Gold, silver rally amid bullish outside markets

Gold and silver prices are higher, with gold solidly up, near midday Monday. The precious metals are being supported in part by bullish daily outside market elements that include higher crude oil prices and a slight down-tick in U.S. bond yields. The gold market also sees technical buying on a bullish chart posture. Silver is also being supported by some short covering in the futures market and some perceived bargain buying after recent selling pressure. December gold was last up $23.60 at $2,497.10. September silver was up $0.287 at $27.87.

Metals traders are awaiting the U.S. data points of the week: the July producer price index on Tuesday and the consumer price index for July on Wednesday. PPI is seen up 0.2% from June and the CPI is also seen up 0.2%, month-on-month. The retail sales report on Thursday will also be closely scrutinized by the marketplace.

Asian and European stock indexes were mixed but mostly firmer overnight. U.S. stock indexes are mixed at midday. The U.S. stock indexes have made solid rebounds from their August lows, but the bulls are not out of the woods yet.

The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices are up and are trading around $78.50 a barrel. A DowJones Newswire headline today reads: “Oil edges higher as markets brace for Iran retaliation.” The benchmark 10-year U.S. Treasury note is presently fetching around 3.96%.

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 contract high of $2,537.70. Bears' nextnear-term downside price objective is pushing futures prices below solid technical support at $2,350.00. First resistance is seen at today’s high of $2,500.30 and then at $2,516.60. First support is seen at the overnight low of $2,462.70 and then at $2,450.00. Wyckoff's Market Rating: 7.5.

September silver futures bears have the overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the August high of $39.355. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at today’s high of $28.08 and then at $28.50. Next support is seen at today’s low of $27.28 and then at $27.00. Wyckoff's Market Rating: 3.5

(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Sign up here; it’s real easy. https://www.kitco.com/services

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Jim Wyckoff

Time to Buy Gold and Silver

Tim Moseley

Gold will maintain its upward momentum as Fed cuts, sovereign buying, ETF flows support prices – ING’s Manthey

 

(Kitco News) – Gold prices will peak in the fourth quarter as investors focus on Fed cuts, while ETF inflows and central bank buying continue to provide support against a backdrop of geopolitical risk, according to Ewa Manthey, Commodities Strategist at ING.

In the bank’s monthly update, Manthey noted that gold fell along with the global equities sell-off at the start of the week as fears of a U.S. recession spiked. “Gold, usually a safe haven during such uncertainty, sold off sharply on Monday amid likely liquidations to cover margin calls on other assets,” she said.

“Looking ahead, we believe gold should regain its footing once again, amid the ongoing geopolitical uncertainties and expectations of interest rate cuts from the US Fed,” Manthey said. “Despite Monday’s sharp drop, gold is still up about 15% so far this year and is one of this year’s best-performing commodities, aided by central bank buying, Asian consumers and expectations the Fed is getting close to cutting rates. It hit an all-time high in July amid strong appetite from central banks and Asian consumers.”

“We believe, after a consolidation phase, gold will maintain its upward momentum,” she added.

Manthey wrote that the attention of gold investors is squarely focused on the scale and timing of the Federal Reserve’s expected interest rate cuts.

“The Fed has held its key policy rate in a target range of 5.25% to 5.5% – the highest level in more than two decades – since last July,” she said. “Our US economist now sees a 50bp cut in September followed by a series of 25bp moves that would get us back to a Fed funds rate of around 3.5% by next summer.”

She noted that central bank buying remained relatively strong in June, with World Gold Council data showing 12 tonnes of net buying during the month.

“June’s purchases were once again led by emerging market central banks. Uzbekistan and India both added 9 tonnes to their gold reserves during the month,” Manthey said. “However, China has seen a slowdown in gold purchases over recent months. The People’s Bank of China didn’t add gold to its reserves for a third consecutive month in July.”

The largest seller in June was Singapore, which liquidated 12 tonnes – “it reduced its gold reserves in June by the most since at least 2000,” Manthey said.

“Buying strength continues this year, although gross purchases and sales are lower compared to the same period last year,” she noted. ‘In 2023, central banks added 1,037 tonnes of gold – the second-highest annual purchase in history – following a record high of 1,082 tonnes in 2022. However, we still expect central bank demand to remain strong looking ahead amid the current economic climate and geopolitical tensions and as prices retreat from record highs.”

 

Manthey also pointed out that funds have continued their recent streak of positive flows.

“Following the strongest month since May 2023, global gold ETFs have now seen inflows for two months in a row, according to data from the WGC,” she wrote. “In June, notable European and Asian buying offset outflows from North America. Although June and May inflows helped limit global gold ETFs’ year-to-date losses to US$6.7bn (-120t), this remains the worst first half of the year since 2013 – both Europe and North America saw hefty outflows while Asia was the only region with inflows.”

“Investor holdings in gold ETFs generally rise when gold prices gain, and vice versa,” Manthey said. “However, gold ETF holdings have been in decline for much of 2024, while spot gold prices have hit new highs. ETF flows finally turned positive in May.”

ING believes gold will peak in the fourth quarter as geopolitics will continue to drive price action. “The war in Ukraine and the Middle East and tensions between the US and China suggest that safe-haven demand will continue to support gold prices in the short to medium term,” she said. “The US presidential election in November and the long-awaited US Fed rate cut will also continue to add to gold's upward momentum through to the end of the year, in our view. Central banks are also expected to keep adding to their holdings, which should offer support.”

