Tag Archives: kinesis money system

Gold Price News: Gold Set for Monthly Gain as Attention Turns to Rate Decisions

Gold Price News: Gold Set for Monthly Gain as Attention Turns to Rate Decisions

Gold continues to trade just below $2,000 an ounce with the precious metal set to record a second monthly gain on the back of investors’ rush to safe havens earlier in the month.

While gold may have dipped slightly from the highs achieved earlier in April, there remains plenty of support for the haven asset while market confidence is still so fragile. A broadly positive set of corporate earnings has failed to have a detrimental impact on the gold price – illustrating investors’ medium-term concerns about the health of the global economy and the banking sector.

As we look ahead to May, next week’s Federal Reserve interest rate decision on Wednesday followed by the European Central Bank on Thursday is likely to set the early tone for gold. While both banks are expected to increase their rates by 25 basis points, the commentary that supports these moves will have a significant impact on how long gold can remain at these elevated levels.

After a strong run in March and April, gold investors will be hoping that next week’s hikes, particularly that of the Fed, are close to the final ones in this current cycle of increasing interest rates. If that does prove to be the case, then gold has sufficient support to keep it trading in the high $1,900s for the foreseeable future while hints of further hikes needed may push it back down towards $1,900.

Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.

As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

Time to Buy Gold and Silver

Tim Moseley

Gold a bit weaker following downbeat US GDP data

Gold a bit weaker following downbeat U.S. GDP data

Gold prices are modestly down in midday U.S. trading Thursday, in the aftermath of a major U.S. economic report that was weaker than expected and falls into the camp of those expecting a U.S. economic recession. Such a scenario would likely mean less consumer and commercial demand for metals. June gold was last down $3.40 at $1,992.80 and May silver was up $0.009 at $24.885.

First-quarter U.S. GDP growth came in lower than expected at up 1.1%, year on year, compared to expectations for a rise of 2.0%. The closely watched PCE price index of the GDP data came in hot at up 4.2%; it was expected to be up 3.7%, year-on-year, versus a rise of 3.9% in the fourth quarter. The hotter PCE number falls into the camp of the U.S. monetary policy hawks, who want the Federal Reserve to keep interest rates higher for longer, to choke off problematic inflation.

Global stock markets were mostly higher overnight. U.S. stock indexes are solidly higher at midday. Risk appetite is better Thursday, but by no means robust, following the big drop in share price of First Republic Bank earlier this week. Also, the specter of a U.S. economic recession is moving closer to the front burner of the marketplace. It could be that the growing U.S. government debt burden and congressional wrangling regarding what to do about it are also crimping investor enthusiasm. Reads a Wall Street Journal headline today: "Banking turmoil is tip of debt iceberg."

  Gold consolidates but remains on a 'golden cross path' higher – NDR's Tim Hayes

The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are up and trading around $74.75 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching around 3.5%.

Technically, June gold futures bulls have the firm overall near-term technical advantage. However, a six-week-old uptrend on the daily bar chart has stalled out. Bulls' next upside price objective is to produce a close above solid resistance at the April high of $2,063.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the April low of $1,965.90. First resistance is seen at this week's high of $2,020.20 and then at $2,028.00. First support is seen at last week's low of $1,980.90 and then at $1,965.90. Wyckoff's Market Rating: 7.0

]

May silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $26.235. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at this week's high of $25.435 and then at $25.71. Next support is seen at this week's low of $24.53 and then at $24.25. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 115 points at 386.50 cents today. Prices closed nearer the session high and hit a nearly four-month low early on today. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 410.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 360.00 cents. First resistance is seen at 390.00 cents and then at Tuesday's high of 397.00 cents. First support is seen at today's low of 380.50 cents and then at 377.50 cents. Wyckoff's Market Rating: 5.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

Gold weaker as US Treasury yields up-tick

Gold weaker as U.S. Treasury yields up-tick

Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) – Gold prices are modestly down and silver near steady in midday U.S. dealings Wednesday. The precious metals markets are seeing buying interest limited by a rise in U.S. Treasury yields at mid-week. However, losses in metals are being limited by a weaker U.S. dollar index today. June gold was last down $7.20 at $1,997.30 and May silver was up $0.003 at $24.89.

