Gold Price News: Gold Rises After US Jobless Figures

Prices rose as high as $2,338 an ounce on Thursday, compared with around $2,310 an ounce in late deals on Wednesday.

US initial jobless claims figures released Thursday came in at 231,000 in the week to May 4th, well above market expectations of 210,000. A higher-than-expected rise in the number of people seeking unemployment benefits strengthens the call on the US Fed to slash interest rates to stimulate the economy.

Recent bets among interest rate traders have begun to coalesce around September as the most likely start for US interest rate cuts, with a majority expecting no change to monetary policy at upcoming meetings in June and July.

Lower interest rates tend to support gold prices because they weaken the US dollar, making gold cheaper for buyers in other currencies, as well as reducing the opportunity cost of holding non-yield-bearing assets.

Elsewhere, the World Gold Council issued a report Wednesday that highlighted a number of factors behind the new all-time high prices seen in April:

Gold Market Commentary: Higher-for-longer: Inflation not growth | World Gold Council

The industry group cited a positive flip in North American gold ETF flows which combined with strong Asian ETFs. Moreover, increased geopolitical risk, positioning in the Shanghai futures exchange and strong central bank buying all contributed to the higher prices in March and April, it said.

Looking ahead, the markets will be watching out for several speeches by US Fed officials on Friday for clues on the central bank’s view on the outlook for interest rates, especially in light of the recent surprise rise in jobless claims numbers.

Time to Buy Gold and Silver

Tim Moseley

Gold investors watching inflation data next week to see if this new momentum will last

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Gold investors watching inflation data next week to see if this new momentum will last teaser image

After two weeks of consolidation, gold is attracting some new bullish attention after holding initial support at around $2,300 an ounce, according to some analysts.

Bouncing off its lows at the start of the week, gold is looking to end Friday near a two-week high. June gold futures last traded at $2,375.40 an ounce, up nearly 3% from last Friday’s close.

At the same time, silver has managed to push back above $28 an ounce after holding critical support levels. May silver futures last traded at $28,310 an ounce, up a solid 6% from last Friday.

Some analysts note that gold is benefiting from fluid interest rate expectations following disappointing economic data. Thursday, a jump in weekly jobless claims pointed to growing slack in the U.S. labor market and brought renewed focus to last week’s disappointing nonfarm payrolls report.

Friday, the Univerisity of Michigan’s preliminary consumer sentiment survey showed optimism falling to a five-month low, while inflation expectations rose to a nearly two-year high.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said that it is not surprising that gold is seeing a renewed push to the upside as the market’s bullish conviction has not been tested during the two-week consolidation period.

“Now we see a technical break to the upside, supported by signs the U.S. labor market is cooling. With inflation being controlled, the expected number of U.S. rate cuts has been lifted to two from one,” he said.

However, some analysts warn that although markets are now pricing in two rate cuts this year, these expectations are extremely fluid.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, said he expects rallies in gold and silver to be sold in the near term.

“Traders do not have a clear signal from the Fed in relation to their monetary policy,” he said. “The job data and other economic numbers indicate that the economy is slowing down, but the Fed is still determined to keep rates higher for longer. All of this is bringing strength back to the dollar index and taking the shine away from the metal.”

Looking at the precious metals’ technical outlook, Alex Kuptsikevich, Senior Market Analyst at FxPro, said that the renewed momentum in gold and silver comes after both metals managed to hold key retracement levels.

“This week's upward momentum revives the idea that the decline in the second half of April was a corrective pullback,” he said.

However, Kuptsikevich added that although gold and silver are seeing robust moves higher, a lot of work still needs to be done to attract new capital and drive prices above the recent all-time highs above $2,448 an ounce.

“A further rise in the price of gold with high bond yields in developed countries, huge budget deficits in many countries, and the need to support the economy makes one think that the upside potential is limited,” he said. “Until gold and silver reach a new level, we doubt the success of a new attack on the highs and see the potential for a renewed decline.”

Although gold could continue to consolidate, Peter Granditch, renowned Financial Analyst and market strategist, said that risks for gold and silver remain to the upside as interest rates have peaked due to weakening economic activity. However, he added that investors should be patient.

“I’m hard-pressed to think gold can get much below its recent lows while the upside remains hundreds of dollars (if not more) higher,” he said in a comment to Kitco News. “I don’t think this leg up will be as hard and as fast as the one we saw earlier his year, but my long-standing target of $2,536 is most reachable this year.”

With renewed attention on economic fundamentals, some analysts note that next week will be critical to gold and silver’s potential recovery and drive to record highs.

Next week's main economic event will be the April Consumer Price Index after the Federal Reserve signaled that its fight against inflation has been insufficient as prices remain well above its 2% target.