We see gold averaging $2,380 in the third quarter and prices peaking in the fourth quarter at $2,450/oz, resulting in an annual average of $2,301/oz.

ING sees spot gold averaging $2,380 in the third quarter before prices peak at $2,450 per ounce in Q4 for an annual average of $2,301 per ounce.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Wall Street sees consolidation in the cards for next week, Main Street maintains bullish bent

Markets began this week with one of the most profound shocks in recent years after the unwind of the yen carry trade and fears of a U.S. recession combined to drive risk assets sharply lower, dragging gold prices down along with them.

After opening the week trading close to $2,440 per ounce, spot gold saw a double bounce at $2,420 as news of the collapse of Japanese equities hit the wires, causing crypto and other risk assets to drop sharply during overnight trading. Gold initially saw a rally off their lows, with the spot price rising to a session high just shy of $2,460 per ounce shortly after midnight EDT as investors fled to safety.

But as the panic spread through the Asian and European sessions, gold was dragged lower once again, and after failing to hold support at $2,420 per ounce, spot gold began its own collapse shortly after 6:30 a.m., falling $60 in two hours.

After bouncing twice at the session low of $2,365 per ounce just after 8:30 a.m. on Monday, spot gold shot higher over the next couple of hours, eliminating nearly half of its losses by 11:00 a.m. EDT.

From there, gold prices stabilized along with equities, and the yellow metal established a range between $2,380 and $2,415 per ounce which it maintained throughout the middle of the week.

Thursday morning's better-than-expected weekly jobless claims report brought renewed optimism to both equities and precious metals markets, and drove spot gold to the edge of $2,430 throughout Thursday and Friday, but the yellow metal was rebuffed after every attempt to break through this resistance level. Still, the spot price never fell more than $2 below $2,420 per ounce for the duration of the week.

The latest Kitco News Weekly Gold Survey shows most industry experts predicting sideways price action next week, while the majority of retail traders expect the yellow metal to post gains.

“I am neutral on gold for the coming week,” said Colin Cieszynski, Chief Market Strategist at SIA Wealth Management. “I just have the feeling that coming off a volatile ten days, markets may settle down a bit next week before the Democratic convention starts the following week.”

Marc Chandler, Managing Director at Bannockburn Global Forex, also expects gold to trend sideways, at least at the beginning.

“I suspect continued consolidation is likely through at least the early part of next week,” he said. “I think the market may have exaggerated the likelihood of a 50 bp cut, let alone an emergency inter-meeting Fed cut. US coupon yields have firmed.”

Chandler said next week’s highlight will be the CPI report. “It is likely to be unchanged on year-over-year basis, which will meet the low bar of a Fed Sept cut (25 bp),” he said. “Note that China’s PBOC did not buy gold for the 3rd month in July after an 18-month buying spree.”

“Still to come: Middle East tensions, and many still expect Iran to strike Israel, which would, at least initially, be supportive of gold,” he added.

Adrian Day, President of Adrian Day Asset Management, expects gold prices to move higher. “Market expectations for an interest rate cut by the Federal Reserve keep changing, and with them so does the gold price,” he observed. “But there is little doubt that there will be at least an initial rate cut in the near term, and that will be the signal for North American investors to become more interested in gold, especially as the U.S. economy shows signs of slipping into a recession.”

“Until now, the gold price has been driven with very little interest from Western investors,” Day said, “but a cut from the Fed and ongoing cuts from other central banks will change that.”

Adam Button, head of currency strategy at Forexlive.com, is neutral on gold’s near-term prospects. “A double top at $2475 is competing with a series of higher lows,” he said. “We’ve also seen a speculative wash-out. I think that sets the stage for a week of calming and consolidation, but watch Wednesday’s CPI report closely as it’s likely to put the nail in the coffin of the inflation story.”

“Sideways,” said Darin Newsom, Senior Market Analyst at Barchart.com. “While I still see Dec gold in an intermediate-term downtrend on its weekly chart, it remains range bound heading Into Friday's session.”

“Heading into next week, resistance is at the previous 4-week high of $2,537.70 with support at the previous 4-week low of $2,398.20,” he said. “Granted that’s a wide $139.50 range, but that sometimes happens. The contract’s daily chart is providing little guidance, also indicating a sideways short-term trend early Friday morning.”

Sean Lusk, co-director of commercial hedging at Walsh Trading, said the gold market is changing so quickly these days that it’s difficult for traders to choose a direction.

“You're living day to day, not week to week with this stuff,” Lusk said. “These gyrations, the swings in the market… check your position in another four hours and see what your opinion is, because it may change big time.”

Lusk said that since recession fears first flared up last week, they sent everything tumbling, and he still believes the U.S. employment situation is worse than the headline numbers. “The market is contracting in the private sector,” he said. “The job growth is pretty contained in government hiring, so that's not really sustainable. Longer term, that's the fear, but the emotion sometimes is out of whack versus reality.”

Lusk said Monday’s apocalyptic pessimism was just as overdone as the equity market’s irrational optimism that preceded it.