Traders at mid-week are buzzing about First Republic Bank's quarterly earnings report on Tuesday that was worse than expected, including a huge outflow of deposits. Reports said the bank's conference call on its earnings was very brief, with no questions taken from reporters. That prompted a nearly 50% drop in the bank's share price Tuesday, including trading in the stock being halted for a while. Reports today said the U.S. government is not going to step in an assist the ailing bank.

Meantime, U.S. and/or global recession fears appear to be moving back toward the front burner of the marketplace. Diesel fuel prices in the U.S. have plunged in recent months and are about half of what they were one year ago. Such suggests a slowdown in the commercial transportation sector that could be a signal of a slowing U.S. economy. United Parcel Service (UPS) on Tuesday issued a downbeat corporate earnings report, saying “macro conditions” would likely continue to pressure its delivery volume. The metals markets appear to be taking a bearish lean from this situation, on notions of less consumer and commercial demand if the global economy weakens.

Global stock markets were mixed to weaker overnight. U.S. stock indexes are mixed at midday. Focus of stock traders this week is on the release of quarterly corporate earnings reports. So far, they have been mixed.

  QE isn't over and will drive gold to $3,000 and Bitcoin to $100,000 in the next decade – Crossborder Capital

In overnight news, Sweden's central bank raised its main interest rate by 0.5%, saying inflation is still far too high.

The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are weaker and trading around $76.75 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.695%.

Technically, June gold futures bulls still have the firm overall near-term technical advantage. However, a six-week-old uptrend on the daily bar chart has stalled out. Bulls' next upside price objective is to produce a close above solid resistance at the April high of $2,063.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the April low of $1,965.90. First resistance is seen at today's high of $2,020.20 and then at $2,028.00. First support is seen at last week's low of $1,980.90 and then at $1,965.90. Wyckoff's Market Rating: 7.0

May silver futures bulls have the overall near-term technical advantage. However, a six-week-old uptrend on the daily bar chart has been negated, which is one early clue that a market top is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $26.235. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at this week's high of $25.435 and then at $25.71. Next support is seen at this week's low of $24.53 and then at $24.25. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 105 points at 385.85 cents today. Prices closed nearer the session low today. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 410.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 382.20 cents. First resistance is seen at 390.00 cents and then at Tuesday's high of 397.00 cents. First support is seen at this week's low of 383.00 cents and then at 382.20 cents. Wyckoff's Market Rating: 5.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

Info from Thursday’s GDP and Friday’s PCE report will guide investors

Info from Thursday’s GDP and Friday’s PCE report will guide investors

This week will contain two exceedingly important government reports on the US economy. These two reports will be exceedingly important in guiding the final decision of the Federal Reserve at the FOMC meeting next week.

Beginning on Thursday the Bureau of Economic Analysis (BEA) will release the Gross Domestic Product first quarter report. An average of the current forecasts is predicting that the first quarter GDP for 2023 will come in at 1.8%. If correct, this would indicate that the economy continues to contract from the 2.6% GDP that was reported in the fourth quarter of last year.

According to Saxo.com, “The advance reading of the US real GDP growth, scheduled to release on Thursday, is expected, according to Bloomberg’s survey of economists, to slow to 2% Q/Q annualized in Q1, down from 2.6% in Q4 last year. Despite inventory drawdown potentially dragging GDP growth, personal consumption is expected to come in strong at 4% Q/Q annualized and be the key driving force to sustain GDP growth in Q1.”

This will be followed by Friday’s Personal Consumption Expenditures (PCE) index, the preferred measure of inflation and wage growth used by the Federal Reserve. Economists polled by Bloomberg are predicting a moderate forecast for the core PCE to show an increase of inflation by 0.3% MoM and 4.5% YoY.

According to the same report by Saxo, “As rent-related components have a smaller weight in the core PCE measures than in the core CPI calculation, the core PCE may not benefit as much as the CPI counterpart from the recent weaknesses in rents. Investors will monitor closely the core service excluding housing sub-index in the PCE report to gauge the underlying consumer inflation trend in the U.S. Meanwhile, the headline PCE deflator growth is expected to slow to 0.1% M/M and 4.1% Y/Y in March from 0.3% M/M and 5.0% Y/Y in February.”

These upcoming reports and their forecasts have led investors to devalue the US dollar which in turn has added strength to gold prices. However, gold futures remain just under $2000 per ounce at the time of this writing.

