold. They note that gold’s rising opportunity costs are also stopping it from attracting safe-haven flows as a slowing Chinese economy spooks investors.

“Yields are at a level that is supporting the Federal Reserve’s monetary policies and that is a tough environment for gold,” said Ed Moya, senior market analyst at OANDA. “There will be a time when gold is attractive again, but now is not that time.”

Despite the uphill battle, Moya said that he is neutral on gold for next week as bond yields could be close to peaking; he added that selling momentum in gold appears to be slowing.

“For gold selling pressure to remain, global bond yields might need to surge higher,” he said.

However, most analysts said lower gold prices are more likely in the near term. There are growing expectations that Federal Reserve Jerome Powell, speaking at the annual Jackson Hole central bank retreat next week, will maintain his hawkish bias and signal rates will remain higher for longer.

“The markets are now pricing in an extended period of elevated US interest rates, a dynamic that supports the dollar and is bad news for the precious metal. Against this background, gold prices are likely to remain under pressure, with the next significant support level at $1875,” said Ricardo Evangelista, senior analyst at ActivTrades.

This week, 16 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, ten analysts, or 63%, were bearish on gold in the near term. At the same time, two analysts, or 13%, were bullish for next week, and four analysts, or 25%, saw prices trading sideways.

Meanwhile, 941 votes were cast in online polls. Of these, 415 respondents, or 44%, looked for gold to rise next week. Another 386, or 41%, said it would be lower, while 140 voters, or 15%, were neutral in the near term.

Kitco Gold Survey

Wall Street

Bullish

Bearish

Neutral

VS

Main Street

Bullish

Bearish

Neutral

Adrian Day, president of Adrian Day Asset Management, said that while he expects gold prices to push higher in the next few months, investors shouldn’t ignore the near-term price action.

“It’s very rare to see a washout like this without seeing some follow through,” he said. “I think we should expect to see lower gold prices next week, but that won’t do anything to change the long-term outlook.”

James Stanley, market Strategist at Stone X, said that while he expects Powell to strike a neutral tone at Jackson Hole next week, it will be difficult for gold to shake its bearish technical outlook.

“[Powell will] have a little something for both USD bulls and bears without too much inference ahead of the September meeting, and I think removing some pressure from the situation could allow for gold to retrace some of this week’s losses,” he said. “I’m still retaining a bearish bias because spot Gold slipped below a big level this week at 1900 and that three-year range remains very much in play.”

However, there are still a couple of bulls in the marketplace. Michele Schneider, director of trading education and research at MarketGauge, said that despite the selling pressure, gold still holds critical support levels. The gold market has managed to hold support above its March lows.

“I’m not worried about gold,” she said. “I would be looking to buy at lower levels.”

  Gold price outlook remains bullish but record highs pushed out to the end of Q1 2024 – ANZ

By

Neils Christensen

For Kitco News

www.kitco.com

Time to Buy Gold and Silver

Tim Moseley

A dovish Powell could provide some relief next week for gold prices stuck at five-month lows

Growing worries that the Federal Reserve, in its bid to fight inflation, will keep interest rates aggressively elevated longer than expected is taking a significant toll on gold as prices end the week near a five-month low.

While there is still a lot of optimism that gold can regain its luster by the end of the year, analysts are warning investors that a lot of near-term technical damage has been done, and the precious metal has room to move lower next week.

Analysts note that although economic uncertainty is fairly elevated as China's economy shows signs of stress, the precious metal is not seeing much investor interest as a safe-haven asset. Rising bond yields, which hit a 15-year high Thursday, have become significant competition for gold.

Some analysts noted that it has become more compelling to hold three-month U.S. Treasury bills with a 5% interest than gold.

"The U.S. economy is not going to collapse overnight, so you would be foolish not to invest in short-duration bonds," said Adrian Day, president of Adrian Day Asset Management. "But short-term Treasuries is just a parking spot. It is not a long-term investment."

Day added that he remains long-term bullish on gold, but it is difficult to ignore the current weakness in the market. December gold futures are closing the week at $1,918.20 an ounce, down 1.4% from last week. This is the fourth consecutive week of lower prices for the precious metal.

Ole Hansen, head of commodity strategy at Saxo Bank, said he also maintains a long-term bullish outlook for gold but sees a risk of lower prices next week.

"While we maintain a bullish outlook for gold, these developments also highlight the risk that gold may continue to struggle, attracting demand from investors until something breaks, either through a credit event, a weaker dollar, or the belief the FOMC has switched its focus towards cutting rates. Technical traders are unlikely to offer much support until the downtrend is broken and, until then, gold may be at risk of an extension towards [spot gold] $1865," he said in a weekly report.

The Federal Reserve continues to dominate the gold market

Although economic data could create short-term volatility in the precious metals market next week, analysts expect to see muted market action as investors wait for Friday as Federal Reserve Chair Jerome Powell speaks at the central bank's annual retreat at Jackson Hole, Wyoming.

Recent economic data has provided little guidance on the health of the economy, but a growing choir of economists expects that Powel will strike a more dovish tone even as he says the central bank will keep its options open and remain data dependent.