“There were people screaming Monday morning that the Fed had to do a 75-point emergency cut,” he said. “It's just nonsense. For what? Where were we in January in the S&P 500? We closed last year at 4820, and we're 5359 currently. We have to have a crash in the market. You have to go negative, and this did not happen in the Dow or S&P. NASDAQ, different animal, but nothing goes up forever.”

Turning to gold’s price action, Lusk said he expects the yellow metal to remain strong, and while he doesn’t see another big move higher in the near term, he believes gold will run higher by year-end.

“We hit $2,485, that was our target,” he said. “Now we're at $2,468 [in the December contract], and last Friday it was over twenty-five-hundred dollars, $2,522. Last Friday was the all-time high. Now you're only $50 away from there, which these days is nothing. But the next target up is going to be that $2,580 to $2,585 area, that's 25% higher on the year.”

“They'll act in five percent increments,” Lusk added. “That's all they've done on this rally, by the way: take it up five, ten, fifteen, twenty percent higher on the year, get a little above it, pause, correction, break a hundred dollars, right back up, make new highs, repeat, consolidate, blah, blah, blah. New story comes in, run it up.”

This week, 10 analysts participated in the Kitco News Gold Survey, with the majority of Wall Street now expecting gold to settle into a consolidation pattern as bearish sentiment has completely evaporated. Six experts, or 60%, expect to see gold prices trending sideways during the week ahead, while the remaining 40% believe gold will post further gains next week. None predicted a decline in price for the precious metal.

Meanwhile, 210 votes were cast in Kitco’s online poll, with most Main Street investors maintaining their bullish outlook. 130 retail traders, or 62%, looked for gold prices to rise next week. Another 45, or 21%, expected the yellow metal to trade lower, while 35 respondents, representing the remaining 17%, saw prices consolidating during the week ahead.

After this week's virtually empty data calendar, market-moving news picks up once again. Next week's highlights include Tuesday's release of U.S. PPI for July, followed by U.S. CPI for July on Wednesday, July retail sales and weekly jobless claims on Thursday, and U.S. housing starts and building permits for July on Friday morning, followed by the preliminary University of Michigan consumer sentiment survey for August.

Markets will also pay attention to the Empire State and Philly Fed manufacturing indexes for August scheduled for release on Thursday morning.

And with attention now squarely focused on the prospect of a September rate cut from the Federal Reserve, precious metals investors will also be paying close attention to next week's slate of Fed speakers, including Bostic on Tuesday, Musalem and Harker on Thursday, and Goolsbee on Friday afternoon.

James Stanley, senior market strategist at Forex.com, expects to see gold prices rise next week. “Bulls are still in control and they illustrated that well over the past week,” he said. “The Monday spike-low led into a higher-low on Tuesday and buyers came back in a big way in the latter part of the week.”

“In my view they have an open door to re-test highs but there still hasn’t been any clear evidence that they’re ready to take out $2500 yet,” Stanley said. “If they can break the pattern of lower-highs in spot Gold on the daily chart, that door for the $2500 test widens significantly. The risk to this scenario would be Treasury yields around the CPI report next week as a rush for yield can see capital flee gold to chase yield.”

Everett Millman, Chief Market Analyst at Gainesville Coins, said that he expects August’s seasonal favorability to support gold despite the geopolitical and market turmoil.

Millman said gold’s sharp drop was expected during Monday’s market decline. “Somewhat counterintuitively, it's actually the standard response that we see from the precious metals when other markets are selling off,” he said. “It's just that gold is very liquid, it's easy to sell and it's the first thing to go when risk assets are selling off the first move tends to be lower for gold. That's why it didn't surprise me because hedge funds and wealth management firms have to sell something to recoup their losses.”

Millman said that seasonally, August is one of the best months for gold, and markets are now looking ahead to a September rate cut from the Fed.

“It seems to be set in stone that everyone's expecting it,” he said. “They may not cut rates as much as some people are howling for right now, but it seems the Fed is going to start cutting in September, and that's good for gold.”

While Millman expects a fair amount of front running of the rate cut throughout the month of August, he doesn’t see a big price increase. “I don't expect any major moves higher,” he said. “I would expect gold to continue sideways with a bit of a bias toward trading higher.”

“Really, anything holding above support at $2,400 should be cheered massively by the bulls,” he added. “Gold still is up a ton this year, so they can only be happy with where we're already at. $2,500, up to $2,700, I wouldn't expect to see any of that until at least September.”

The one thing that Millman believes could drive gold to new highs ahead of schedule is an escalation in the Middle East. “The biggest thing would be if Iran finally retaliates,” he said. “The biggest concern is that if the conflict spreads, that more countries are roped into it, and then you get a wider war, and everyone has to line up and pick sides.”

“I think that's definitely a risk that would drive gold higher,” he concluded.

“This is now bullish,” said Michael Moor, Founder of Moor Analytics. “Decent trade back above 24979 (+3.5 tics per/hour starting at 7:00am) should bring in decent strength. Decent trade above 25123 (-.6 of a tic per/hour starting at 7:00am) will project this upward $110 (+). A maintained gap higher will leave a minor bullish reversal below. Decent trade below 24316 (+3 tics per/hour) will project this downward $40 (+).”