As of 5:00 PM EST, gold futures basis most active June contract is up $8.10 or 0.41% and fixed at $1998.60. Gains witnessed in gold futures today have an exacting negative correlation to dollar weakness. Currently, the dollar is down 0.45% with the dollar index currently fixed at 101.095. Gold futures have traded to a higher low and a lower high than Friday’s strong price decline. On Friday of last week, gold futures broke below a critical technical and psychological price level of $2000 per ounce. As gold held above $2000 speculators and traders believed there was a strong possibility that gold would challenge the record of $2088 per ounce. Reciprocally, moves below that key technical level garnered speculation of gold prices dropping.

According to the CME’s FedWatch tool, there is almost a certainty (91.4%) that the Federal Reserve will end next week’s meeting with the announcement of a ¼% rate hike. Also, there is a 67.9% probability that the Fed’s terminal target rate will remain between 5% and 5 ¼% with the Federal Reserve not raising rates at the June 2023 FOMC meeting.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

Tim Moseley

Gold price plunges 30 but analysts focus on Fed pause after May rate hike

Gold price plunges $30, but analysts focus on Fed pause after May rate hike

Gold tumbled $30 on the day and dropped below the critical $2,000 an ounce level, but analysts said there is enough buying interest to boost prices back up.

Significant volatility in the U.S. dollar and Treasury yields markets took a toll on gold Friday, with June Comex gold futures last trading at $1,989.10, down 1.49% on the day.

The Fed's blackout period also begins this Saturday, meaning Federal Reserve officials won't speak publicly between then and the May 3 FOMC meeting. Markets are currently pricing in an 88% chance of a 25-basis-point hike, according to the CME FedWatch Tool.

"It is expected the Fed will raise rates a quarter point next month. And there is a great deal of uncertainty with gold above or below $2,000. I remain bullish at these levels. We will get to a point where the Fed has to pause and make that pivot. And maybe resort to cuts later this year," RJO Futures senior market strategist Frank Cholly told Kitco News. "That will support gold, which will trade at all-time highs between now and the end of the year."

Next week, markets will zero in on fresh macro data, including the U.S. Q1 GDP and PCE price index numbers.

"The upcoming U.S. economic data, especially the GDP data and the price deflator for consumer expenditures, being the Fed's preferred inflation measure, could trigger some price movement," said Commerzbank analyst Carsten Fritsch.

On Friday, markets already digested stronger-than-expected U.S. manufacturing and service sector data, which weighed on gold. The S&P Global Flash U.S. manufacturing PMI advanced to 50.4 in April from March's reading of 49.2. This marked the first move into expansion territory since September.

"Markets were looking for a decline. Also, people thought that the U.S. dollar would be dropping and positioned short. And with economic data moving higher, we are likely seeing some short-covering," TD Securities' global head of commodity strategy Bart Melek told Kitco News. "The Fed is more likely than not to keep that hawkish stance alive. For May, it is on track to do another 25bps hike, and there is a risk of one increase more after that."

Price levels

A decent support level for gold is at around $1,962, but prices can drop below that, Melek noted, adding that it will depend on the economic data and what the yields are doing. “Technically, we see significant support at just above $1,960/oz. However, we see the yellow metal trend at $2,100/oz in late H2-2023,” he said.

Cholly pointed to $1,975-80 as likely to hold next week. He added that "markets tend to overreach in both directions. The $1,975 level is going to be relatively good support. I don't see it getting below $1,965." On the upside, the first hurdle will be $2,025 and then $2,050-60.

After the Fed May rate hike

The May hike looks increasingly likely to be the last interest rate increase, according to Capital Economics deputy chief U.S. economist Andrew Hunter.

"We are increasingly confident that the May rate hike will prove to be the last of this cycle … [And] our expectation that rates will be cut again late this year. That's based on our long-standing view that the economy is headed for recession, eventually dragging inflation down more quickly than the Fed is allowing for."

Gold's long-term bullish outlook is still very much intact. And as soon as markets settle on when the Fed pauses, gold will rally.

"Right now, there is a risk that the Fed overdoes it. When the economy slows, it will be fast. For gold, it is important that a pivot is happening, and there is a significant risk that U.S. central bank won't strictly adhere to 2% inflation," said Melek.

And that means that the Fed will likely ignore elevated inflation and keep adding accommodation, which will sustain gold's bullish trend. "This would imply lower real rates than previous cycles," Melek pointed out. "Central banks and consumers are buying gold as a hedge to preserve their purchasing power."

