Gold sees mild profit-taking after tame U.S. CPI

Gold prices are near steady in midday U.S. trading Wednesday after selling off a bit right after the release of a tame U.S. inflation report. Profit taking from the shorter-term futures traders was featured. Silver prices are higher. December gold was last up $1.00 at $2,544.10 and December silver was up $0.316 at $28.935.

The U.S. data point of the week is Wednesday’s consumer price index for August, which came in at up 2.5% annually, compared to forecasts for up 2.6%, year-on-year, and follows the 2.9% rise seen in the July report. The “core” CPI (excluding food and energy) for August was up 3.2% annually, right in line with forecasts, and compares to a rise of 3.2% in the July report. The U.S. producer price index report is out Thursday.

It’s likely some of the selling pressure in gold after the CPI report was a “buy the rumor, sell the fact” scenario, whereby shorter-term futures traders expected a tame CPI report and established long positions beforehand, and then took profits after the tame CPI print.

U.S. stock indexes are solidly lower today. Some analysts are saying the weaker U.S. stock indexes are due in part to perceptions U.S. Vice President Kamala Harris beat former President Donald Trump in their debate Tuesday night.

The key outside markets today see the U.S. dollar index slightly up. Nymex crude oil prices are firmer on some short covering after hitting a 16-month low Tuesday, trading around $67.00 a barrel. The benchmark 10-year U.S. Treasury note yield is on the decline and is presently fetching 3.631%.

Technically, December gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,570.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,475.00. First resistance is seen at $2,550.00 and then at today’s high of $2,558.00. First support is seen at this week’s low of $2,514.20 and then at the September low of $2,502.70. Wyckoff's Market Rating: 8.0.

December silver futures bulls and bears are on a level overall near-term technical playing field. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at the August low of $26.885. First resistance is seen at the overnight high of $29.215 and then at $29.55. Next support is seen at Tuesday’s low of $28.36 and then at $28.00. Wyckoff's Market Rating: 5.0.

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

Tim Moseley

Gold Price News: Gold on Hold

Gold traded down at the end of last week faced with a somewhat firmer dollar and a US August Non-Farm Payroll print that combined both weaker than expected hiring and firmer wages. Rates markets have concluded that this might not only give the Fed pause for thought but that this would also be a policy error. While expectations of total Fed easing until the end of the year have fallen from c. 125bp to c. 115bp, they have also increased from c 240bps to c. 280bps by June 2025. This is ultimately bullish for gold but weakens short-term fundamental support. Gold starts this week trading at $2491/toz.

KAU/USD 1-hourly Kinesis Money

The CFTC Commitments of Traders (CoT) report published late on Friday saw gold speculators only slightly trim their net long gold futures positions over the week from the 52-month high seen at the end of August. However, data from physical gold ETFs/ETCs suggests that the first week of September saw net outflows, with European funds leading withdrawals. Friday also saw the People’s Bank of China (PBoC) reporting unchanged reserves at the end of August, implying a fourth straight month of zero net purchases. Overall, the gold flow and positioning picture seems rather less bullish – perhaps inevitable given elevated prices.

Technically, gold’s inability last week to successfully challenge descending minor oblique and major horizontal resistance confirms the overall picture of consolidation seen since 19 August and foreshadowed by unfavorable MACD and RSI indicators. Today these resistance levels appear at $2520/toz (descending minor oblique) and $2525/toz (major horizontal).

To the downside, the rising 20-day Simple Moving Average appears to have provided support, and this currently lies at $2498/toz. However, this seems very vulnerable given its proximity and poor underlying momentum. More dependable support is seen at $2490/toz being the confluence of major ascending oblique support and the 23.61% Fibonacci Retracement of the 25 July – 20 August uptrend.

It’s a relatively slow start to the events calendar this week, although August China inflation today and European Commission Summer Economic Forecasts on 10 September should be of interest to gold investors.

Time to Buy Gold and Silver

Tim Moseley

Gold Price News: Gold Eyes US Employment Data

Currently trading at $2519/toz, gold has enjoyed a modest bounce amidst febrile investor risk appetite, a continued easing of rates markets and further weakening of the US dollar. Initial indications are that net flows into physical ETFs/ETCs have held up well thus far this week. However, these flows can be highly volatile and are only loosely correlated to futures positioning, the latter of which will be updated after today’s European close.