And Kitco Senior Analyst Jim Wyckoff sees technical and fundamental drivers favoring price gains next week. “Steady-higher as charts remain bullish and geopolitics simmering,” he said.

At the time of writing, spot gold last traded at $2,423.78 per ounce for a gain of 0.14% on the day, but a loss of 0.46% on the week.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Gold Defies Headwinds of Dollar Strength, Higher Yields, and Jobless Claims

Amidst a confluence of factors typically bearish for the precious metal, gold prices managed to post solid gains on Thursday. This resilience in the face of economic data and market dynamics that would normally weigh on the yellow metal suggests the recent price correction may be nearing its end.

According to the U.S. Labor Department, initial jobless claims fell to 233,000 last week, down from 249,000 the prior week and below the 240,000-consensus forecast. This decline in new unemployment filings is generally seen as a positive economic indicator, one that would normally put downward pressure on safe-haven assets like gold.

Similarly, the U.S. dollar gained 0.05% on the day, reaching an index level of 103.01. A stronger dollar tends to make gold, which is priced in the U.S. currency, more expensive for foreign buyers, thereby reducing demand. Treasury yields also rose, with the 2-year note climbing 9.3 basis points to 4.061% and the 10-year note gaining 5.2 basis points to 4.018%. Higher yields make non-yielding gold less attractive in comparison.

Typically, the combination of a stronger dollar, higher yields, and improving employment data would be enough to send gold prices lower. Yet, defying these typical market dynamics, gold for December delivery settled $30.90 higher at $2,463.30 per ounce, a 1.27% increase.

This resilience was foreshadowed on Wednesday, when gold futures traded largely unchanged, closing just $0.20 below the opening price. This price action created a Japanese candlestick pattern known as a "doji," which occurs when a commodity or stock opens and closes at virtually the same price. To Eastern technical analysts, the doji candlestick can signal a potential key-reversal or pause in a trend.

The fact that gold was able to rebound strongly in the face of these apparent headwinds suggests the recent price correction may be drawing to a close. Over the past several weeks, gold had declined from its August highs near $2,500 per ounce, leading some to wonder if the precious metal's remarkable rally since the start of 2023 was running out of steam.

However, Thursday's performance, combined with the preceding doji candlestick, indicates that gold may be finding its footing. The ability to advance in the face of a stronger dollar, higher yields, and improving economic data points to underlying strength and resilience in the gold market.

For those who would like more information simply click on one of the links below:

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Gary Wagner

Time to Buy Gold and Silver

Tim Moseley

U.S. dollar is 'the biggest asset bubble,' all roads lead to more money printing – Mark Moss

The inevitable consequences of a recession in the U.S. are more money printing, liquidity injections and inflation, according to Mark Moss, Host of 'The Mark Moss Show' and Partner of the Bitcoin Opportunity Fund, who warns that the U.S. dollar is the biggest asset bubble.

"We're in the situation where all roads lead to more government printing and more inflation," Moss told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "If we were to have a recession, that just means more inflation … The Fed is between the rock and the hard place; there's no way out. The government cannot afford a recession. Typically, when we see a recession, we see tax receipts drop by somewhere between 12 to 15%. They can't afford that."

 

There's a big difference between a recession and how asset prices perform, Moss noted, saying that the Fed will inevitably inject more liquidity into the economy, causing asset prices to "crash up" due to devaluation and debasement of the U.S. dollar's purchasing power.

For insights on Moss' 'crash up' theory, watch the video above.

He explained that it all comes down to the fact that the U.S. is running on a debt-based monetary system, with the national debt now surpassing $35 trillion.

"Money is created through debt issuance. That means the dollar is a liability, and the debt is an asset. Then, it becomes collateral for more debt. The problem is that if these asset prices start to fall, then there's not enough collateral for the other debt that's out there. And that will cause a massive downward spiral that we could not handle," Moss said.

This cycle ultimately leads to more liquidity injections into the economy, with more money ending up in assets like equities, real estate, Bitcoin, and gold.

“We know that the S&P 500 moves up exactly like the global liquidity,” Moss noted. “Gold has a sensitivity ratio of 1.49. So that means for every 10% rise in liquidity, gold goes up by 14%. Bitcoin has an 8.95 sensitivity, which means for every 10% rise in liquidity, Bitcoin goes up by 90%.”

Moss also pointed out that individuals do not really own anything in a debt-based monetary system. “The money in the bank is legally not your money. That money is owed to you. Stocks – you don't actually own those legally, your broker owes them to you. The house that you've paid off, you don't really own that. You have to pay monthly to the County assessor, or they take that from you,” Moss stated.

Watch the video above for his explanation how the debt-based monetary system works.

Perhaps the biggest issue for investors is the state of the U.S. dollar. Moss stated that as the dollar continues to lose its purchasing power, it creates an illusion of asset price bubbles forming in areas like real estate and stocks. However, the real bubble lies in the dollar's value.

"It's not that stocks are in a bubble or homes are in a bubble. It's the dollars that are in a bubble," he said. "We're looking at the underlying denominator – the U S dollars – a manipulated denominator. We're not realizing the bubble is actually in the denominator – the dollars."

 

For more on Moss' "dollar is the biggest asset bubble" theory, watch the video above.

What's next for Bitcoin?