Investors are also once again realizing that there is more than one reason to own gold, added Cholly.

"The safe haven trade is going to be a factor. And it is not just a hedge against the U.S. dollar and rates. But geopolitical tensions are rising again, especially between U.S. and China," he said. "People are starting to feel like there is enough uncertainty. And we are about to enter a recession. Gold prices will remain strong."

Next week's data

Tuesday: CB consumer confidence, U.S. new home sales

Wednesday: U.S. durable goods orders

Thursday: U.S. GDP Q1, jobless claims, U.S. pending home sales,

Friday: U.S. PCE price index

By

Anna Golubova

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

Gold is just stepping back to build a running start

Gold is just stepping back to build a running start

After a month of massive volatility, markets are now comfortable with the idea that the Federal Reserve is not done raising interest rates. Not only is a 25-basis point hike for May firmly priced in, but markets have now pushed back the timing of any potential rate cut to the end of the year.

At the height of last month's banking crisis, markets were pricing in a potential rate cut as early as June, so it's no wonder why gold prices are ending below $2,000 an ounce this week. While gold could see further lows in the near term, analysts note that the market is still on track to hit all-time highs this year.

It's not surprising that some investors are taking some profits in gold. Fear of the global economy breaking is being replaced by renewed fears of inflation. While U.S. consumer prices are on a downward trend, inflation is being acutely felt in the United Kingdom. The nation's Consumer Price Index showed annual inflation holding relatively steady at 10.1% last month. This was the seventh consecutive month that inflation has been above 10%.

There are unique reasons why inflation is exceptionally high in Britain. Still, the data indicates that inflation is a global problem that will likely become entrenched in the broader global economy. The British inflation data showed that food prices rose 19.2% in the last 12 months.

Despite specific economic issues, this number does not bode well for the world. The last time I checked, everyone needs to eat.

It's hard to argue that the inflation threat has gone away when agricultural commodity prices are going higher. Sugar prices are at their highest level in 11 years; meanwhile, feeder cattle future prices are at an eight-year high. Consumers better prepare for more expensive barbecues this summer.

Even those who don't eat beef are stuck. This week analysts at Fitch Solutions published a report saying that rice production in 2023 is expected to see its worst annual production in 20 years. According to Fitch, The world could see a rice deficit of 8.7 million tonnes.

These headlines will keep the Federal Reserve from loosening its monetary policies anytime soon, which, as we know, is a negative for gold.

However, while gold could see some near-term selling pressure, many analysts note that the precious metal remains well supported. Last month's banking crisis shows that there is only so much the Federal Reserve can do before the economy breaks.

Many analysts have noted that gold remains an attractive, safe haven and inflation hedge.

"The monetary disorder that we have seen is far from over, and right now, we are just waiting to see how it will spread," said James Robertson, an analyst at Grant's Interest Rate Observer, in an interview with Kitco News. "This will continue to support gold prices."

Looking past global monetary policies, there are other reasons to be bullish on gold, including the fact that it remains an essential monetary metal. The worldwide de-dollarization trend is picking up significant momentum. In a recent report, Stephen Jen, CEO and co-CIO of Eurizon SLJ Capital, said that the U.S. dollar's share as a global reserve currency dropped to 47% last year, down from 55% in 2021. In 2020, 73% of reserves were in U.S. dollars.

  Inflation may moderate, but pension funds aren't taking any changes as they increase their exposure to gold and commodities – Ortec Finance

“The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions," Jen wrote in the report.

Central banks have been flocking to gold in this environment, and analysts don't expect this trend to end anytime soon.

Finally, while we talk a lot about gold in this newsletter, we can't ignore what is happening in other precious metals. Silver is outperforming gold as prices hold above $25 an ounce and platinum is the best-performing metal in the complex.

Both silver and platinum are benefiting from growing imbalances in their supply and demand fundamentals.

This week, the Silver Institute said that the silver market hit a record deficit in 2022 and it expects that trend to continue into 2023. Metals Focus, the firm behind the research, noted that the deficits in 2021 and 2022 have more than offset the cumulative surpluses of the previous 11 years.

According to many analysts, this deficit should continue to support higher prices.

