What’s keeping silver down while gold hold above $2,400?

Gold has been able to maintain a solid uptrend, building a new base with each rally; however, this momentum has not filtered through the entire sector as silver struggles to find its footing.

While gold is fighting for support at higher lows around $2,400 an ounce, silver is struggling around $29 an ounce. Silver's underperformance compared to the yellow metal has pushed the gold/silver ratio to its highest level in two months, back above 82 points.

The gold/silver ratio has jumped 14% from its multi-year lows seen in May. September silver futures last traded at $29.185 an ounce, down 0.45% on the day; meanwhile, August gold futures last traded at $2,405 an ounce, up 0.43% on the day.

Some analysts have said that gold is benefiting as a safe-haven asset because of rising geopolitical uncertainty, fueled by the U.S. elections in November.

“Silver usually follows the price movements of gold disproportionately. However, this has recently only applied to the downside. The previous upward movement in gold following the US inflation figures was more or less ignored by silver,” said Carsten Fritsch, Commodity Analyst at Commerzbank. “The relative weakness in silver is likely due to the weakness in base metals. This is because industrial applications are expected to account for almost 60% of silver demand this year.”

Commerzbank noted that base metals are struggling due to weakening demand in China; however, the analysts said that the selloff in base metals is overdone.

“On the one hand, the rate cuts by the central banks that have already been made, and those still to come in the coming months, should lead to an economic upturn, which should brighten the currently very negative market sentiment,” the analysts said. “On the other hand, the lower price level should put pressure on metal producers to curb production.”

Although silver continues to struggle, many investors are still not ready to give up on the precious metal.

In a recent interview with Kitco News, Robert Minter, Director Of Investment Strategy at abrdn, said that he expects silver to eventually outperform gold as the Federal Reserve starts to cut interest rates.

“Looking at the last three rate cycles, in 2000 gold went up 57%, but silver went up 65%; in 2006, gold went up 235%, but silver went up 318%; and in late 2018, gold went up 69%, but silver went up 101%,” he said. “Silver is the higher beta play.”

In a comment to Kitco News, Julia Cordova, Founder of Cordovatrading.com, said that while silver is struggling, she remains optimistic that it can regain its luster.

“Silver followed through on the confirmed weekly bearish divergence from last week, and the weekly close was outside of the possible pennant structure to the downside, but I think it is likely to outperform the yellow metal this week if it can regain $29.855. $28.41 is strong support," she said.

While silver has managed to push back above $29 an ounce, James Hyerczyk, Senior Technical Analyst at FXempire, said that the key support level to watch is around $28.50 an ounce.

“The short-term outlook for silver appears bearish. The metal’s dual nature as both a precious and industrial metal is currently working against it,” he said. “Traders should watch for a potential break below the $28.57 support level, which could trigger further downside. However, upcoming economic data, shifts in Fed policy expectations, or changes in industrial demand could provide volatility and potential turning points in the silver market.”

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Neils Christensen

Time to Buy Gold and Silver

Tim Moseley

Gold prices fell sharply on Friday, adding to two previous days of losses, after the US dollar strengthened, putting precious metals prices under pressure.

Prices fell as low as $2,395 an ounce on Friday, down from a high of $2,475 an ounce on Thursday. The latest losses come in the context of a fresh all-time high of $2,484 an ounce seen on Wednesday, which came as the markets reacted to softer than expected inflation in June and a strengthening of expectations that the US Fed will start to cut interest rates in September.

KAU/USD 1-hourly Kinesis Exchange

The US dollar strengthened against other major currencies on Thursday and Friday after data showed that manufacturing in the US mid-Atlantic region increased more than expected in July after a surge in new orders.

A stronger US dollar makes dollar-denominated gold more expensive for buyers in other currencies, weakening demand and contributing to gold price weakness.

Gold’s fall through the second half of the week means the yellow metal has re-visited the price levels of $2,400 an ounce seen in the previous week ending July 12.