If former President Donald Trump wins the election, Moss sees Bitcoin hitting $400k towards the end of 2025. For his more precise timeline and Bitcoin price forecast for the end of this year, the start of 2025, and the longer term, watch the video above for insights.

 

This video is brought to you by Swan Bitcoin:

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Anna Golubova

Time to Buy Gold and Silver

Tim Moseley

Gold Market Experiences Fourth Consecutive Day of Decline

 

The gold market has been experiencing a turbulent period in August, with prices declining for the fourth consecutive trading session. This downward trend began on August 1, when the December gold contract decline by the fractional amount of $2.50, after opening at $2,493.40. As of the latest report, the most active December contract has fallen to $2,432.10, representing a significant drop of $20. Gold is currently trading in Australia down an additional -$1.50, taking December gold to $2429.80

The recent decline in gold prices can be attributed to several factors, including concerns about a potential U.S. economic recession and fluctuations in Treasury yields. The latest jobs report revealed an increase in the unemployment rate to 4.3%, its highest level since October 2021, fueling worries about the economy's health.

 

U.S. Treasury yields have also played a role in gold's recent performance. The two-year note yield rose by 7.9 basis points to 4.016%, while the 10-year Treasury note yield increased by 11 basis points to 3.908%. These changes in bond yields, coupled with a slight strengthening of the U.S. dollar index (up 0.15% to 102.685), have contributed to the downward pressure on gold prices.

The economic uncertainty has led to increased speculation about the Federal Reserve's upcoming monetary policy decisions. The probability of a more aggressive rate cut at the September Federal Open Market Committee (FOMC) meeting has risen dramatically. Just one month ago, the likelihood of a 0.5% rate cut was only 5.5%. However, this probability surged to 85% yesterday before settling at 71.5% today.

 

According to the CME's FedWatch tool, which analyzes interest rate futures to predict monetary policy changes, there is now a 100% certainty of a rate cut next month. The tool suggests a 71.5% chance of a 0.5% cut and a 28.5% probability of a more modest 0.25% reduction.

These market dynamics highlight the complex interplay between economic indicators, monetary policy expectations, and precious metal prices. As investors and traders navigate this uncertain landscape, they must consider a range of factors, including employment data, Treasury yields, dollar strength, and potential Federal Reserve actions.

 

The gold market's recent volatility serves as a reminder of the metal's sensitivity to economic conditions and policy shifts. As the September FOMC meeting approaches, market participants will be closely monitoring further economic data and policy signals to gauge the future direction of gold prices and the broader financial markets.

 

For those who would like more information simply click on one of the links below:

 

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Gary Wagner

Time to Buy Gold and Silver

Tim Moseley

Gold prices recover as equities stabilize, silver and platinum face further downside risk – FX Empire’s Zernov

Gold markets came under pressure as traders sold their strongest assets to cover positions during Monday’s global market downturn, but recovered as traders covered their positions, while silver lost more than 5% as the gold/silver ratio shot higher, and platinum prices are nearing critical support at $900, according to analyst Vladimir Zernov at FX Empire.

“Gold rebounded from session lows as traders reacted to the better-than-expected ISM Services PMI report,” Zernov wrote. “From a big picture point of view, it looks that traders sold gold to raise money during global market sell-off.”

Meanwhile, silver continues to see strong selling pressure as the gold/silver ratio rallied above the 88.50 level.

“If silver stays below the support at $27.20, it will move towards the next support level at $25.20 – $25.60,” Zernov warned. “RSI is in the moderate territory, so there is enough room to gain momentum in the near term.”

Platinum is also down over 5% as fears of a U.S. recession mount. “Unlike gold markets, platinum markets are not trying to rebound as traders fear that demand for platinum would decline in the upcoming months,” Zernov wrote.

“A move below the $900 level will push platinum towards the support at $880 – $890,” he said.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Gold Price Forecast – August 2024

Gold News

Key Takeaways

Gold hits another all-time high above $2,483/toz in July as flows remain supportive.

Markets price in further easing of US rates for the remainder of 2024, softening the USD.

Gold now appears to be trading in a slightly widening ascending channel.

Gold Hits New High Amid Solid Sentiment and Political Risk

Gold hit yet another all-time high above $2,483/toz during July, with the attempted assassination of former President Trump appearing to give the precious metal a significant, if temporary, boost. At the time of writing much of these gains have been retraced, although this still leaves gold 0.4% higher month-on-month.

We discuss the most recent macroeconomic support for gold in detail below, but clearly, the precious metal continues to enjoy flow support from several sources. While the People’s Bank of China (PBoC) appears to have made no net purchases for two months in succession (May & June) the Reserve Bank of India (RBI) recorded its largest monthly purchase of gold in almost two years in June. Overall, the pace of central bank purchases seems to have moderated, though as highlighted in last month’s Gold Price Forecast, the longer-term prognosis remains favourable.

Turning to private sector demand indicators, we note that, despite elevated gold prices (1), physical gold ETF aggregate flows have remained positive in recent weeks, with both the US and Europe being notable sources of demand strength. Elsewhere, the most recent Commitments of Traders (CoT) report from the CFTC suggests that speculative gold futures positions are now at a 15-month high (2), while the newly announced reduction in Indian gold and silver import tariffs (from 15% to 6%) is also likely boost gold (and silver) demand going forward (3).