All eyes now turn towards the slew of US August employment data released later today. This is arguably the single most significant data point ahead of the Fed’s rate decision 18 September. After the market havoc wreaked by the previous month’s weak print and historic revisions, expectations are for a 160k rise in Non-Farm Payrolls for August.

Gold’s most recent price action has seen it move back above the 23.61% Fibonacci retracement of the 25 July- 20 August uptrend at $2490/toz, ascending oblique major support at $2493/toz and a steeply ascending 20-day Simple Moving Average at $2494/toz. An immediate breakdown seems to have been avoided.

However, while gold now appears to have breached weak descending oblique resistance at $2517/toz, some caution should be exercised. Momentum indicators remain weak, and we need to see a sustained move above major horizontal resistance at $2520/toz before we can be confident of a positive resolution to a broader consolidation. Should that occur, there is weak ascending oblique resistance at $2538/toz and an initial breakout target of $2543/toz.

If the current tentative proximate support from Fibonacci, oblique support and moving averages be decisively compromised at $2493/toz, then the next major support levels present as the converging ascending lower bound of a 26 June/17 July/26 July channel and the rising 50-day Simple Moving average, both currently around $2439/toz.

Significant events for gold investors going forward include US August Employment data and speeches from Fed Board Member Waller and New York Fed President Williams – both FOMC voters and centrists – all on 6 September.

Mike Ingram

Time to Buy Gold and Silver

Tim Moseley

Gold shines as stocks and cryptos slide, traders bet on 4 rate cuts in 2024

Volatility extended for another day on Thursday, wiping the crypto gains recorded on Wednesday from the books and treating stock traders to whipsaws and afternoon downturns while gold shined bright.

“Yesterday’s sharp 4% rally to $58,500 proved short-lived as Bitcoin (BTC) quickly retraced to $56,400,” noted analysts at Secure Digital Markets. “Despite persistent selling pressure, the $56,000 level held firm as support.”

BTC/USD Chart by TradingView

“Realized volatility appears to be decreasing, and the spread between 30-day options at-the-money implied volatility is narrowing,” they added. “Historically, this suggests a significant price movement could occur within the next two to three weeks.”

At the time of writing, Bitcoin trades at $56,058, a decrease of 3.48% on the 24-hour chart.

Following Wednesday’s normalization of the two- and 10-year Treasury yield curve, Thursday’s jobs report – with private employers in the US posting their smallest monthly hiring growth since January 2021 – further stoked fears that the Fed waited too long to cut interest rates and has pushed the economy to the brink of recession.

As a result, the Kalshi prediction market shows traders “are now pricing in 4 rate cuts in 2024, or 100 bps of cuts, for the first time since the August 5th crash,” analysts at The Kobeissi Letter reported.

“Over the last 2 days, prediction markets have priced in an additional rate cut in 2024,” they said. “This comes as labor market data has deteriorated around the board. It's clear that unemployment data is quickly becoming the primary driver of Fed policy, along with inflation. Tomorrow's jobs report is huge.”

“Tomorrow's jobs report will be the key factor in determining if a 50 bps rate cut is coming this month,” the analysts said. “If the jobs report is in-line with expectations, or better, we believe a 25 bps rate cut is coming. Interest rate expectations appear to be shifting too dovish again.”

According to John Fath, managing partner at BTG Pactual Asset Management US LLC, “The Fed may need to act sooner, possibly with a 50 basis-point cut. If they do, the yield curve should fully disinvert.

Analysts at Secure Digital Markets noted that “Interest rate swaps indicate that traders have fully priced in a 25 basis-point cut at the upcoming Fed meeting, with a 30% chance of a more substantial half-point reduction. Overall, markets are expecting 110 basis points of rate cuts across the three remaining policy meetings this year.”

And X user David Sommers noted that while the 2m10y yield curve has turned positive, it would take at least six rate cuts to get the 3m10y yield curve back to neutral.

For now, all eyes are on Friday’s August jobs report, which will be one of the last bits of major economic news for the market and Fed to digest before the FOMC meeting on Sept. 18.

“This market is sort of showing restless qualities in the sense that it can't really figure out if good news is good news or bad news is bad news, and we continue to search for direction on all of this macro data,” Liz Young Thomas, head of investment strategy at SoFi, told Yahoo Finance. “I think if tomorrow's data comes in cool or soft compared to expectations, there will be a negative reaction in the market and likely further selling in a lot of those mega-cap names that have led us up to this point.”