Despite gold’s price slump this week, from a technical standpoint, the charts suggest a cautiously bullish outlook. This is based on a combination of prices testing support at around $2,300 an ounce multiple times in May and June, and successively higher peaks seen in April, May and July. Taken together, these price movements indicate a solid support base and a willingness to test further upside.

On the political front, the uncertainty level was cranked up a notch over the weekend after US President Joe Biden announced he would be stepping down from the presidential race ahead of the November 5 election, leaving questions over who will lead the Democrats’ re-election bid. A growing number of senior Democrats are backing vice-president Kamala Harris, according to news reports over the weekend.

Looking ahead, Tuesday will see the release of Euro Area consumer confidence figures for July, while a flurry of industry and manufacturing figures are due out on Wednesday next week, including from Japan, India, the Euro Area, UK and US.

The markets will also be watching out for Wednesday’s interest rate decision by the Bank of Canada, which is expected to cut rates to 4.5% after a cut to 4.75% in June from the previous 5%. The upcoming decision comes in the context of a start to rate cuts by other central banks, including the ECB in June. Meanwhile, the Bank of England has yet to start cutting rates, while the US Fed is widely expected to make cuts in September.

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Biden, 81, pulls out of presidential race, will serve out term

WASHINGTON, July 21 (Reuters) – U.S. President Joe Biden ended his reelection campaign on Sunday after fellow Democrats lost faith in his mental acuity and ability to beat Donald Trump, leaving the presidential race in uncharted territory.

Biden, in a post on X, said he will remain in his role as president and commander-in-chief until his term ends in January 2025 and will address the nation this week.

"It has been the greatest honor of my life to serve as your President. And while it has been my intention to seek reelection, I believe it is in the best interest of my party and the country for me to stand down and to focus solely on fulfilling my duties as President for the remainder of my term," Biden wrote.

By dropping his reelection bid, he clears the way for Vice President Kamala Harris to run at the top of the ticket, the first Black woman to do so in the country's history.

Biden, 81, did not mention her when he announced his move.

It was unclear whether other senior Democrats would challenge Harris for the party's nomination, who was widely seen as the pick for many party officials – or whether the party itself would choose to open the field for nominations.

Biden's announcement follows a wave of public and private pressure from Democratic lawmakers and party officials to quit the race after his shockingly poor performance in a televised debate last month against Republican rival Donald Trump.

Reporting by Kanishka Singh, Jeff Mason, Jarrett Renshaw and Steve Holland, Leah Douglas, Susan Heavey and Tyler Clifford; Editing by Heather Timmons, Daniel Wallis and Leslie Adler

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Reuters

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Tim Moseley

Wall Street is balanced and cautious on gold next week, Main Street remains optimistic about price gain 

Precious metals traders rode a roller coaster of optimism and greed higher this week, as markets cemented expectations for a rate cut from the Federal Reserve at their September meeting. But gold prices may have pushed too high too quickly, with the ensuing pullback dragging the yellow metal right back to where it started.

Spot gold opened the week trading at $2,411.65 before moving down to test support near $2,400 per ounce shortly after 3:00 am early Monday morning. This level of support held, and it started the precious metal’s upward climb. After hitting an intraday high of $2,436 per ounce shortly after 11:00 am EDT on Monday, spot gold saw a retracement down to the $2,420 area following comments from Fed Chair Jerome Powell, which were dovish on balance.

Prices then began trending higher during the Asian session, and by Tuesday morning gold was trading above $2,440 per ounce. Prices saw a dip to the low $2,430s following the release of a slightly better-than-expected U.S. retail sales report for June, but they rebounded sharply thereafter, and by Tuesday evening spot gold had set a new all-time high above $2,482 per ounce.

Traders then turned their attention to the next Fed speaker on the docket, Christopher Waller, whose comments shortly after 9:30 am that “the time to lower the policy rate is drawing closer” appeared to confirm the market’s optimism for a fall rate cut. This drove spot gold to a fresh all-time high above $2,483 per ounce, but the yellow metal couldn't break decisively through resistance, and the sharp retracement that followed drove the price to an intraday low of $2,452 per ounce.

