Gold declines by over $27 as hope diminishes of a rate cut this year

Gold spot and futures both declined by over 1% today as traders reacted to dollar strength and stronger yields on U.S. Treasuries. But that explanation lacks the complete backdrop to the multiple reasons why gold is trading under pressure today.

Market participants are reacting with extreme caution before the release of Friday's nonfarm payroll jobs report. Current forecasts are predicting that the report will reveal that 200,000 new jobs were added in July after increasing by 209,000 in June.

In a report today by Reuters, U.S. job openings hit more than a two-year low.

"U.S. job openings fell to the lowest level in more than two years in June but remained at levels consistent with tight labor market conditions, which could spur the Federal Reserve to keep interest rates elevated for some time. Labor market resilience was underscored by the third straight monthly decline in layoffs as employers hoard workers after difficulties finding labor during the COVID-19 pandemic."

This week's jobs report could be an underlying factor enticing some traders and investors to take profits ahead of the report.

A momentary pause from the focus on the Federal Reserve

Although last week's FOMC meeting statements and comments by Chairman Powell left many investors, analysts, and economists with more questions than answers regarding the future guidance as it pertains to the monetary policy of the Federal Reserve, it is widely believed that next month's FOMC meeting will not contain another rate hike. The most current information provided by the CME's Fedwatch tool predicts that there is an 82.5% probability that rates will remain unchanged after the Fed raised rates by ¼% at the last FOMC meeting.

While it is true that the Fed remained guarded about revealing too much information about their plans, Chairman Powell's statements were carefully worded but direct and to the point such as, "It's not an environment where we want to provide a lot of forward guidance".

As of 4:32 PM EDT, gold futures basis the most active December contract is currently trading down $27.40 or -1.36% and fixed at $1981.80. This after breaking a key psychological price point trading to an intraday high today of $2004.40, $0.20 above this morning's opening price. Gold is currently trading near $1978.30 today's intraday low.

While dollar strength is partially responsible for gold's strong selloff today it was certainly not the major component moving gold lower. The dollar is currently up 0.38% and the index is fixed at 102.015. Silver futures basis most active September contract declined by $0.54 and is currently fixed at $24.435

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and silver

Tim Moseley

Gold, silver gain on chart-based buying

Gold and silver prices are higher in midday U.S. trading Monday. Amid a lack of fresh fundamental news to drive market prices, the precious metals traders are focusing on the improved near-term chart postures in gold and silver and doing some technically based buying. December gold was last up $10.00 at $2,009.80 and September silver was up $0.46 at $24.96.

Gold and silver bulls this week may also be focusing on recent upbeat U.S. and European Union economic data that may suggest better consumer and commercial demand for metals in the coming months. However, downbeat economic data coming out of China recently will keep precious metals traders from getting too bulled up.

Asian and European stock markets were mixed to higher in overnight trading. U.S. stock indexes are slightly higher at midday in quieter summertime trading. Trading may remain more subdued this week, ahead of the U.S. data point of the week on Friday: the U.S. employment situation report for July. The key non-farm payrolls number is expected to come in at up 200,000 jobs, compared to a rise of 209,000 in the June repot.

  Silver prices struggling as market ignores robust economic data

The key outside markets today see the U.S. dollar index slightly up. Meantime, Nymex crude oil prices are up and trading around $81.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.98%.

Technically, December gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,050.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,939.20. First resistance is seen at last week’s high of $2,022.10 and then at the July high of $2,028.60. First support is seen at $2,000.00 and then at today’s low of $1,986.70. Wyckoff's Market Rating: 5.5

September silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.00. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at last week’s high of $25.325 and then at the July high of $25.475. Next support is seen at $24.50 and then at last week’s low of $24.18. Wyckoff's Market Rating: 6.0.