At the close of markets, the S&P and Dow finished in the red, down 0.30% and 0.54%, respectively, while the Nasdaq gained 0.25%.

And while stocks and cryptos trended lower, gold returned to its winning ways, with spot gold up 0.84% at the time of writing and trading at $2,516.20 per ounce.

Bitcoin bulls could soon push higher

According to TradingView analyst TradingShot, Bitcoin has been under intense bearish pressure since early last week, but history suggests that it could soon restart its uptrend higher.

“Bitcoin may be under a quite strong short-term correction since the August 27 rejection on the 1D MA200 (orange trend-line), but based on this 2-year Cyclical Chart, it has high chances of finding Support again and starting a rally similar to the two it had over this time span,” TradingShot said in an update on Thursday.

“Let's start with the long-term outlook, which remained bullish after BTC hit and rebounded (August 06) on the 1W MA50 (red trend-line), its long-term Support since March 13, 2023,” he said. “The formation of the 1D Death Cross may have offset some of this optimism, but on this cyclical pattern, it is not a bearish sign as last time it emerged (September 11, 2023), Bitcoin formed its new bottom at the time.”

“In fact, it was inside a short-term (dotted) Channel Up, the vessel pattern, which took the price from the bottom to a new +100% rally,” he added. “The key parameter was the fact that the 1D MA200 broke and later was retested and held as Support. This is most likely why we are having the recent pull-back – because even though the price broke above the 1D MA200, it failed to hold.”
 

TradingShot noted that “The 1D RSI also prints a similar pattern to the previous two bottom fractals on this chart, and it appears that relative to those past sequences, we are currently after the first RSI peak and pull-back. On the price action, we illustrate the relative position of now and then with circles.”

“The Sine Waves [are] perhaps the most efficient depiction of the price cyclicality, clearly displaying where Bitcoin should be bought and where sold,” he concluded. “At the moment, we are just past the most optimal Buy Entry, so the opportunity still exists but may not last for long! Another +100% rise from August's recent bottom will see Bitcoin test the psychological benchmark of 100k.”

In the near term, MN Trading founder Michaël van de Poppe highlighted $56,000 and $58,200 as the support and resistance levels to watch for indications on whether the next move for Bitcoin will be a breakout higher or a breakdown lower.

Time to Buy Gold and Silver

Tim Moseley

Gold Price News: Gold Runs Out of Steam

While gold has largely been in consolidation mode since 19 August, price action this week is starting to suggest a retracement with the metal now trading at c. $2486/toz. This has come against a fundamental backdrop that has little changed over recent days with a slight easing of US rates and some firming of the US dollar, creating very little net impact for non-yielding dollar-denominated assets such as gold and silver.

gold price kau on kinesis exchange

Kinesis gold (KAU) price – $/g – on Kinesis Exchange

Consequently, it seems more likely that gold’s current weakness is a function of both recent performance – up 2.3% in August amid broader market turmoil – and an absence of further clear catalysts prompting profit-taking. Certainly, multiple geopolitical flashpoints remain, but timing remains a known unknown. So, are we seeing ‘stale bulls’ remove support?

The question is pertinent. We noted on Monday that the most recent CFTC Commitments of Traders (CoT) report saw speculative gold futures net longs at a 52-month high. It certainly remains to be seen how resilient this elevated level of speculative interest remains during this period of neutral fundamental support and recent depressed price momentum

Technically, gold is currently testing both the 20-day Simple Moving Average and the 23.61% Fibonacci retracement of the 25 July- 20 August uptrend at $2490/toz. Given that the standard MACD line pushed below the signal line on Monday and has descended further since, there is a reasonable probability of a further downside break. Should this occur, then the next likely levels of support are at the 38.3% Fibonacci retracement level of $2464/toz and descending oblique major support at $2445/toz.

To the upside, we see ascending major oblique resistance at $2510/toz and major horizontal resistance at $2513/toz. The initial breakout target of $2543/toz remains.

Significant events for gold investors going forward include the Bank of Canada rate decision (with high probability of a 0.25% cut) on 4 September and August US ISM Servies PMI on 5 September.

Time to Buy Gold and Silver

Tim Moseley

Gold Versus Savings Accounts: How To Safeguard From Inflation

Key takeaways:

Gold can protect investors from the devaluating effects of inflation

Savings accounts deliver returns only if interest rates are higher than inflation

Digital gold can offer the best of both worlds: underlying appreciation plus yield

Choosing the right investment

When choosing how to invest money, an investor may want to consider several factors including: purpose, individual goals, age, expected period of investment, attitude to risk, personal beliefs, and whether urgent access to capital may be required.