Asian and European traders once again boosted gold into the low $2470s, but after a higher-than-expected weekly jobless claims report on Thursday morning followed by a failure to break back above $2,470, spot gold began its long march lower, falling from $2,468.48 just before 11:00 am EDT on Thursday to Friday morning’s weekly low of $2,393.88 just before the North American market open.

Gold prices have continued to test the critical $2,400 per ounce level throughout Friday's trading session, but at the time of writing, spot gold had yet to see a decisive break below.

The latest Kitco News Weekly Gold Survey shows industry experts returning to a balanced stance, while retail sentiment remained optimistic about the coming week.

“Unchanged,” said Adrian Day, President of Adrian Day Asset Management. “Gold will likely need to consolidate before moving back up. Additional hints of the Federal Reserve starting its rate cutting cycle, however, could see gold up any time.”

Darin Newsom, Senior Market Analyst at Barchart.com, sees gold continuing to trend lower in the near term.

“I’m sticking with the idea gold remains in an intermediate-term downtrend on weekly charts,” Newsom said. “Looking at the more heavily traded December issue, a close below last Friday’s settlement of $2,469 would bring to an end the string of 3 consecutive higher weekly closes, fitting with a normal technical pattern. With weekly stochastics still neutral, meaning there is time and space for Dec futures to move lower, I’m looking for Dec24 to test its previous series of lows near $2,350.”

“Neutral,” said Adam Button, head of currency strategy at Forexlive.com. “The market impressively shook off the news that China has halted buying (at least temporarily) but the heavy profit-taking late in the week will be tough to reverse. Eyes are on US politics.”

“May have seen a double-top in gold,” said Mark Leibovit, publisher of the VR Metals/Resource Letter. “I have been cautious and occasionally hedging with inverse gold and silver ETFs. Risk is a near-term move down to 1900-2000, despite my longer term of 2700.”

“As always, taking it a day at a time,” Leibovit added. “Currently own NO precious metal positions, which were sold a few days ago.”

Analysts at CPM Group are recommending that investors stand aside next week, cautioning that the $92.7 price decline over the last two days “could potentially be repeated in the coming days or weeks, not only on the downside, but also on the upside.”

“Should prices settle below $2,400 today, Friday 19 July, liquidation selling on Monday could be heavy,” they said. “Or, with more bad political news the price could spike higher once again.”

CPM sees the price action for the next two weeks skewed to the downside, but the outlook is skewed to the upside after that. “In such a volatile environment, prices could move sharply either way, potentially testing $2,300 and possibly reaching $2,500 once more,” they said. “Any downside risk is likely to be short-lived, with investors using price softness as a reason to buy gold to hedge against the numerous risks.”

Bob Haberkorn, Senior Commodities Broker at RJO Futures, said that while Friday’s price weakness looked dramatic, it wouldn’t impact gold’s appeal in the medium term.

“The pullback we're seeing this morning is pretty significant,” he said. “But I think, news-wise, nothing's really changed. Bond futures are down, but the rates are pretty significant, they’ve come up a little bit here, and the dollar’s a little stronger.”

“I think what you're seeing here is just a liquidation of some of the weaker longs from the week, and it's overdone itself,” Haberkorn said. “I mean we tested $2,400, the low on the August [contract] was $2,395. I think overall it's just a shakeout of some of the weaker longs and concern about weakening demand out of China.”

Haberkorn doesn’t expect the yellow metal to stay down for long. “I think this move lower is going to be short-lived, and you'll see it as a buying opportunity,” he said. “There's no comment by the Fed that I saw on rates, or not doing a rate cut, that would justify this kind of move.”

“The geopolitical situation hasn't changed this week,” he added. “If anything, it's gotten even riskier on the geopolitical front, and with the U. S. election. And then there was news last night of some attacks inside of Israel along with the continuation of what's going on in Europe and the Ukraine.”

On the recent turmoil surrounding the U.S. election, Haberkorn said he doesn’t think a Biden withdrawal would materially impact precious metals.