“If [consumer] prices rise more strongly once more, the recent slight rise in interest rate hopes is likely to be dampened again. Gold should then fall back again,” said Barbara Lambrecht, precious metals analyst at Commerzbank, in a note Friday.

Along with U.S. CPI data, some economists have said that after the disappointing consumer sentiment data on Friday, U.S. retail sales data will also garner some market attention. Traditionally, consumers who are less optimistic about the health of the economy spend less, which will weigh on economic activity.

“The renewed slump in the University of Michigan consumer sentiment gauge to a six-month low is hard to explain given that gasoline prices are now falling again, the stock market is back close to a record high, and there is little evidence of any major downturn in the labor market,” Paul Ashworth, Chief North America Economist at Capital Economics, said in a note. “That leaves us wondering if we’re missing something more worrying going on with the consumer. We don’t think so, but next week’s April retail sales figures will provide more insight.”

Economic data to watch next week:

Tuesday: U.S. PPI, Federal Reserve Chair Jerome Powell to speak in Amsterdam, Netherlands

Wednesday: U.S. CPI, U.S. retail sales, New York Fed Empire State Survey

Thursday: U.S. weekly jobless claims, U.S. building permits housing starts, Philadelphia Federal Reserve manufacturing survey

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

Tim Moseley

Gold Price News: Gold Dips As Mid-East Fears Ease

Gold prices edged slightly lower on Tuesday, coming under moderate downward pressure from an easing in geopolitical tensions in the Middle East.

Prices eased as low as $2,311 an ounce before regaining some of the losses to trade at around $2,317 an ounce by late afternoon. That compared with around $2,327 an ounce in late trades on Monday.

Palestinian militant group Hamas on Monday said it has accepted a proposal from Egypt and Qatar which involved a weeks-long halt to fighting in Gaza and the release of several dozen hostages. However, the latest proposal did not appear to meet Israel’s conditions for halting its military operations in Gaza.

The ongoing conflict between Israel and Hamas has injected a risk premium into gold prices, and any signs of a potential end to hostilities would be taken as a bearish signal for safe haven gold.

Gold prices did rebound slightly later on Tuesday, taking support from comments by US Fed officials overnight that kept alive hopes that the central bank may yet cut interest rates this year. Recent market expectations for the first rate cut have been pushed back to September, compared with an earlier target of June.

US 10-year treasury yields also edged lower on Tuesday, providing a supportive factor for gold prices.

In general though, gold prices have been range bound since the last week of April, showing little convincing momentum in either direction in recent days.

Looking ahead, Wednesday will see a flurry of speeches by US Fed officials, which will be closely watched for any signs of monetary policy changes. Then on Thursday, eyes will be on the US weekly initial jobless claims figures, for a pulse-check on the health of the US economy.

Time to Buy Gold and Silver

Tim Moseley

Gold, silver up a bit in quieter, two-sided trading

Gold and silver prices are just a bit higher in midday U.S. trading Wednesday, on some more backing and filling on the charts amid a lack of major, fresh fundamental news in the marketplace at mid-week. Traders are awaiting some fresh markets-moving fundamental news. June gold was last up $1.80 at $2,326.10. July silver was last up $0.156 at $27.70.

Reports said China’s central bank continues to stock up on gold reserves, adding 1.9 metric tons in April, making it 18 straight months for expanding its reserves. However, the reports said the pace of China gold buying has slowed.

The key outside markets today see the U.S. dollar index slightly up. Nymex crude oil prices are firmer after hitting a nearly two-month low overnight and are trading around $78.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.488%.

Technically, June gold futures bulls have the overall near-term technical advantage. A price downtrend is still in place on the daily bar chart, however. Bulls’ next upside price objective is to produce a close above solid resistance at $2,400.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,250.00. First resistance is seen at this week’s high of $2,341.90 and then at $2,350.00. First support is seen at today’s low of $2,311.40 and then at $2,300.00. Wyckoff's Market Rating: 6.5.

July silver futures bulls have the overall near-term technical advantage. A price downtrend on the daily bar chart has stalled. Silver bulls' next upside price objective is closing prices above solid technical resistance at $29.00. The next downside price objective for the bears is closing prices below solid support at last week’s low of $26.255. First resistance is seen at $28.00 and then at $28.25. Next support is seen at today’s low of $27.24 and then at $27.00. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed down 645 points at 454.10 cents today. Prices closed near mid-range today. The copper bulls have the solid overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 480.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 440.00 cents. First resistance is seen at 460.00 cents and then at this week’s high of 464.50 cents. First support is seen at 450.00 cents and then at last week’s low of 446.60 cents. Wyckoff's Market Rating: 7.5

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

Tim Moseley