Investors who are within the middle-aged bracket may have already built significant wealth and be looking for ways to balance the risks associated with holding wealth in assets other than property or a pension. For example, those investing in higher-risk assets such as equities may want to balance or hedge those risks by holding some of their capital in safer investments such as cash, bonds, precious metals or other assets.

But even within the category of safe investments, different attributes may affect an investor’s choice.

Two obvious safe investment options are holding cash in a savings account and investing in gold, as neither of these approaches to storing value are at risk of catastrophic losses that can and do occur in higher-risk investment assets such as stock markets.

Investing in gold

There are several ways to invest in gold. Perhaps the most obvious is purchasing physical metal such as bullion-grade coins or bars and storing them in a safe location, be it domestic or via a third party. But investors can also gain exposure to gold through other forms of investment, such as exchange-traded funds (ETFs) or buying shares in gold mining companies, either directly or as part of a managed fund, for example.

Physical gold has been recognised as a store of value for thousands of years across multiple continents, and this is due to several of gold’s fundamental attributes:

Scarcity: total global above-ground supply of gold is estimated at around 212,000 tonnes, according to the World Gold Council’s report which can be found here. Gold’s available supply cannot easily be increased and unlike currency, governments cannot print more of it

Resilience: gold is near indestructible, with natural resistance to oxidation and corrosion

Beauty: gold’s unfading warmth and lustre has made it highly sought after for thousands of years as a store of wealth

Portability: gold’s high value-to-volume ratio makes it an extremely efficient and portable store of value

Flexibility: gold’s malleability and ductility, combined with its rarity, have made it ideal as a metal for jewellery, making it a symbol of wealth and status

This unique combination of attributes has made gold a reliable store of value for thousands of years, meaning the yellow metal has transcended cultural and linguistic barriers, becoming recognised as money in almost all countries.

For these reasons, gold is relevant to investors seeking to diversify their investments and to build in stability as a cornerstone of their portfolio.

What are investment savings accounts?

Investment savings accounts are accounts that allow cash to be held, earning interest over time. This can include high-yield savings accounts, which earn a higher level of interest than standard savings accounts, or money market accounts, which can offer a combination of features normally associated with savings and checking accounts.

Investment savings accounts typically provide a rate of return that is similar to or linked to the underlying base rate set by a central bank. In recent years in the UK, banks have offered rates of 0.5% to around 4% for standard savings accounts, with the higher end of the range often linked to a fixed period of investment in which the saver agrees not to withdraw funds, or may only make limited withdrawals. Individual Savings Accounts (ISAs) offer a similar product while exempting the holder from paying tax on the earnings, up to an annual deposit limit of £20,000 per person.

These accounts are therefore appropriate for experienced investors seeking low-risk, steady returns.

Comparing gold and investment savings accounts

Throughout history, gold has been very effective at holding its value, and the nominal price of gold has tended to rise as governments debase their fiat currencies by increasing the total money supply. This means that as the value of currency slowly erodes, gold maintains its purchasing power.

Gold traded in a range of approximately $600 to $800 an ounce in 2007. However, as governments deployed quantitative easing after the Global Financial Crisis of 2008- effectively creating money to deflate debt- gold prices began to rise, eventually reaching over $2,500 an ounce by August 2024. That’s not to say gold’s trajectory was one way: the yellow metal fell from around $1,800 an ounce in 2011 to below $1,100 an ounce in 2015. However, the long-term trend for gold has been positive as inflation continues to erode the purchasing power of currencies.

Savings accounts, on the other hand, may not offer the same spectacular returns that gold has managed in some years, but they do provide a steady and reliable return that may suit an investor wanting predictability, a low-risk profile and instant access to their cash.

However, new systems have emerged which offer the best of both worlds: the reliable store of wealth offered by physical ownership of precious metals and the returns for holding them in a platform account. Kinesis is an online gold trading platform which offers precious metals trading and a yield on gold and silver held in an investor’s platform account. Find out how investors can access the appreciating value of precious metals and a yield on physical gold and silver here.