“I don't think if he drops out, it would necessarily be a shock to anybody, or to the market, where it would impact gold prices or silver prices,” he said. “If there were, the shock would be the unknown. Do they go with Harris, or do they go into an open convention floor in Chicago in two weeks? There's unknowns there, but I think a lot of this is baked into the cake.”

Haberkorn sees the Fed and interest rate expectations as the main driver for gold right now. “I think If Biden drops out, it'll be a big deal, but I don't think it will be for gold. It's not going to be a game-changer in any direction.”

This week, 16 Wall Street analysts participated in the Kitco News Gold Survey, and the results showed a return to a balanced and uncertain outlook for the precious metal. Six experts, representing 38%, expect to see gold prices rise next week, while the same number predict a price decline. The remaining four analysts see gold trending sideways during the week ahead.

Meanwhile, 168 votes were cast in Kitco’s online poll, with Main Street investors remaining bullish but tempering their expectations compared to last week. 103 retail traders, or 61%, looked for gold prices to rise next week. Another 36, or 21%, expected the yellow metal to trade lower, while 29 respondents, representing the remaining 17%, saw prices trading within a range next week.

Investors will be paying attention to key inflation data next week with the release of June’s core Personal Consumption Expenditures Index on Friday morning. The Federal Reserve’s preferred inflation gauge could deliver the final confirmation that inflation is trending definitively downward, with the CME’s FedWatch Tool already indicating a more than 90% chance of a rate cut by the end of the summer.

Markets will get the first look at the second-quarter Gross Domestic Product with the release of Advance Q1 GDP on Thursday, along with durable goods orders and weekly jobless claims. Traders will also watch for key housing data with Tuesday’s existing home sales and Wednesday’s new home sales.

And the Bank of Canada will issue its monetary policy decision on Wednesday, with economists saying that weaker inflation data gives the central bank room to cut its interest rate.

Marc Chandler, Managing Director at Bannockburn Global Forex, believes the dollar and bond yields will strengthen, tamping down gold’s potential gains. “Gold is correcting lower after setting a record high near $2484,” he said. “I look for USD and US rates to push higher. This will likely see gold come off. A break of $2388 gives potential toward $2350-$2365. Momentum indicators look positioned to turn down.”

Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, was attempting to gauge the drivers of market sentiment amid Friday’s downturn.

“I think we're mostly seeing fairly significant trading correction in gold,” he said. “It ran up pretty hard over a couple of weeks, from $2,300 to $2,480. That's $180. So it's given back not quite half of that, which is not unusual, and a 50 percent correction after a short-term move is no big deal.”

Cieszynski said it looks like gold is stabilizing around the $2,400 level. “If it does, then that gets encouraging again,” he said. “I still think the medium-term outlook for gold remains positive. There's just so much uncertainty and there's so much volatility out there.”

He also pointed to the moderate bounce in treasury yields and the U.S. dollar. “I think that might have just been enough to spark a bit of a correction,” Cieszynski said. “Plus, of course, it's a Friday in the summertime ahead of a weekend. Over the last several weekends, there was last week with Trump, there was two weeks ago, the French election, there was a European election. You could have people just taking a step back before weekends, especially here in the summertime.”

Cieszynski said Friday’s pullback to support at $2,400 just means that gold prices will have a clear path higher ahead of them to start next week. “It looks like gold has moved up into a higher range, and based on trading so far, it looks like around $2,400 to $2,480,” he said. “And of course, you've got that big $2,500 round number just sitting out there.”

Alex Kuptsikevich, senior market analyst at FxPro, sees significant downside risk to gold prices.

“Pullbacks after making new highs have been a typical pattern for gold in recent months, with similar retreats in May, April, March, and December,” he said in a note shared with Kitco News. “The highs were followed by a pullback, which subsided within about two weeks, leading to a stabilisation of the price and a return to the upside.”

“However, bull markets do not last forever, and traders should look for signs that this bullish trend is reversing,” he warned. “Next week could determine the momentum for months to come. Drops of more than 3% next week could repeat the pattern of 2020 and 2022 with protracted corrections of more than six months.”