By

Neils Christensen

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

The hawkish Fed narrative continues to underscore the need for further rate hikes

The hawkish Fed narrative continues to underscore the need for further rate hikes

The recent volatility that led to diminished bullish market sentiment for gold has diminished as gold continues to effectively find support at $2000 per ounce and above. Today gold traded to a low of $2002.20, effectively above the current critical support level of $2000. This morning in New York traders witnessed a quick and powerful price surge taking gold to a high of $2024.20. As of 4:00 PM EST gold futures basis the most active June 2023 contract is up $8.30, or 0.41%, and fixed at $2015.60.

The dollar had very little input in today’s price gains in gold with the index off fractionally by 0.08% and fixed at 101.585.

Officials of the Federal Reserve continue to express a resolute narrative that is conveying that at least for the near future a pause of interest rate hikes is off the table. Rather, an additional Federal Reserve official today continues to reiterate the need for taking interest rates higher, which will include additional rate hikes, and keeping the elevated level intact for a longer period of time.

Federal Reserve officials will go silent in two days, on Saturday, April 22. The blackout period will remain in effect until the May FOMC meeting has concluded, and a statement is released which will be followed by a press conference with Chairman Powell.

Now three Fed officials have expressed the need to continue to raise interest rates even after the anticipated ¼% rate hike occurs in May. Yesterday, the New York Federal Reserve President, John Williams spoke to a group of bond-market experts known as the Money Marketeers of New York University saying that recent data has indicated that a “trend of slowing inflation is continuing.” He also added that there are some indications of a “gradual cooling in the demand for labor”. However, “Inflation is still too high and we will use our monetary policy tools to restore price stability.”

President Williams's comments can now be added to similar remarks by Fed Governor Christopher Waller and James Bullard.

Wallace said that the Federal Reserve needs to continue raising interest rates because of the high level of inflation. St. Louis Federal Reserve President James Bullard said, “The U.S. central bank should continue raising interest rates on the back of recent data showing inflation remains persistent while the broader economy seems poised to continue growing, even if slowly.”

The combination of all three Fed officials expressed a narrative much different than many market participants assumed, which was a pause by the Federal Reserve in rate hikes to begin after one more rate hike in May. Market participants are now factoring in the possibility of additional rate hikes after the expected ¼% hike at the FOMC meeting in May.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

Tim Moseley

Fed narrative alarms traders who believe that a rate pause is imminent after the May rate hike

Fed narrative alarms traders who believe that a rate pause is imminent after the May rate hike

Recent volatility led to diminished bullish market sentiment for gold causing a price break and taking gold futures to $1980.90 before recovering. This morning in New York traders witnessed a quick and powerful price decline in gold breaking $20 below $2000 and recovering just as quickly as it sold off.

This was in response to Federal Reserve officials who continue to reiterate the need for taking interest rates higher. Federal Reserve officials will go silent one week before the May FOMC meeting beginning on Saturday, April 22.

Two Fed officials have been extremely vocal both suggesting the need to continue to raise interest rates even after the anticipated ¼% rate hike occurs in May.

Last week Fed Governor Christopher Waller said that the Federal Reserve needs to continue raising interest rates because of the high level of inflation. "Economic output and employment are continuing to grow at a solid pace while inflation remains much too high," Waller said, noting that investors should not expect rates to fall any time soon. "Monetary policy will need to remain tight for a substantial period of time, and longer than markets anticipate,".

Fed Governor Waller was resolute when he spoke on Friday saying, “Despite a year of aggressive rate increases U.S. central bankers "haven't made much progress" in returning inflation to their 2% target and need to move interest rates higher still.”

Addressing current inflationary pressures Waller said that inflation has "basically moved sideways with no apparent downward movement… Monetary policy needs to be tightened further. How much further will depend on incoming data on inflation, the real economy, and the extent of tightening credit conditions."

James Bullard and Christopher Waller both strongly believe that the economy and inflation continue to remain stronger than expected.

Reuters posted an interview yesterday with St. Louis Federal Reserve President James Bullard who also underscored the need for higher U.S. interest rates to combat inflation. During the interview, Federal President Bullard said, “The U.S. central bank should continue raising interest rates on the back of recent data showing inflation remains persistent while the broader economy seems poised to continue growing, even if slowly.”

Both Fed officials expressed a narrative much different than many market participants assumed, which is a pause by the Federal Reserve in rate hikes to begin after one more rate hike in May. The assumption that the Federal Reserve will stop their consecutive rate hikes at every FOMC meeting since March 2022 diminished based on the most recent narrative by Waller and Bullard.