"We view next week's Jackson Hole symposium as a good opportunity for Chair Powell to start laying the ground for the next evolution of the Fed's post-Covid policy guidance," said rate analysts at TD Securities. "Given recent favorable inflation and labor market data, we expect the end-of-the-tightening-cycle message to dominate Fedspeak in coming weeks as we approach the September FOMC meeting."

Michele Schneider, director of trading education and research at MarketGauge, said that even neutral comments from Powell would be enough to support gold prices as it would indicate that bond yields have peaked.

Schneider added that Powell is in a difficult place as he has tried to maintain an aggressive stance in the face of a slowing economy.

"There is still a lot of debate and uncertainty on the direction of the economy: are we going to see a recession, a soft landing, deflation, stagflation? Regardless, we know that we will see some negative effects from higher interest rates at some point," she said. "The Federal Reserve will be unable to maintain these aggressive rates when the economy starts to slow. They will have to cut interest rates even as inflation remains high and those expectations are supporting gold prices."

Although gold has seen solid selling pressure in the last four weeks, Schneider said that the market continues to show resilient strength. She pointed out that despite the selling pressure, gold remains above its March lows.

"I'm not worried about gold," she said. "I would be looking to buy at lower levels."

Technical damage has been done

While there might be a silver lining for gold next week, there are still some dark clouds hovering over the marketplace. Analysts noted that it has suffered significant technical damage, dropping below its 200-day moving average.

Alex Kuptsikevich, the FxPro senior market analyst, said in a note that spot gold prices could be on their way to $1,800 an ounce as the precious metal has seen only three positive sessions through August.

Gold's sharp decline began a month ago when the bears once again prevented the metal from consolidating above $1980, a critical resistance level since May," Kuptsikevich said. "On the way down in August, gold first broke below the 50-day moving average and then two days ago below the 200-day moving average. Both curves act as medium and long-term trend indicators. If there is no strong rally above $1905 today or Monday, confidence will grow that gold's downtrend is already established. The $1800-1810 area is a potential technical target in this case. This is where gold has been supported or surrendered many times over the past three years."

Marc Chandler, managing director at Bannockburn Global Forex, said that gold appears to be looking for a bottom, and next week's price action could be crucial.

"A Close above the 5-day moving average ~$1897, which it has not done this month, maybe the first sign that the downside momentum is easing," he said. "A move above the 200-day moving average (~$1906) would help stabilize the technical tone."

Next week's data:

Tuesday: Existing Home Sales

Wednesday: Flash Manufacturing PMI, New Home Sales

Thursday: Weekly Unemployment Claims, Durable Goods Orders, Jackson Hole Symposium

Friday: Fed Chair Powell Speaks at Jackson Hole

By

Neils Christensen

For Kitco News

Contact nchristensen@kitco.com

www.kitco.com

Time to Buy Gold and Silver

Tim Moseley

Gold closes higher to end nine consecutive daily declines and lower lows

Gold futures had declined for the last nine consecutive days taking prices dramatically lower from just under $1980 per ounce to yesterday’s low of $1914. Today gold futures basis the most active December contract is trading fractionally higher up $3.40 and currently fixed at $1918.60. However, if you look under the hood so to speak it was dollar weakness that provided the tailwinds which moved gold higher breaking the consecutive losing streak.

The dollar is trading down 0.16% and gold futures are up by 0.17% indicating that today’s gains were almost totally the net result of dollar weakness. The dollar index is currently down 0.155 points and fixed at 103.315. Silver which had also been deep in a corrective mode is now in its second day of higher pricing. The most active September futures contract is currently fixed at $22.81 after factoring in today’s net gain of $0.095.

On a technical basis, there are market technicians that believe that nine consecutive lower lows will typically be followed by a price reversal.

There is a Japanese candlestick pattern that is based upon a series of nine consecutive days of price declines. This price pattern is based upon the identification of 8 to 10 new price highs, or new price lows. The theory behind this Japanese candlestick pattern group is that after 8 to 10 new price lows the market has moved into an oversold condition. This pattern is an exhaustion pattern and identifies potential markets being oversold.

There is also a world-renowned technical market analyst who has created multiple mathematical formulas which are used for market timing and analytics, Tom DeMark. His proprietary studies and formulas designed to identify areas of potential price inflection have identified a pattern based on the numbers 9 and 13.

Simply called 9*, which according to Demark says that after nine consecutive price declines with lower lows is often followed by a price reversal.

According to Tom Demark indicators, “A 9 indication marks a completion of the Setup phase in the Sequential and Combo family of indicators. The 9 output looks for a series of consecutive price comparisons to define the underlying environment. Generally speaking, these 9 results are often followed by a price reversal, with the impact and duration defined by other elements of the indicator.”

Although gold trading higher by three dollars today does not indicate a full-blown reversal in the precious yellow metal, a price reversal must begin in exactly this way. We will have to wait till next week to see if there is follow-through bullish market sentiment moving gold off its recent lows.