“Most worrisome would be a repeat of the 2011 pattern, when the high of $1921 was followed by a 20% sell-off over four weeks,” Kuptsikevich concluded. “This peak was not rewritten until nine years later, and from the global peak to the global bottom, the value of a troy ounce almost halved, declining for more than four years.”

“Down,” said Michael Moor, Founder of Moor Analytics. “The trade above 23276 (-2 tics per/hour) warned of decent strength—we have attained $160.8. The trade above 23437 (-1 tic per/hour) projected this upward $15 minimum, $45 (+) maximum—we have attained $144.7. These are ON HOLD. I warned trade below 24648-12 will warn of pressure, likely decent—we have come off $48.6. Decent trade below 24102 (+2.5 tics per/hour starting at 6:00am) will project this downward $58.00 (+); but if we break below here decently and back above decently, look for decent short covering.”

And Kitco Senior Analyst Jim Wyckoff said he expects a period of near-term consolidation from the yellow metal. “Choppy and sideways amid routine chart consolidation after the record high set this week,” he said.

Spot gold last traded at $2,399.85 per ounce at the time of writing for a loss of 1.86% on the day and 0.54% on the week.

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Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Gold Price News: Gold Hits Fresh All-Time High on Interest Rate Cut Hopes

Gold News

Market Analysis

Gold prices pushed up to a new all-time high on Tuesday, as the markets reacted to US Fed comments suggesting a stronger chance of interest rate cuts in September.

Prices rallied as high as $2,466 an ounce on Tuesday, compared with $2,422 an ounce in late trades on Monday. The latest gains mean gold has topped its previous all-time highs of just over $2,450 an ounce seen on May 20.

KAU/USD 1-hourly Kinesis Exchange

The trigger for the renewed strength for gold was a speech by US Fed chair Jerome Powell on Monday. Powell noted that inflation had come in below expectations in June, suggesting that price increases are coming down towards the central bank’s target. He also said that inflation wouldn’t necessarily need to hit the 2% mark before the Fed starts to cut rates – a bullish factor for gold as lower rates cut the opportunity cost of holding non-yield-bearing assets.

The latest data from interest rate traders shows that the markets have now fully priced in a first US interest rate cut in September, with more than 90% expecting a 25-basis point cut, with a minority expecting a 50-point cut. A second cut is also widely anticipated in November.

Yields on US 10-year treasury notes also fell to a four-month low on Tuesday, providing a supportive element for gold prices.

Looking ahead, Wednesday will see US industrial production figures released for June, for the latest pulse check on the US economy.

Attention will then turn to Europe on Thursday with the ECB set to make an interest rate decision. Few expect anything other than a continuation of the current rate of 4.25% after the bank began its rate-cutting cycle in June, although the markets will be watching out for clues on the future path for monetary policy in a press conference, followed by a speech later by ECB President Christine Lagarde.

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.

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Time to Buy Gold and Silver

Tim Moseley

These defense pacts could trigger WW3 and drag the U.S. into conflict – it's not being covered by mainstream

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These defense pacts could trigger WW3 and drag the U.S. into conflict – it's not being covered by mainstream media teaser image

(Kitco News) – As geopolitics has become a key focus for markets, Hal Kempfer, CEO of Global Risk Intelligence & Planning (GRIP) and retired marine intelligence officer, pointed to a conflict zone that could activate several defense pacts, drag the U.S. into conflict, and trigger World War 3.

"We're not in World War 3; we're definitely in a world of wars," Kempfer told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "Whether those things merge into one larger conflict, that's the big concern."

Kempfer zeroed in on the South China Sea, describing the area as at extreme risk of escalation and calling it the "center of gravity" due to the multiple mutual defense pacts that it could kick in. "It would effectively be World War 3 if the war breaks out in the Pacific," he said.

Kempfer pointed to recent clashes between Chinese and Philippine forces, saying that there's a risk that it could drag the U.S. into a war with China because this could trigger the U.S.-Philippine Mutual Defense Treaty and then spark a major global conflict with various countries. The treaty was signed in 1951 and requires both nations to support each other if attacked by another party.