September N.Y. copper closed up 790 points at 400.55 cents today. Prices closed near the session high today and hit a 13-week high. The copper bulls have the overall near-term technical advantage and gained more power today. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the April high of 418.25 cents. The next downside price objective for the bears is closing prices below solid technical support at 378.00 cents. First resistance is seen at today’s high of 401.55 cents and then at 405.00 cents. First support is seen at 385.00 cents and then at 390.00 cents. Wyckoff's Market Rating: 6.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold investors will be watching U.S. data like a hawk this week, anticipating a weakening trend

Gold market will be hungry for information that will help provide some clarity to the Federal Reserve's open-ended monetary policy stance with disappointing economic data supporting higher prices.

While analysts are not expecting a major breakout in gold in the near term, some have said that the bias is to the upside as the Federal Reserve's monetary policy stance is expected to weaken the economy. Heading into the weekend, the gold market has pushed back above $1,950 an ounce, even as it sees a modest loss. August gold futures last traded at $1,958.80 an ounce, down 0.3% from last Friday.

In comparison, silver has seen a bigger struggle this past week as prices have managed to hold support above $24.25 an ounce. September Silver futures last traded at $24.45 an ounce, down 1.6% from last week.

Kevin Grady, president of Phoenix Futures and Options, said he expects gold prices to test the top end of its current range in reaction to softer data. He added that while a definitive softening trend could propel gold higher, even the slightest sign of weakness will be price supportive.

"The market is desperate for any type of clarity. Right now, the Federal Reserve is going to maintain their hawkish bias because they want to see inflation go down further, so any soft data that will shift that bias will be good for gold," he said.

While there are a variety of economic reports that investors will be able to sink their teeth into, the main event will be on Friday with the release of the U.S. Labor Department's July nonfarm payrolls report.

Lukman Otunuga, manager of market analysis at FXTM, said that because of the Federal Reserve's data-dependent stance, gold will be particularly sensitive to the employment numbers.

The Federal Reserve has said it would like to see some cooling in the labor market as a condition for controlling inflation. In the last report, the Labor Department said the economy created 209,000 jobs in June. This was the first time the employment data missed expectations since May 2022.

"Every US data point moving forward will act as a key piece that will determine whether the Fed raises rates one final time in 2023 or not. Given how markets are only pricing in an 18% probability of rate hike in September, with this jumping to only 37% by November, gold bulls remain in a comfortable position," Otunuga said. "The path of least resistance for gold points north with a disappointing jobs report next week potentially opening a path back towards $1985. A solid breakout above this point could open the doors towards the psychological $2000 level."

Some analysts have noted that along with benefiting from an inevitable shift in monetary policy, which will weaken the U.S. dollar, weaker economic data will also raise fears of a potential recession, supporting gold's safe-haven allure.

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Silver prices struggling as market ignores robust economic data

"Right now, central banks have the fraught responsibility of striking the balance just right on interest rates – investors will be looking for signs by which to judge the success or otherwise of the banks' actions," said Stuart O'Reilly, Market Insight Analyst at the Royal Mint, in a statement to Kitco News. "Persistently high inflation or signs that a major economy could tip into recession might lead some investors to increase their allocations to gold as a traditional ‘safe haven' – signs of economic recovery and falling inflation may have the opposite effect. As central banks navigate this challenging period, the jury is out on how gold will fare in the months ahead as global economies find out whether recent interest rate rises have gone too far, too quick."

Bob Haberkorn, senior commodities broker with RJO Futures, said he doesn't expect to see a significant breakdown in economic data next week. However, he added that the reports should start highlighting a slowing pattern.

"We are starting to see inflation turning in the right direction because interest rates are starting to bite into the economy," he said. "When you look at gold, it's in a great place. It is holding above $1,950 an ounce even after the Fed has raised interest rates above 5%. The minute the Federal Reserve indicates it's done tightening, we will see gold prices much higher."