Future growth

Gold certainly has the potential to reach new highs in the future. Factors affecting gold’s future performance include scarcity, central bank demand, investor demand, central bank interest rates, economic conditions, stock market performance and declining faith in fiat currencies. With growth in emerging markets and an expanding world population, there is likely to be more money chasing a finite supply of gold – a factor that certainly could propel the yellow metal to as-yet-unseen highs.

Investors can access physical gold fairly easily through a specialist dealer, requiring little more than personal details and proof of identification, while access to ETFs would normally require the opening of an account with an exchange and/or a broker, and payment of fees, depending on the provider.

Digital gold

‘Digital gold’ trading, or ‘gold-backed digital currency’ options are also available, offering a simple and cost-effective way to own physical gold through an online account that includes the physical storage of an equivalent volume of gold in safe, insured and audited vaults.

Savings accounts are arguably easier to open and manage, although some accounts may include certain restrictions on how much capital can be withdrawn in a given year, or how frequently.

Gold can offer protection against inflation, as its value tends to rise as currencies become weaker. Savings accounts can also offer an effective hedge against inflation, but this is only true if the interest rate on the account is greater than the underlying rate of inflation. Inflation can therefore undermine the claims that a savings account provides a return. Once the inflation-adjusted returns are calculated, a cash account may even return a loss in terms of purchasing power.

More details on inflation-adjusted returns can be found here.

Historical Performance

Over the last 10 years, $20,000 in cash held in a savings account at an interest rate of 4% per year would have grown to $29,605, excluding any tax on those returns, and assuming the rate of interest hadn’t changed during the period. In reality, at some points during this period, savings accounts offering 4% would have been hard to find, but the value reflects products on offer at the time of publication.

Ten years ago (mid-August 2014), spot gold prices traded at around $1,310 an ounce. At the time, that same $20,000 would have purchased 15.27 troy ounces of gold. At today’s price of over $2,400 an ounce, that stack of gold would be worth $36,641 – an investment that returned $7,036 more than the same sum held in the cash account. That equates to an annual return of about 6.25% for gold, compared with the cash account at 4% per year.

This example does not prove that gold will always outperform cash, and past performance does not guarantee future returns. But it does demonstrate gold’s ability to maintain its purchasing power in the face of inflation and currency devaluation.

Pros And Cons

To summarise, let’s look at the pros and cons of each type of investment.

Gold’s benefits include its inherent scarcity: governments cannot increase the supply at the stroke of a pen. Gold can also protect an investor from the corrosive effects of inflation, which slowly eat away at the purchasing power of cash.

On the other hand, physical gold does not earn any interest or ‘yield’. Moreover, gold prices can fall in certain situations, particularly during times of high interest rates, which increase the opportunity cost of holding non-yield-bearing assets. Gold prices can also fall during times of stock market strength when equities may provide a more attractive return than physical assets. If stored at home, physical gold can also represent a security risk, while secure storage and insurance offered by a third party carry a cost.

Savings accounts meanwhile, provide a steady and reliable return on investment, and while this may be lower than the returns available from other assets, holding cash is a very low-risk way to build wealth. Setting up a savings account is also a very straightforward process, and easy access to cash is a further advantage.

On the downside, savings accounts can leave the investor exposed to central bank interest rate decisions, which tend to influence the rates offered by savings account providers. At the same time, savings accounts don’t add to the purchasing power of the sum held unless the interest rate on offer is higher than underlying inflation, which can make savings accounts less rewarding than they might appear at face value.

Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.

Time to Buy Gold and Silver

Tim Moseley

Ignore U.S. dollar volatility and focus on gold in euro terms as prices test April highs – MKS’ Nicky Shiels

Ignore U.S. dollar volatility and focus on gold in euro terms as prices test April highs – MKS’ Nicky Shiels teaser image

Gold continues to consolidate around its recent record highs above $2,500 an ounce, but its bullish momentum is at risk as the U.S. dollar appears oversold. However, one market analyst suggests that investors should pay attention to another gold/currency cross to determine the precious metal’s true trend.

In her latest note, Nicky Shiels, Head of Research and Metals Strategy at MKS PAMP, said she is paying more attention to gold against the euro as it trades near record highs. She noted that XAUEUR is a good proxy for “gold-only” demand, as it removes the broader U.S. dollar volatility.

While the U.S. gold futures market is closed Monday for the Labor Day long weekend, spot gold against global currencies continues to trade. Gold is trading in neutral territory against the euro, at €2,259.60 an ounce, roughly unchanged on the day.