"I don't ignore what's going on in Europe with the war in Ukraine and certainly what's happening in the Middle East and with Iran. But if you want to look at where there is a huge potential impact, not just in terms of the carnage, but also the impact on markets, you have to look at the South China Sea," he said.

For Kempfer's breakdown of the recent confrontation between China and the Philippines and the potential triggers for conflict, watch the video above.

Kempfer advised looking at the world through a geostrategic lens. "The great fear is that the U.S. gets pulled into a kinetic confrontation with China due to the Philippines, [for example], and then China responds in some ways and triggers our agreement with Japan or something like that," he said. "And next thing you know, you got all the countries in there basically pulled into a big war across the board. That is possible."

For more on potential defense pacts that could be triggered in the area, watch the video above.

Market impact: how crucial is the South China Sea route?

According to Kempfer, the South China Sea is massively important as a shipping area, with more than 20% of all global trade passing through there.

"It's a phenomenal impact," he told Kitco News. "If you look at container shipping, that is a preponderance of stuff that's impacted by what's happening in the South China Sea."

Furthermore, the South China Sea is located right next to the Sea of Japan, which means that a potential conflict with China could impact a larger waterway.

"It's not just material that comes from China or from Taiwan that could be disrupted. It's also the total impact that would have on places like Japan. Hence, Japan has broken out of decades of taking a more passive stance and moved to a much more active and aggressive stance. They are signing a mutual defense agreement with the Philippines, which is rather interesting when you look at the history of Japan and the Philippines and certainly the history of World War 2."

In terms of products, Kempfer added that the impact would also be massively disruptive.

"When people think of China, they think of the manufactured goods 'made in China.' And certainly, that is significant. So literally, store shelves will start going empty," he said. "But it's also much bigger than that. If you look at semiconductors, Taiwan, in certain categories, controls up to 80 percent of the semiconductor industry or market. That would be shut down completely. Certainly, any semiconductors coming from China would be shut down. It would have a phenomenal disruption of the supply chain around the world. It's difficult to think of anything these days that has any electronic components that aren't reliant upon semiconductors."

Rare earths are another area of impact. Watch the video above for Kempfer's outlook on this and China's dominance in this area.

For Kempfer's breakdown of other top geopolitical threats at risk of a flare-up, watch the video above.

U.S. election is 'a time of vulnerability'

Kempfer added that with the U.S. distracted by its own election on November 5th and all the uncertainty surrounding it, foreign actors could use this as an opportune time to stir things up on the geopolitical level.

"With this election coming up … it is a time of vulnerability. It's a time of transition. If somebody's going to try and do something – a foreign actor like China – that's the opportune time to do it," he said. "The election distracts the entire United States and the rest of the world. So it is a time of vulnerability or a window of vulnerability in terms of our ability to react."

The latest round of uncertainty came with the attempted assassination of former President Donald Trump that took place over the weekend. In a shocking incident on Saturday, a gunman opened fire on Trump during a rally in Butler, Pennsylvania. A bullet pierced the upper part of Trump's right ear. During the incident, firefighter Corey Comperatore was shot and killed and two other people were critically injured.

Trump said he was saved from death because he turned from the crowd to look at a screen showing off a chart he was referring to. "I rarely look away from the crowd. Had I not done that in that moment, well, we would not be talking today, would we?" Trump told the reporters.

Authorities have identified the shooter as Thomas Matthew Crooks, 20, from Bethel Park.

Gold price hits new record highs, Bitcoin surges

Safe-haven assets advanced early this week as markets digested the failed assassination attempt. Gold hit new record highs on Tuesday, boosted by safe-haven demand and expectations of the Federal Reserve opting to cut rates more than previously expected.

Spot gold was trading at a new record high of $2,470.20 an ounce at the time of writing. Bitcoin also climbed, hitting a daily high of $65,046.18.

Kempfer examined investment strategies amid global tension. Watch the video above for his advice on preparing for a greater level of uncertainty and his outlook on gold and Bitcoin.

Swan Bitcoin IRA – Start Saving Now 👉 https://Swan.com/retire

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