The chart above is a 30-minute Japanese candlestick chart of gold futures. It shows how quickly gold sold off during the morning trading session in New York after breaking below the support trendline at $2013. The chart also indicates that gold recovered as quickly as it sold off. As of 5:30 PM EST, the most active June 2023 futures contract is down $12.30 and fixed at $2007.40.

Gary S. Wagner

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

Tim Moseley

Gold has found support above 2000 aided by the belief the Fed will pause hikes soon

Gold has found support above $2000 aided by the belief the Fed will pause hikes soon

Over the last 10 trading days, gold futures have effectively closed above $2000 per ounce. Although on an intraday basis, gold has moved below $2000 on three occasions, gold prices recovered and closed above $2000 on each instance.

On April 3, gold futures opened at $1990, traded to a high of $2007 and closed just at $2000 per ounce. On the following day, April 4 gold opened above $2000 and closed at $2038. This marked the first of 10 consecutive days in which gold closed above that critically important psychological level.

Market participants have been solidly bullish about gold based on the belief that the Federal Reserve could stop raising rates after the May FOMC meeting. The belief that the Fed will pause rate hikes after one final ¼% hike in May has ignited strong bullish market sentiment for gold pricing.

Because there is an intrinsic lag between rate hikes and the effect on contracting the economy the Federal Reserve will need to pause at some point to gauge the outcome of raising rates at every FOMC meeting since March 2022.

This optimism has pressured the dollar and yields lower and concurrently moved gold futures above $2000 per ounce. Recent volatility and diminished bullish market sentiment for gold have been in response to Federal Reserve officials who continue to reiterate the need for taking interest rates higher. Last week Fed Governor Christopher Waller said that the Federal Reserve needs to continue raising interest rates because of the high level of inflation. Reuters posted an interview today with St. Louis Federal Reserve President James Bullard who also underscored the need for higher U.S. interest rates to combat inflation

Market participants will continue to focus on more comments from Fed officials this week before the Feds standard blackout period that will begin on April 22, ahead of the May FOMC meeting.

As of 5 PM EST gold futures basis the most active June 2023 contract is up $10.80 and fixed at $2017.80. Spot gold has moved back above $2000 and is currently up $9.91 and fixed at $2004.80.

By

Gary Wagner

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

Gold futures trade to 199340 and recover back above 2000

Gold futures trade to $1993.40 and recover back above $2000

As of 4:25 PM EST, gold futures basis the most active June 2023 contract is trading down $8.50 or 0.42% and fixed at $2007.20. In earlier trading market participants actively moved gold below the key psychological level of $2000, taking June gold to its intraday low of $1993.40.

Today’s price decline in gold can be 100% attributed to dollar strength. Currently, the dollar is up 0.54%, however, when compared to gold’s decline of -0.41% investors are bidding the precious yellow metal fractionally higher.

Spot gold is also trading lower with dollar strength being 100% responsible for the decline. Currently, spot gold is fixed at $1994.40 a decline of -0.45%. However, on closer inspection dollar strength accounted for $-11.00, and normal trading add + $1.90 resulting in today’s $9.10 decline, according to the Kitco Gold Index (KGX).

Recent statements by members of the Federal Reserve have maintained its current hawkish demeanor underscoring the need for the Fed to continue raising interest rates. On Friday speaking at a conference in San Antonio Texas Federal Reserve Governor Christopher Waller said, “Because financial conditions have not significantly tightened, the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further.”

Governor Waller called the most recent March CPI report “mixed news” that indicated that the Federal Reserve has not made much progress on its goal to reduce inflation. He referenced core consumer prices rising 0.4% or higher for the last four consecutive months as proof that the Federal Reserve needs to continue its aggressive stance of rate hikes.

It must be noted that some economists including Mohamed El-Erian and BlackRock are convinced that inflation is not on track anywhere near the Federal Reserve’s target of 2%. In a note, a strategist at BlackRock said, "Inflation in the US is not on track to settle anywhere close to the Federal Reserve's 2% target, in our view. That was reinforced by March inflation data,"

This is in line with CME’s FedWatch tool that reveals there is an 86.7% probability that the Federal Reserve will implement another rate hike of ¼% which would take their terminal benchmark rate to between 5% and 5 ¼%.

Persistently high inflation will continue to be highly supportive of gold as pricing builds a base and eventual support at $2000 per ounce.

Gary S. Wagner

For Kitco News

Time to Buy Gold and Silver

Tim Moseley