Next week's data:

Tuesday: U.S. ISM manufacturing PMI, JOLTS job report

Wednesday: U.S. ADP nonfarm employment

Thursday: Bank of England monetary policy decision, jobless claims, ISM services PMI

Friday: U.S. nonfarm payrolls

By

Neils Christensen

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold prices push back above $1,950 as U.S. PCE inflation continues to cool rising 0.2% in June

Gold prices have pushed back above the critical psychologically important $1,950 level as U.S. inflation drops in line with expectations.

Friday, the U.S. Department of Commerce said its core Personal Consumption Expenditures price index increased 0.2% last month, compared to May's increase of 0.3%. The inflation rose in line with economists' expectations.

Inflation in the last 12 months rose 4.1%, down sharply from June's 4.6% increase. Annual inflation also came in a tick cooler than expected, with economists looking for a 4.2% rise. Looking at the broader trend, inflation remains stubbornly high, roughly double the Federal Reserve's target of 2%.

Meanwhile, headline inflation for the last 12 months rose 3.0%, compared to May's increase of 3.8%.

Although inflation remains stubbornly high, some analysts have noted that it continues to fall in the right direction, giving the Federal Reserve room to leave interest rates unchanged in September. A potential halt to the central bank's tightening continues to support gold prices.

August gold futures last traded at $1,955.90 an ounce, up 0.55% on the day.

Analysts note that growing cracks in consumption also support gold prices. The report noted that personal income is not keeping up with consumption.

Personal income increased 0.3% in June, compared to May's revised increase of 0.5%. The data missed expectations as economists looked for a 0.5% increase.

Meanwhile, consumers appear to be dipping into their credit to meet their shopping needs. The report said that consumption increased by 0.5% last month, compared to May's increase of 0.2%. Spending came in higher than expected, with consensus estimates calling for a 0.4% increase.

By

Neils Christensen

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold, silver slump after strong U.S. data rallies greenback

Gold prices are solidly lower and hit a two-week low in midday U.S. trading Thursday. Silver is down sharply, too. Modest overnight gains in both metals were erased after the release of upbeat U.S. economic data this morning that beat market expectations. August gold was last down $27.10 at $1,943.00 and September silver was down $0.645 at $24.325.

U.S. economic data Thursday morning fell squarely into the camp of the monetary policy hawks, suggesting at least one more interest rate hike may be necessary to further cool the U.S. economy and choke off problematic price inflation. The first estimate of second-quarter U.S. gross domestic product came in at up 2.4%, year-on-year, which beat market expectations for a rise of 2.0%. The internals of the GDP report were also solid. Meantime, U.S. durable goods order were reported up 4.7% in June versus expectations for a 1.5% gain. Also, weekly U.S. jobless claims came in lower than expected. The data sharply boosted the U.S. dollar index and pushed U.S. Treasury yields up—both of which are daily bearish elements for the precious metals markets.

The marketplace Thursday pretty much digested Wednesday afternoon's 25 basis-point interest rate increase from the Federal Reserve. Fed Chair Powell's remarks at his press conference were deemed not too hawkish and not too dovish and the markets showed no big reactions. Some Fed watchers are thinking the central bank is now done with its rate-hike cycle, while others think the Fed will do one more rate increase in November.

Asian and European stock markets were mostly higher in overnight trading. U.S. stock indexes are higher at midday. The indexes are at or near their highs for the year amid a summertime rally.

In other news, the European Central Bank slightly raised its main interest rate at today's monetary policy meeting, as expected.

  ECB's data-dependent stance weakens euro against U.S. dollar, pushing gold prices to session lows

The key outside markets today see the U.S. dollar index sharply higher and posting its biggest daily gain in months. Meantime, Nymex crude oil prices are firmer and trading around $80.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching around 3.9%.

Technically, August gold futures prices scored a bearish outside day down today and hit a two-week low. Bulls have lost their slight overall near-term technical advantage. A three-week-old uptrend on the daily bar chart has been negated. 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 June low of $1,900.60. First resistance is seen at $1,960.00 and then at $1,975.00. First support is seen at $1,937.50 and then at $1,925.00. Wyckoff's Market Rating: 5.0.