Shiels warned that gold is trading at a critical resistance level against the euro, which could set the stage for a broader trend.

“XAUEUR has been sitting comfortably in a broad ~€150 range since the large breakout in March and April this year,” Shiels said in her note. “XAUEUR is extremely toppy in the high €2200s; there have been six failed attempts in the €2270-2280 range since the April peak and all-time high in euro terms at €2287/oz.”

Although gold has been unable to break above its March/April highs, Shiels noted that the precious metal appears to be building a solid base around €2,200 an ounce. She said that even as prices consolidate, gold has maintained an upward bias against the euro. She added that in this environment, investors should look to buy the dips.

“Time is somewhat ripe for a rerating (up or down)—it’s been six months since the March breakout—but we don’t think the top is in yet. There is still ‘oomph’ in the XAUEUR as a proxy for real demand trading strongly, and this isn’t an environment to counter longer-term trends just yet. Sure, there’ll be tactical reversals, but calling the gold top at $2500/€2300 is premature,” she said in the note.

The gold market has been building broad bullish sentiment in the last month as markets prepare for the Federal Reserve to start its highly anticipated easing cycle. Market expectations for a 25-basis-point move and a growing outside chance of a 50-basis-point cut have pushed gold prices above $2,500 an ounce.

Growing expectations for aggressive easing caused a sharp selloff in the U.S. dollar; however, many analysts have said that a 50-basis-point move is unlikely, which could provide some support for the dollar in the near term.

At the same time, gold remains supported in euro terms. Markets expect the European Central Bank to cut interest rates again in September as inflation pressures continue to cool.

Kitco Media

Time to Buy Gold and Silver

Tim Moseley

Wall Street evenly divided between bulls, bears, and the fence, Main Street cooler on gold’s potential gains

After a series of dramatic performances throughout the summer, gold traders were treated to a relatively calm and steady week as, with the exception of a couple of dips, the precious metal traded within a $25 range above $2,500 per ounce.

Spot gold kicked off the week trading just above $2,514 per ounce before rising to $2,525 during the European trading session on Monday. The North American open saw the yellow metal driven down to $2512 by 11:15 am EDT, and by early Tuesday morning, spot gold had fallen to the then-weekly low of $2,505 per ounce. This time, the North American trading session provided the upward momentum, helping to propel gold prices to their weekly high above $2,525 per ounce shortly after 7:00 pm EDT before the Asian session delivered a perfect reverse image of the day's gains.

Wednesday morning saw spot gold hit its weekly low of $2,496 before it once again bounced back up to the $2,505 range, which acted as a magnet for gold's price action throughout the week. From there, gold prices went on an upward march, topping out above $2,523 per ounce by 6:00 am Eastern on Thursday before a sharp sell-off coinciding with the release of the second estimate of U.S. Q2 GDP and the weekly jobless claims report saw it once again return to the $2,505 level at 8:30 a.m. But by 1:00 p.m. Eastern, gold was once again trading at its weekly high close to $2,527 per ounce, and after a modest slide during the Asian session, European traders pushed it close to that level once again.

Friday morning brought the week’s most anticipated economic indicator, the U.S. PCE price index report for July which, even though it was in line with economists’ expectations, still saw the yellow metal slide all the way down to a fresh weekly low of $2,494.21 per ounce just after 1:15 pm Eastern.

Gold prices returned once again to the $2,505 level and continued to hover right around support at $2,500 per ounce for the duration of Friday's trading session.

The latest Kitco News Weekly Gold Survey saw retail investors reining in their recent bullishness on gold prices, while industry experts were evenly distributed across the sentiment spectrum.

“Up,” said Adrian Day, President of Adrian Day Asset Management. “As we get close to the Federal Reserve’s rate cut, momentum will likely build. The first rate cut in the cycle has been a bullish signal for gold for the last 20+ years, and although it’s already priced in to some degree, I still expect a positive reaction.”

“I like gold lower next week,” said Marc Chandler, Managing Director at Bannockburn Global Forex. “The upward momentum stalled. If the markets move to hurt most of the people most of the time, maybe the pain trade now is a sequential improvement in US jobs creation and a tick lower in the unemployment rate. This could extend the dollar’s upside correction that began in recent days and push up US rates. I can envision a move toward $2470-75.”