Gary S. Wagner

Time to Buy Gold and silver

Tim Moseley

Gold weaker as U.S. Treasury yields continue to climb

Gold prices are modestly down and hit another five-month low today, as U.S. Treasury yields are on the rise, with the 10-year note scoring its highest yield in 15 years, at around 4.3%. The present rally in the U.S. dollar index is another bearish element that have the gold and silver sellers in overall control. December gold was last down $5.20 at $1,923.20 and September silver was up $0.19 at $22.72.

(Note: For exclusive market forecasts and intermarket insights, sign up to my new weekly Markets Front Burner newsletter, at https://www.kitco.com/services/markets-front-burner.html )

The minutes from the last FOMC meeting of the Federal Reserve, released Wednesday afternoon, reminded traders and investors that the Fed remains committed to bringing down U.S. inflation. The marketplace read the minutes as leaning hawkish. U.S. Treasury yields rose further following the release of the minutes, while the U.S. dollar index hit a nine-week high overnight. Gold prices dropped to a five-month low overnight.

The key outside markets today see the U.S. dollar index near steady on a pause from recent gains. Nymex crude oil prices are higher and trading around $81.00 a barrel.

Asian and European stock markets were mixed in overnight trading. U.S. stock indexes are weaker near midday.

In overnight news, China’s central bank said it will provide further stimulus to the listing Chinese economy. The central bank said it wants to prevent the Chinese yuan from further depreciation. The central bank also said it will coordinate financial support for local government debt risk and provide support to the housing market. The statements came from the People’s Bank of China second-quarter monetary policy report. China’s weakening economic growth has also been a drag on the precious metals market bulls, on weaker demand worries.

Technically, December gold futures prices hit another five-month low today. Bears have the firm overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,980.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at Wednesday’s high of $1,938.20 and then at $1,950.00. First support is seen at today’s low of $1,918.80 and then at $1,910.00. Wyckoff's Market Rating: 3.5.

September silver futures bears have the firm overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at today’s high of $23.07 and then at $23.50. Next support is seen at this week’s low of $22.265 and then at $22.00. Wyckoff's Market Rating: 3.5.

September N.Y. copper closed up 355 points at 369.30 cents today. Prices closed nearer the session high and hit a 2.5-month low early on today. Prices also scored a bullish outside day up today. The copper bears have the firm overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the July high of 402.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 356.50 cents. First resistance is seen at today’s high of 371.95 cents and then at this week’s high of 374.90 cents. First support is seen at today’s low of 362.70 cents and then at 360.00 cents. Wyckoff's Market Rating: 2.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Federal Reserve minutes reveal angst regarding ‘Upside Inflation Risks’

The minutes from the July FOMC meeting were released today. The document indicated that most Federal Reserve officials still believe that high levels of inflation are an ongoing threat and merit additional interest rate hikes. However, there was not an overall unison regarding the path forward in what can be best described as mixed messages amongst Federal Reserve members.

One of the primary takeaways was that members were divided over the question of further rate hikes. While most Fed officials were in favor of an increase in the terminal interest rate (Fed funds rate), some members believe that further hikes might take rates too high.

According to an article in The Wall Street Journal, “Minutes of the July policy meeting, released Wednesday, said some officials thought the risks of raising rates too much versus too little “had become more two-sided, and it was important that the committee’s decisions balance the risk of an inadvertent overtightening of policy against the cost of an insufficient tightening.”

A divided Federal Reserve reveals mixed messaging

Numerous mixed messages were revealed by Fed members. Although “most” senior voting members were in favor of a further increase in interest rates, there were a few notable dissenters to that view. Philadelphia Fed President Patrick Harker, a voting member said, “I believe we may be at the point where we can be patient and hold rates steady.”

In addition, presidents of both Boston and Atlanta federal banks revealed that they were in favor of a longer pause. Last week Susan Collins, President of the Boston Federal Reserve Bank said, “The risks of doing too much have increased and are much closer to balance, relative to the risks of not doing enough.”

Other Fed members expressed apprehension about the real possibility that underlying price pressures may prove to be more persistent as a direct result of a tight labor market. A tight labor market would allow workers to bargain for higher pay and that would make it more difficult to reduce inflationary pressures.

Also in an interview last week, Tom Barkin, President of the Federal Reserve Bank of Richmond expressed uncertainty that inflation could be moved to the Fed’s 2% target, “If the economy is softening as you would expect. If it’s not, then I do wonder about the policy path.”

Yesterday, Neel Kashkari, President of the Minneapolis Federal Reserve Bank reinforced the idea of more rate hikes when he said that the Fed “Is not ready to declare victory in the battle over high inflation.”

Overall, there is a consensus that the Federal Reserve will not raise rates at the next FOMC meeting in September. At the same time, according to the CME’s FedWatch tool, there is a one in three chance that the Fed will implement one more 0.25% rate hike this year. Since interest rate hikes this year have resulted in bearish market sentiment taking gold lower, today’s minutes will most likely continue that trend.

As of 4:30 PM EDT, gold futures basis the most active December contract is currently down $11.50 or 0.59% and fixed at $1923.70. Today’s price decline was based on a mixture of dollar strength and traders bidding the precious yellow metal lower. Currently, the dollar (DX) is up 0.26% and the index is fixed at 103.36.

By

Gary Wagner

Contributing to kitco.com

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