September silver futures prices scored a bearish “outside day” down today. The silver bulls have the slight overall near-term technical advantage but faded today. A four-week-old price uptrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $26.475. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $25.00 and then at today's high of $25.325. Next support is seen at today's low of $24.18 and then at $24.00. Wyckoff's Market Rating: 5.5.

September N.Y. copper closed down 290 points at 387.30 cents today. Prices closed nearer the session low today and scored a bearish outside day down. The copper bulls have the slight overall near-term technical advantage. 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 368.30 cents. First resistance is seen at the July high of 395.40 cents and then at 396.40 cents. First support is seen at Tuesday's low of 384.45 cents and then at last week's low of 378.10 cents. Wyckoff's Market Rating: 5.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold shows little reaction to widely expected 0.25% Fed rate hike

Gold prices are moderately higher in afternoon U.S. trading Wednesday and have shown little initial reaction to the U.S. central bank raising its main interest rate by a small amount, which was fully expected by the marketplace. August gold was last up $8.70 at $1,972.40 and September silver was up $0.181 at $25.005.

The just-released U.S. data point of the week, if not the month, saw the Federal Reserve's Open Market Committee (FOMC) raise the Fed funds rate by 25 basis points, to a range of $5.25% to 5.50% and at a 22-year high. The FOMC statement said U.S. economy is growing moderately but job gains have been "robust." Markets showed very little initial reaction. However, the marketplace will closely scrutinize Fed Chair Powell's remarks at his press conference for clues on the trajectory of Fed monetary policy in the coming months. Powell's press conference may be the bigger markets-mover this afternoon. Traders want to see if Powell continues to lean hawkish on U.S. monetary policy, or if he eases up a bit given the tamer U.S. inflation readings recently.

U.S. stock indexes are mixed in afternoon trading

 U.S. dollar to weaken as BOE and ECB play catch-up with the Fed, but it will remain the world's reserve currency – Invesco's Hooper

The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are weaker and trading around $79.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.887% and moved very little after the Fed rate increase and FOMC statement.

Technically, August gold futures bulls have the slight overall near-term technical advantage but need to show fresh power soon to keep it. Prices are in a three-week-old 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 June low of $1,900.60. First resistance is seen at today's high of $1,976.30 and then at the July high of $1,989.80. First support is seen at today's low of $1,963.20 and then at this week's low of $1,951.60. Wyckoff's Market Rating: 5.5

September silver futures bulls have the overall near-term technical advantage. A four-week-old price uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.00. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the July high of $25.475 and then at $26.00. Next support is seen at this week's low of $24.425 and then at $24.00. Wyckoff's Market Rating: 6.5.

September N.Y. copper closed down 155 points at 390.00 cents today. Prices closed near mid-range today. The copper bulls have the slight overall near-term technical advantage. 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 368.30 cents. First resistance is seen at the July high of 395.40 cents and then at 396.40 cents. First support is seen at Tuesday's low of 384.45 cents and then at last week's low of 378.10 cents. Wyckoff's Market Rating: 5.5.

By

Jim Wyckoff

For Kitco News

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.

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Gold, silver weaker as USDX continues its rebound

Gold and silver prices are moderately lower in midday U.S. trading Monday, pressured by the U.S. dollar index continuing its recovery after hitting a 15-month low last week. Focus of the marketplace is on a key central bank decision at mid-week. August gold was last down $4.50 at $1,962.00 and September silver was down $0.245 at $24.61.

The U.S. data point of the week is the Federal Reserve's Open Market Committee (FOMC) meeting that begins Tuesday and ends Wednesday afternoon with a statement. Most market watchers believe the Fed will raise the main U.S. rate, the Fed funds rate, by 0.25%. As usual, the marketplace will closely scrutinize the FOMC statement and Fed Chair Powell's remarks at his press conference for clues on the trajectory of Fed monetary policy in the coming months.