US Rate Outlook Also Lending Greater Support

Having rejected the Fed’s hawkish rhetoric in June, rate markets pushed back further in July, with an increasingly dovish outlook being priced in for the remainer of 2024. Two-year US Treasury yields are now trading some 30bps lower month-on-month while 10-year yields have moved 10bps lower.

A quarter-point rate is now all but priced in at the Fed’s next rate decision on 31 July, while Fed Fund Futures imply over a 90% probability of two or more quarter-point cuts by the end of 2024 (4). In response, the US Dollar Index (DXY) has traded mildly lower. All of this is supportive of ‘zero-yielding’ USD-denominated assets such as precious metals (5).

These dovish developments have been underpinned by both incoming US economic data and subsequent statements from the Federal Reserve. Inflation data, both at a headline and core rate, suggests a continued resumption of a downward trend, while growth indicators such as employment, services and manufacturing activity and jobless claims all point to a slowing US economy. Notably, Chairman Powell’s most recent testimony to Congress acknowledged that maintaining a restrictive monetary policy now entailed greater two-way risks to the Fed’s dual mandate on growth and inflation.

Technical Analysis

Gold now appears to be trading in a slightly widening ascending channel with the upper bound formed by the 12 April, 20 May and 17 July tops and the lower bound by the 3 May, 7 June, 26 June bottoms, having failed to sustain a breakout at the recent high. This channel currently ranges between $2,489/toz (resistance) and $2,300/toz (support). More immediate support is offered by the rising 50-day Simple Moving Average at $2,361/toz.

We note that gold is also currently trading above, but close to, the sharply rising 20-day Simple Moving Average at $2,386/toz. However, we would view this notional support as being rather weak, given the widespread 50-day Simple Moving Average and neutral momentum indicators.

Key Drivers Ahead

Upcoming events for gold investors include July Eurozone Flash Inflation on 31 July, FOMC US rate decision and press conference on 31 July, July US Non-Farm Payroll data on 2 August, July US ISM Services PMI on 5 August, July US CPI Inflation data on 14 August, July US Retail Sales on 15 August, US FOMC Minutes on 21 August, Jackson Hole Symposium 22-24 August, August Eurozone Flash Inflation and July US PCE Inflation on 30 August.

 

Citations

1. https://www.lbma.org.uk/prices-and-data/precious-metal-prices#/table

2. https://www.gold.org/goldhub/data/gold-etfs-holdings-and-flows

3. https://www.cftc.gov/dea/options/other_lof.htm

4. https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2024

5. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

Mike Ingram

Time to Buy Gold and Silver

Tim Moseley

Hoard of gold coins from 400 BC found buried in Turkey

An ancient treasure trove of rare Persian gold coins dating back to the Peloponnesian War was recently unearthed by archaeologists in Turkey.

University of Michigan archaeologist Christopher Ratté and his research team discovered the bullion coins purely by chance while digging beneath the courtyard of a house in the ruins of Notion, an ancient city-state in modern-day Turkey. “The coins were buried in a corner of the older building,” Dr. Ratté told the New York Times. “We weren’t actually looking for a pot of gold.”

The researchers first uncovered a small clay jug, called an olpe, which was reason enough to rejoice. But hidden inside the olpe were dozens of gold coins, known as darics.

In the fifth century B.C., darics were mainly used to pay soldiers and mercenaries, with one daric equal to a month’s salary, so Ratté speculated that one such soldier may have buried his life savings, representing years of pay, in the jug before being killed in battle.

University of Oxford archaeologist Andrew Meadows, who was not involved in the dig, said he was not aware of any other gold coin stash of this type ever being discovered in Asia Minor. “This is a find of the highest importance,” Meadows said. “The archaeological context for the hoard will help us fine-tune the chronology of Achaemenid gold coinage.”

The Notion archaeological site covers 80 acres in western Anatolia, which divides Asia from Europe and has been a strategically critical piece of land for thousands of years. Notion was one of the Greek-speaking communities that arose during the beginning of the first millennium B.C. and the gold coins were buried during a time of war between the regional powers over the contested frontier zone.

 

“This was true in deepest antiquity, as remembered in the story of the Trojan War,” Dr. Ratté said. “And it remains true to this day, as demonstrated by the Syrian refugee crisis.” He pointed out that the small harbor to the east of the city was one of the departure points for Syrian refugees fleeing to Europe during the refugee crisis of 10 years ago.

Anatolia is the birthplace of the stater, the first state-issued coin in Western world history, which was minted by the seafaring Lydian people. The weight and design of the Lydian stater was standardized by King Alyattes around 610 B.C., who struck the coins in electrum, a natural alloy of gold and silver.

The king’s son and successor, Croesus, is credited with minting the first true gold coin, known as the Croeseid, and the expression ‘rich as Croesus’ is a reference to the massive gold riches of Lydia during his reign.

According to the Greek historian Thucydides, an Athenian general named Paches attacked and killed a group of Persian-aligned mercenaries at Notion In 427 B.C. after luring their commander into a trap. The Persian loyalists were then expelled, and Notion came under Athenian rule. Twenty years later, an important naval battle in the Peloponnesian War between Athens and Sparta was fought off the coast of Notion, which the Athenians used as a naval base.