“Sideways,” said Darin Newsom, Senior Market Analyst at Barchart.com. “I’m getting no clear read on Dec gold’s daily chart as we approach the end of the week/month Friday. Given that, I’m going to go with a sideways trend next week, looking for a breakout in either direction.”

Phillip Streible, Head of Market Strategy at Blue Line Futures, is bearish on gold but said that any corrections are expected to be shallow and present buying opportunities. He added that September is a terrible month for gold historically, so traders should look for opportunities to buy, but don't want to be overweight.

Bob Haberkorn, Senior Commodities Broker at RJO Futures, was looking at the price action in light of the sideways churn this week.

“$2,500 is the handle, and it's naturally going to be a spot that people will trade around,” he said. “People are looking to buy below $2,500, and the way the market moves with stops and limit orders, it'll naturally trade around there, but I think $2,480 looks to be more of a support level.”

“We're down today just because the dollar's up, it's risk-off heading into the long weekend,” he added. “That's how it feels with all these markets today, there's just people clearing positions out of anything to wait and see into next week.”

Looking ahead to next Friday’s employment data, Haberkorn said even if the nonfarm payrolls report is bad, he thinks it's very unlikely that the Fed would cut by 50 basis points to kick off their easing cycle.

“I think right now there's just so much pressure that's built up for rate cuts, Powell tipped his hand that it's coming here, and the market's not going to be surprised,” he said. “But I think to get a 50-basis point cut… I don't think we're there, and I don't think, with the inflation numbers and with some of the housing numbers that we've seen, I just don't think it's going to be possible between now and the next meeting to do 50.”

Haberkorn said the most likely scenario he sees is that the Fed delivers one 25 bps cut, then sits back and watches. “I think we're more likely to see a quarter, then they hold off a little bit to see how things go,” he said, “Inflation is still here, people are still feeling the pain of inflation, and I don't think the job's finished.”

“They have 25 points coming at the next meeting,” he said. “If it wasn't an election year, I think they'd be waiting to see, but because we have an election coming up here, and there is a lot of political pressure right now to start cutting rates, I could see them doing two quarter-point cuts between now and November.”

“The quarter-point cut in itself is just the Fed throwing out some charity,” he added. “‘We'll give you a quarter, leave us alone for a little bit.’ That's what it feels like to me, because I don't think they're anywhere near to their targets, or where they need the numbers to be with the inflation, to do anything drastic.”

This week, 15 analysts participated in the Kitco News Gold Survey, and no one view on the price action held sway. Five experts, or 33%, expect to see gold prices rise during the week ahead, while another five analysts believe gold will trade lower next week. The remaining five experts predicted sideways trading for the precious metal.

Meanwhile, 199 votes were cast in Kitco’s online poll, with Main Street investors remaining bullish on balance, but less so than last week’s poll. 112 retail traders, or 56%, looked for gold prices to rise next week. Another 47, or 24%, expected the yellow metal to trade lower, while 40 respondents, representing the remaining 20%, saw prices consolidating during the week ahead.

After the past week was dominated by the runup to Friday’s inflation data, market participants will be focused on employment indicators next week when North American markets return from the long weekend.

On Tuesday, markets will receive the U.S. ISM Manufacturing PMI for August, and Wednesday brings the Bank of Canada’s monetary policy decision and U.S. JOLTS Job Openings. Then on Thursday, traders will be watching ADP Employment for August, the weekly jobless claims report, and the U.S. ISM Services PMI.

But the big risk event next week is the Friday morning release of U.S. Nonfarm Payrolls for August, which some market experts believe has the potential to bump the Fed’s expected September rate cut from 25 to 50 basis points.

Adam Button, head of currency strategy at Forexlive.com, believes the chances of a larger cut from the Federal Reserve will depend on the unemployment rate in the payrolls report.

“Powell was clear that he doesn't want to see any further deterioration in the labor market,” he said. “If we see the unemployment rate tick up one tick, it'll make it a tough call. The consensus is down to 4.2% from 4.3%. If we were to see a two-tenths miss, if we were to see 4.4% or 4.5% unemployment… you’ve just got to go back to March and you're at 3.8%, now you're at 4.3%. It's come up quick.”

“At 4.5%, I’d put it at 60 percent [chance] for 50 basis points,” he added. “I think the unemployment rate is where you want to watch.”

On the question of whether a September rate cut would be a one-off followed by a pause, or the start of a steady easing cycle, Button said he believes it’s the latter.