A Barron's news headline today reads: “Tech earnings, Fed rate call, inflation data—expect crucial answers this week."

Asian and European stock markets were mixed in quieter overnight trading. U.S. stock indexes are mixed at midday. The U.S. stock indexes are hovering near their highs for the year.

Kitco daily macro-economic/business digest – July 24

The key outside markets today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are higher and trading around $79.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.837%.

Technically, August gold futures bulls have the slight overall near-term technical advantage but need to show fresh power soon to keep it. Prices are in a three-week-old 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 June low of $1,900.60. First resistance is seen at today's high of $1,969.80 and then at Friday's high of $1,975.90. First support is seen at last week's low of $1,958.10 and then at $1,950.00. Wyckoff's Market Rating: 5.5.

September silver futures bulls have the overall near-term technical advantage. A four-week-old price uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.00. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at today's high of $24.89 and then at $25.00. Next support is seen at today's low of $24.425 and then at $24.00. Wyckoff's Market Rating: 6.0.

September N.Y. copper closed up 310 points at 384.90 cents today. Prices closed near the session high today. The copper bulls and bears are on a level overall near-term technical playing field amid choppy trading. 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 368.30 cents. First resistance is seen at 388.85 cents and then at 396.40 cents. First support is seen at last week's low of 378.10 cents and then at 374.25 cents. Wyckoff's Market Rating: 5.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

Eyes on the Fed, the ECB, and the BOJ

Next week, markets will be digesting the Federal Reserve, the European Central Bank, and the Bank of Japan's monetary policy statements.

There was a lot of optimism this week that the Fed was close to being done with its tightening cycle despite Powell's promises of at least two more rate hikes this year.

"The Fed is almost certain to hike its policy rate by 25bp to between 5.25% and 5.50% at next week's FOMC meeting, but we increasingly believe that will prove to be the peak," said Capital Economics chief North America economist Paul Ashworth.

Behind this optimism was June's inflation data, which showed inflation sharply cooling in the U.S. The consumer price index rose 3% last month — the slowest pace in over two years. And the core CPI measure, which excludes volatile food and energy prices, was up 4.8%, marking the slowest advance since 2021.

"Despite the 'higher for longer' rhetoric from officials, a more marked decline in core inflation and easing in labor market conditions in the second half of this year will eventually persuade the Fed to pivot and cut rates aggressively next year," Ashworth noted Friday.

For next week's FOMC statement, analysts will pay close attention to any changes to the inflation narrative and how strongly the Fed maintains its tightening bias.

"In his press conference, Chair Jerome Powell may even go as far as to stress that additional rate hikes this year are still necessary," Ashworth said. "Markets are unconvinced, however, and broadly agree with our view that the Fed is almost done tightening."

Before the Fed can signal that it's done raising rates, there will be a period of uncertainty and data dependence, said TD Securities senior commodity strategist Ryan McKay. And for gold, it could mean a pause before the next move higher.

"Speculators have been unwilling to fully buy into the bullish gold narrative," McKay said Friday. "Indeed, discretionary traders and investors have thus far remained on the sidelines for now. But, this also offers the potential for additional upside should Fed expectations turn more dovish, and this cohort begins deploying their dry-powder."

The ECB is also expected to raise rates by 25 basis points on Thursday, with analysts paying close attention to ECB President Christine Lagarde's comments. Meanwhile, the BOJ is projected to keep rates steady and its yield curve control unchanged.

"It seems that while the BOJ stands pat, the other major central banks are tightening, and that should continue to drive that interest rate differential trade," Moya pointed out.

Data next week

Tuesday: U.S. CB consumer confidence

Wednesday: Fed decision, U.S. new home sales,

Thursday: ECB decision, U.S. jobless claims, U.S. durable goods orders, U.S. GDP Q2, U.S. pending home sales

Friday: BOJ decision, U.S. PCE Price Index

By

Anna Golubova

For Kitco News

Time to Buy Gold and silver

Tim Moseley