Archaeologists digging at the Notion site – Credit: Notion Archaeological Project/University of Michigan

Dr. Ratté said that the buried gold coins might have been connected to the events of 427 B.C., or with the Athenian evacuation of Notion.

“It is possible it was not associated with either of these dramatic events,” he said, “but was simply the savings of a veteran mercenary soldier in a time and place when soldiers of fortune could make a lot of money if they were willing to risk their lives for the highest bidder.”

In 387 B.C., Notion and the rest of Ionia were reconquered by the Persian Empire, until the conquest of Alexander the Great in 334 B.C. Alexander and his immediate successors had many of the existing gold darics melted down and recast with their own image instead, which is why darics like the Notion trove are so rare today.

The Notion darics bear the likeness of the Persian king kneeling in a long tunic with a bow in his left hand and a long spear in his right, while the backs of the coins were left blank.

Dr. Ratté said that the fact that the treasure was never reclaimed is a clear indication that its owner was killed. “No one ever buries a hoard of coins, especially precious metal coins, without intending to retrieve it,” he said. “So only the gravest misfortune can explain the preservation of such a treasure.”

The gold coins are being stored at the Ephesus Archaeological Museum in Selcuk, Turkey, along with Athenian pottery also recovered at the Notion site.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Wall Street experts see gold gaining on renewed recession fears, Main Street bullishness not far behind

Gold enjoyed one of its strongest runs of the year this week, as downbeat U.S. data and a more dovish Fed combined to boost the yellow metal, and even Friday's flash crash did little to dampen precious metals traders' enthusiasm.

Spot gold kicked off the week trading only a couple of dollars below the $2,400 per ounce level, and the yellow metal’s price held steady between $2,375 and $2,400 before breaking definitively through resistance at 1:00 pm EDT on Tuesday as weaker-than-expected U.S. manufacturing data cemented traders’ certainty that the Fed would lean dovish on the last day of the month.

Gold traders kicked off Wednesday’s North American session by pushing spot gold to a fresh weekly high close to $2,430 per ounce, before pulling back to await the Fed’s rate announcement and Chair Powell’s press conference.

The yellow metal liked what it heard, with spot gold rocketing from $2,422.43 just before the 2:00 pm release of the monetary policy statement to a fresh weekly high of $2,457.86 shortly after 9:00 pm EDT. Gold then traded in its newly established elevated range between $2,430 and $2,460 as weekly jobless claims reinforced the view of a weakening U.S. economy.

Friday morning, however, brought the ultimate confirmation, with U.S. nonfarm payrolls for July coming in well below expectations, and the unemployment rate ticking up two-tenths to 4.3%. This drove spot gold to a double top above $2,470 per ounce, after which precious metals followed the broader market sharply lower as traders abandoned risk assets across the board. Spot gold saw one of its sharpest selloffs of the year, falling from $2,471.96 per ounce at 10:00 am EDT all the way to $2,413.69 just one hour later.

But gold prices bounced along with equities, and spot gold returned to trade above $2,430 per ounce for the remainder of the North American session.

The latest Kitco News Weekly Gold Survey shows retail investors overwhelmingly expect the yellow metal to make further gains next week, while industry experts are even more convinced of gold’s upward trajectory.

Adrian Day, President of Adrian Day Asset Management, expects gold prices to push higher next week.

“Gold has a real shot at breaking above its previous high as the U.S. economy weakens and the odds of a rate cut increase,” Day said. “At his press conference earlier in the week, Fed Chairman Jerome Powell was almost champing at the bit to cut rates but waiting for the opportunity to do so. He now has that opportunity. In the last several rate-cutting cycles, when the Fed starts to cut rates, gold moves up.”

Marc Chandler, Managing Director at Bannockburn Global Forex, sees the price action settling down next week. “The sharp drop in US rates and a weaker dollar helped push gold higher,” he said. “In the spot market gold had its best week in nearly four months, rising by about 3.6%, with about a third of the gains coming at the end of the week.”

Chandler noted that the U.S. 2-year yield fell more than 40 basis points last week, the biggest weekly decline of 2024. “Gold looks set to challenge last month’s record high (~$2483.75, spot),” he said. “The upper Bollinger Band is slightly above $2480. It is difficult to talk about resistance in uncharted waters, but $2500 is the next psychological target. Expect a quieter week ahead.”

“I’m taking a different tack this week,” said Darin Newsom, Senior Market Analyst at Barchart.com. “Technically, it is a coin toss with no clear trend signals. The daily chart for Dec gold shows the contract has rallied off the low end of its recent range, meaning it could test the high end near $2,540.”

Michele Schneider, Chief Strategist at MarketGauge.com, is bullish on the yellow metal for next week. “Gold needs to hold $2450,” she said.

Bob Haberkorn, Senior Commodities Broker at RJO Futures, said Friday’s dramatic selloff was driven by fears of a recession following the weak U. S. job report. “I think if anything, there's an opportunity right here to buy gold,” he said as the yellow metal’s spot price traded near $2,420 per ounce. “I think they're throwing the baby out with the bath water.”

Haberkorn said he didn’t see gold’s sharp drop as evidence that traders were taking short positions. “I think it's profit-taking, stops getting triggered,” he said. “As well, there could be people having some margin issues across the board in equity-type accounts, so they're liquidating everything. I think that's what this whole move is all about.”