“I think Powell was clear that the plan is to bring rates down to neutral and it's really a question of how quickly we get there,” he said. “Given the signaling, I don't see how [the Fed] could take October off the table.”

Button agreed that Powell wouldn’t stubbornly hold off on signaling rate cuts meeting after meeting, then finally say they’re ready to ease at the highest-profile speech outside of an FOMC meeting, only to deliver a one-off rate cut.

“Also, you had other Fed officials saying ‘gradual’ or ‘measured’ or something along those lines,” he added. “He didn't say that. I think the key thing was what he didn't say. He didn't say gradual or measured. And then, to top it off, you had Daly, previously she had said ‘gradual’, and then she got teed up to say it again and didn't. She's a bit of a mouthpiece for Powell.”

“And that's it. They want 50 on the table,” he said. “You don't put 50 on the table if you're not planning to do 25.”

Turning to the price action for gold, Button said September’s seasonal weakness could provide fence-sitters with a good entry opportunity.

“I'm just waiting for a dip,” he said. “I don't think anyone's fooling themselves that we're going to see $2,000 again, $2,000 is a dream. $2,300 is maybe realistic.”

“$200 was about the dip you got last year,” he added. “It was more like $300 if you really go tip to top, but it unfolded a little more slowly. I think that's probably the best you can hope for, $2,300, and an outside chance you get back to $2,100. I'd be pretty aggressive if it gets to $2,300. And for next week, something like $2,440.”

Alex Kuptsikevich, Senior Market Analyst at FxPro, sees gold prices attempting to break out of their recent triangle chart pattern.

“Gold has hit a glass ceiling at $2525 an ounce on the spot market, which it has been battling against for the past two weeks,” he said. “A series of smaller and smaller pullbacks and more frequent rallies to the resistance indicate impressive buying pressure. Under these conditions, we should expect a breakout to the historical highs soon, but it will be important to watch how the price behaves afterwards.”

Kuptsikevich said that over the past two weeks, a triangle of horizontal resistance and rising support has formed on the gold chart.

“This is a clear indication that buyers are taking the initiative at increasingly higher levels,” he wrote. “The same conclusion can be drawn if we look at the longer-term chart period since April, when the trend of increasingly shallow corrections continued. The current consolidation is an oscillation around the upper boundary of the uptrend since then.”

He noted an ongoing divergence between the RSI and the price trend, which he characterized as a sign of upward exhaustion. “However, we saw a similar situation from October 2023 to February 2024, which was followed by a strong uptrend rather than a short-term uptrend,” he noted.

“One of the main drivers of the gold price over the past two months has been the dollar's near 5% weakness against a basket of major currencies, which largely explains the 8.5% appreciation in the ounce,” Kuptsikevich said. “However, we note that the DXY is attempting to reverse its direction to the upside as it reaches the lower end of its trading range in early 2023.”

Taken together, he said that these signals “point to a likely near-term break of resistance with a renewal of historical highs, which could be followed by a medium- or even long-term reversal in the dynamics of the gold price.”

“If we take a look beyond the charts, gold's short-term fate will be determined by the Fed's monetary policy outlook: how much it will cut interest rates before the end of the year,” he concluded. “The monthly Employment report on September 6th and the CPI on the 11th will help clarify the answer.”

“Down,” said Mark Leibovit, publisher of the VR Metals/Resource Letter. “Have hedge long positions. Looking for a correction.”

Moor Analytics Founder Michael Moor believes the risks to gold prices are skewed to the downside, but the yellow metal could still post gains in the near term. “The trade back below 2558 (+3.3 tics per/hour) warns of renewed pressure. The trade below 25417 (+2.5 tics per/hour starting at 5:00am) further warns of pressure: but if we break back above decently, look for decent strength. Decent trade above 25537 (-1 tic per/hour starting at 5:00am) will warn of decent strength.”

Ole Hansen, Head of Commodity Strategy at Saxo Bank, expects gold to trade lower during the week ahead. “Gold is running low on energy, so looking for consolidation/correction ahead of Sept FOMC meet,” he said.

And Kitco Senior Analyst Jim Wyckoff still sees a favorable picture for gold prices next week. “Steady-higher as charts remain bullish, fundamentals remain friendly,” he said.

At the time of writing, spot gold last traded at $2,503.19 per ounce for a loss of 0.71% on the day and 0.35% on the week.

Kitco Media

Ernest Hoffmanr

Time to Buy Gold and Silver

Tim Moseley