“If you look at the headlines and what's going on in the world at this moment, gold is a safe haven asset,” he added. “It should be trading higher.”

Haberkorn said he expects gold to trade higher into the weekend, and to pick up wherever it leaves off on Monday. “In the next week, I would not want to be selling gold,” he said. “People are looking to get out of stuff heading into the weekend. There is a lot of risk this weekend with Iran and Israel. This selloff looks way overdone to me.”

“I think we'll see gold higher in the next week, just because I think it'll flip after today's selloff,” he added. “I think the reality sets in, you get the flight to safety in this market here. The fear of recession and weak jobs number alone should be pushing gold higher, and it continues higher next week to take out that $2,500 level again.”

This week, 14 analysts participated in the Kitco News Gold Survey, with Wall Street optimism on gold surging after equities were staggered amid economic and geopolitical threats. Eleven experts, fully 79% of the total, expect to see gold prices post further gains next week, while only one, or 7%, predicts a price decline. The remaining two analysts, or 14%, see gold trending sideways during the week ahead.

Meanwhile, 191 votes were cast in Kitco’s online poll, with the bullishness of Main Street investors coming in just behind the experts. 140 retail traders, or 73%, looked for gold prices to rise next week. Another 28, or 15%, expected the yellow metal to trade lower, while 23 respondents, representing 12%, saw prices in a consolidation pattern next week.

After digesting a multiplicity of significant economic news events this week, markets will get a well-earned breather during the week to come. The highlights, such as they are, will be the ISM Services PMI for July on Monday, and the Reserve Bank of Australia's monetary policy decision on Tuesday.

Markets will also keep a close eye on the U.S. 10-year bond auction on Wednesday and the 30-year auction on Thursday after the dramatic rally in Treasuries seen at the end of the week.

Christopher Vecchio, head of futures strategies and forex at Tastylive.com, is neutral on gold next week, but he is bullish into the year-end. “Dips should be bought,” he said.

James Stanley, senior market strategist at Forex.com, sees no reason to doubt the precious metal. “Bulls are still in control,” he said. “Once $2500 trades in spot, that could change, but in my view, buyers still have the handle.”

Adam Button, head of currency strategy at Forexlive.com, said he’s looking through the equity selloff and watching Treasuries as a true barometer for market sentiment. “The bond market is sniffing out some big trouble and it has been all week,” he said. “The job report's not that bad.”

Button said that with the benefit of hindsight, he thinks the Fed has made a messaging error. “They should have spent a lot more time earlier saying ‘we're going to ease, we're going to start to ease, we want to move slowly and gradually, so we need to start to ease well before inflation moves down,’” he said. “Going from five and a half down to five and a quarter, it still leaves us very restrictive, and you're not waiting.”

“Now everybody's past inflation,” he said. “Nobody's seeing real inflation now that we're getting Intel laying off 20,000 people. So inflation is over, they got a little bit screwed by the data early in the year, that was a bit tough. But [they thought] they had to have this high level of confidence.”

“Generals always fight the last war, I say that a thousand times,” he added. “You knew the Fed was going to be late because of that, and they're late, and now the market thinks they're late. Now they're in a position where in order to catch up, the Fed has to start cutting pretty dramatically.”

Button said the tail will now begin wagging the dog. “The market has an ability to bully the Fed, and I think we've forgotten that a little bit, because the COVID cycle was a different kind of cycle,” he said. “But you got to go back to the QE era… it's been a while since the market has bullied the Fed.”

The irony for gold, Buton said, is that when markets get too scared, they sell the precious metal as well. “Gold has that problem with too much of a good thing,” he said. “And everybody remembers COVID. Everyone who was long going into COVID and thought gold would be the place to be, it eventually was, but it certainly wasn't in March 2020.”

“It's high,” he added. “In an uncertain environment, the instinct is to always take profits on good trades. And gold has been a wonderful trade this year.”

Button said the smart move might be to stay on the sidelines in the near term. “I like gold into the fall,” he said. “I just don't like rushing to buy it. I still think it probably can go higher next week, but it's just not that easy to buy gold right here.”

“It's no time to be a hero,” he added. “I think that's just the message here. If this is a dollar-weakening cycle, a recession cycle, there's going to be plenty of time to make money in gold, and I like it as much as anyone. Just not in August. Maybe in October.”

Michael Moor, Founder of Moor Analytics, sees downside risks for gold prices next week. “The trade above 23276 (-2 tics per/hour) warned of decent strength—we have attained $185.8,” he said. “The trade above 24296 (-4.8 tics per/hour) projects this upward $55 (+)—we have attained $83.8. Decent trade below 24543 (+4 tics per/hour starting at 1:30 pm EST) will project this downward $30 minimum, $70 (+) maximum; but if we break below here decently and back above decently, look for decent short covering.”

“A maintained gap lower Monday will leave a minor bearish reversal above,” Moor noted.

And Kitco Senior Analyst Jim Wyckoff said he expects the recent consolidation to continue next week. “Higher, as the fundamentals and technicals are both bullish at present,” he said. “New highs likely in the near term.”

At the time of writing, spot gold last traded at $2,436.21 per ounce for a loss of 0.42% on the session, but a gain of 2.02% on the week.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley