Wall Street will sit on the sidelines next week, Main Street divided on gold’s price prospects

Slow and steady continued to be the name of the game in the gold market this week, as the yellow metal once again traded in a narrow channel between $2,300 and $2,340 per ounce.

After opening the week at $2321.87, spot gold spent Sunday night through early Tuesday morning flirting with the high 2,330s, but the bulls’ advances were rebuffed, and after holding in the $2,320 area for the rest of the day, the bears finally took control during the overnight session. North American markets then woke up to slap spot gold down to its weekly low of $2,295.23 by 9:30 am EDT on Wednesday morning.

The spot price then saw multiple tests of the psychologically important $2,300 level before finally breaking back to the upside during Thursday's overnight trading, when it once again tested $2,330.

Friday morning brought a spike to the weekly high of $2,339.78 per ounce just before the U.S. market open, after which it pulled back and chopped sideways in the mid-2320s for the remainder of the North American session.

The latest Kitco News Weekly Gold Survey shows most industry experts planning to sit on the sidelines next week, while retail sentiment is divided on gold’s near-term prospects.

Alex Kuptsikevich, senior market analyst at FxPro, is bearish on the yellow metal as the price has moved below its 50-day moving average.

“Gold, and the markets along with it, may be at the intersection of weak economic data (slowing growth and weak inflation) and a less dovish Fed,” Kuptsikevich said. “This is the worst combination for risk demand and could trigger a broad sell-off, including in gold.”

Marc Chandler, Managing Director at Bannockburn Global Forex, thinks after this week’s solid performance, gold is in a position to make gains next week.

“Gold recovered from the dip below $2300 Wed-Thurs last week to recover back toward $2340 at the end of the week,” he wrote. “It recouped the previous week’s losses in full.”

Chandler said the move was sufficient to extend gold’s rally for a fifth consecutive month. “It has fallen only in one month since the end of Q3 23 (and that was in January).”

Now, he believes gold is poised to recover further in the coming days. “A move above $2350-60 lifts the tone and could signal a return toward $2400,” he said. “Two macro developments that could help gold are the results of the first round of the French election that make a hung parliament more likely and a disappointingly weak US jobs report at the end of next week.”

“Up,” said James Stanley, senior market strategist at Forex.com. “I think that it’s still bulls to lose, at this point. The monthly candles are looking more and more like they want a pullback and prior resistance at $2,075 for spot Gold seems a logical place to look for that to run towards. But, with that said, bulls have continued to defend $2,300 and until that changes, I’m going to favor with a topside bias.”

Kevin Grady, president of Phoenix Futures and Options, said the coming week will likely see thin markets, but that also means the risk of greater volatility.

“A lot of people right now are taking off, it’s started already, and they're going to be down for the week, big vacation week,” he said. “I think you're going to see a lot of people that are flat.”

“The issue with that is I think that's going to cause volatility because what's going to happen is the things that are going to be trading and moving the market are the algorithms reading the headlines,” he said. “I do think there's some volatility depending on how the numbers shape out. Having a holiday week with a lot of data coming out, it's going to be interesting. You're going to have a lot of junior traders on the desks, a lot of guys that are not the main guys. No one's going to really be taking risks. I think it's going to be a pretty quiet week.”

Grady acknowledged that in this kind of environment, geopolitical developments like an escalation in Ukraine or the Middle East can disrupt the market very quickly.

“I think that's why you're going to see a lot of people, I think, flattening out,” he said. “If you're going to be off the desk, you're going to lighten up that position. You don't want to be sitting on a beach and reading news about it and your position is blowing up. It's not the place you want to be. I think a lot of people are not going to be trading as much next week, but again, the algos are going to move that market.”

Grady said he doesn’t even expect many traders to be focused even on Friday’s nonfarm payrolls report. “And even the people that are around on Friday, when London shuts down, say 11:30 [am EDT] or so, I think the market's going to just die. Everyone's going to be getting out of there early.”

This week, 12 Wall Street analysts participated in the Kitco News Gold Survey, and the consensus for next week was that discretion is the better part of valor. Four experts, representing 33%, expect to see gold prices climb higher next week, while two analysts, or 17%, predict a price decline. The remaining six experts, exactly 50% of the total, didn’t want to trust gold’s direction during the coming week.

Meanwhile, 178 votes were cast in Kitco’s online poll, with Main Street investors as divided on gold’s near-term prospects this week as their Wall Street counterparts were last week. 86 retail traders, or 48%, look for gold prices to rise next week. Another 50, or 28%, expected the yellow metal to slide lower, while 42 respondents, representing the remaining 24%, saw prices continuing to chop sideways during the week ahead.

U.S. Independence Day will make next week an unusual one for economic data, with the important releases compressed on either side of the holiday. On Monday, markets will receive the ISM Manufacturing PMI, followed by the Tuesday release of Eurozone CPI flash estimates and JOLTS Job Openings. ECB President Christine Lagarde and Federal Reserve Chair Jerome Powell will also be speaking at a central bank conference in Portugal.

Then on Wednesday, markets will be watching for ADP Employment, Weekly Jobless Claims, and the ISM Services PMI, along with the minutes from the June FOMC meeting.

After the July 4th holiday on Thursday, U.S. traders will wake up to the June Nonfarm Payrolls Report on Friday morning.

Darin Newsom, Senior Market Analyst at Barchart.com, is still optimistic about gold prices for the coming week.

“I’ll stick with up again this week as the August issue still looks to have room to extend its short-term uptrend,” he said. “Early Friday morning saw August take out its previous 4-day high of $2,349.70, with the next short-term upside target at $2,370.40. We need to keep in mind the contract’s intermediate-term trend remains down, with what looks to be a triple bottom made up of $2,304.20 (week of June 3), $2,304.50 (week of June 10), and $2,304.70 (this week).”

“The old adage, or maybe just because I’m old and remember it, is ‘Triples are taken out,’ Newsom warned.

Everett Millman, Chief Market Analyst at Gainesville Coins, said he expects gold to remain trapped in its recent holding pattern until something rocks the broader market.

“A lot of people right now are looking at gold as an inverse to risk assets in the stock market, even though that is not a perfect direct one-to-one line,” he said. “I think right now that's the biggest driver, especially when people conflate the performance of the stock market, and particularly what we're seeing now, just the very top of it, very bad breadth in the start stock market right now, as far as gainers to decliners. It's not a perfect foundation right now, but we still remain pretty close to all-time highs and until we get a really big breakdown in stocks, which I think is inevitable at some point, I think gold is going to hang out.”

Millman said gold would be It would be much lower if there weren't underlying concerns about the broader markets are shaky, “but so long as those magnificent seven hold up, we can point to the headline, we can point to the indices and say ‘oh, U.S. stocks are still in a bull market. Increasingly, I think that's one of the main things that has kept gold in place is that we haven't seen a big decline or correction in the stock market, at least not a sustained one.”

“But at the same time, it's not all roses out there, right?” he added. “I think even people who are still bulls who see stocks moving higher throughout the rest of the year, at least until the election, a lot of them will at least acknowledge that beneath the surface or beneath the hood, there are some challenges and concerns for equity markets right now.”

“Given those two factors, I think it makes sense that gold is ebbing back and forth,” Millman said. It doesn't want to completely sell off because it's not as if we're seeing fresh all-time highs [in equities] day after day, but we're not far from them. Until the stock market moves really wildly one way or the other, I would not at all be surprised if gold just continues to consolidate and hang out in the range it's been stuck in.”

Millman also sees next week’s odd shape, with most significant data coming out on Wednesday, followed by the July 4th holiday, then markets reopening for the release of the employment report early Friday morning, as a risky scenario for traders and investors.

“It's definitely worth taking note of,” he said. “Given that trading volumes might be lower, it wouldn't take as much to push gold. But of course, that would very likely be a temporary move, something that we could see evaporate or correct back in the other direction quickly, given that it's not based on as much of the economic fundamentals.”

Millman said that in the medium term, the market will continue to digest the implications of contradictory inflation data from around the world.

“We got this fairly inline PCE report, and the, CPI numbers in Canada and maybe the UK where inflation is actually rising and moving the wrong direction when they're already moving to start cutting rates,” he said. “I think that dynamic, that differential between improving U. S. inflation and perhaps worsening inflation or backsliding inflation in the rest of the Western world, that divergence is something that's going to have to be considered. I don't think that's baked in completely yet. I think they're still waiting to see if maybe there's just a lag where the US data catches up.”

“That's what I think is being digested right now,” he said. “We're just going to need more data. We're going to have to be like the Fed and be data-dependent.”

Phillip Streible, Head of Market Strategy at Blue Line Futures, is bullish on gold, but he said that now is not the time to enter. “If you don't have a position, don't chase the market at these levels,” Streible said.

And Christopher Vecchio, head of futures strategies and forex at Tastylive.com, is neutral on gold for the coming week. “If you are long gold, there is no reason to sell as prices remain above $2,200 per ounce,” he said.

Spot gold last traded at $2326.72 at the time of writing for a loss of 0.05% on the day, but a gain of 0.21% on the week.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Gold market is building a staircase to $2,400 and beyond – Joy Yang of MarketVector Indexes

Although the gold market has managed to hold its ground above $2,300 an ounce, it remains trapped below $2,350 an ounce. Although the market is looking a little directionless, one market strategist says it is well-valued with limited downside.

In a recent interview with Kitco News, Joy Yang, Head of Index Product Management & Marketing at MarketVector Indexes, said she expects gold prices to move higher in a stair-step fashion as the price action builds a new base after every rally.

She noted that at the start of the year, gold built a solid floor at $2,000 an ounce, and now nearly seven months later, that floor has moved up by $200.

“Gold is definitely in a new comfortable range, and I just don’t see it going below $2,200 again,” she said. “In another couple of months, I expect we could see that floor move up to $2,400. I just don’t see the risks and factors driving gold really going anywhere in the next few years.”

Gold has been a boring trade, consolidating in a fairly narrow range after hitting a record high above $2,450 an ounce last month; however, Yang said that investors shouldn’t be investing in gold because it's an exciting momentum trade. She added that it’s not gold’s role to compete with stocks like NVIDIA or volatile meme stocks.

“Investors who buy and hold gold are more macro-focused,” she noted, emphasizing that gold serves as a long-term store of value amidst market frothiness.

Yang said that generalist investors interested in adding some gold to their portfolio should look at who is already buying the precious metal to help them manage their expectations. For more than two years, the biggest gold buyers have been global central banks.

“Like if you look at why central banks are holding gold, it's really to hedge their position, to diversify their portfolio,” she said.

Yang added that she doesn’t expect central banks will stop buying gold as they continue to move away from the U.S. dollar due to the size and trajectory of the government’s debt. She explained that the higher the debt goes, the more difficult it becomes for other nations to carry that burden.

She also said that as the November 2024 U.S. election approaches, it is clear that neither major political party has a plan for addressing the burgeoning debt. The Democratic Party wants to keep spending to support social programs, while Republicans want to drastically slash taxes.

“In the end, it’s all the same. We have this enormous U.S. dollar debt out there people will have to reprice,” she said. “Somebody still has to buy all this debt. But I think the rest of the world is trying to make sure they're not as dependent on the U.S. dollar. For them, gold offers another opportunity to hold an asset that is still a pretty significant store of value for them,” she said.

Although central banks have been the dominant force in the gold market, Yang said that she expects that Western investors will eventually have their turn.

She said that she expects gold’s next rally to come after the Federal Reserve makes it clear that it will lower interest rates. Currently, markets are pricing in a more than 60% chance that the U.S. central bank will start its easing cycle in September.

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

Tim Moseley

Cryptos and gold see losses in volatile day of trading as investors await Friday’s PCE data

It was a volatile day of trading across financial markets on Wednesday as asset prices trended higher during the morning session but came under pressure in the afternoon as investors focused their attention on Friday’s key Personal Consumption Expenditures (PCE) release.

The downward pressure across diverse assets from cryptos to stocks and gold comes as this week has been peppered with comments from Federal Reserve speakers who stressed their caution in deciding to make interest-rate cuts dependent on the data.

“Wall Street's focus [is in the process of shifting] to new inflation data with the release of May’s personal consumption expenditures price index on Friday,” said analysts at Secure Digital Markets. “The Federal Reserve closely monitors this preferred inflation gauge, and investors are hopeful that a continued moderation in price increases might prompt the central bank to lower interest rates later this year.”

It remains to be seen whether the PCE will show improvement on the inflation front or if it will come in hotter-than-expected, and judging by Wednesday’s price action in the markets, investors are uncertain as to how it will all play out.

At the close of markets, the S&P and Nasdaq squeezed out positive gains of 0.16% and 0.49%, while the Dow finished flat.

Data provided by Trading View shows that Bitcoin (BTC) rallied to a high of $62,487 during the morning trading session, but fell back below $61,000 in the afternoon.

At the time of writing, Bitcoin trades at $60,730, a decrease of 2.05% on the 24-hour chart.

Waiting for inflows into spot BTC ETFs

While crypto analysts debate the near-term future for Bitcoin’s price, most agree that the decline in flows into spot BTC exchange-traded funds (ETFs) corresponds with the weakness and sideways price action seen over the past several months.

“Currently, the market is under pressure,” said Nick Cowan, Group CEO of Valereum PLC, in a note to Kitco Crypto. “The first high of 64,899 was in April 2021, after which we saw a halving in the BTC price down to 30,000 in the next month.”

“The price pushed back up to its previous highs, breaking it in October 2021, and then reaching a new high in November 2021 at 69,000,” he added. “But the buyers could not sustain the advance and the price rolled over, falling to below 16,000 a year later (November 2022). The price of BTC then slowly gained momentum climbing to 31,000 before breaking out in October 2023. Since then, we have seen a huge bull market with the price rallying over 100%, accelerating in Q1 2024 with the approval of the BTC ETFs by the SEC.”

Cowan noted that Bitcoin’s “price has stalled once again. It managed to break its previous high of 69,000 in March 2024, rising to a high of almost 74,000, but the big jump in volume signaled distribution and possible climactic action, confirmed by the price action in the following weeks – i.e. a drop in volume and prices moving sideways to down (to a low of 56,500 at the end of April 2024).”

“BTC is now in a downward trend and looks vulnerable because buying has stalled and, at the time of writing, is trading below its April 2021 levels (its original high),” he said. “To move ahead from here, BTC must absorb the selling pressure, consolidate its position, and then demonstrate a solid breakout above 74,000 in order to reach new highs.”

“Until then, it’s likely that investors will proceed with caution — ironically, retail investors tend to buy when price action is bullish rather than during weaker periods,” Cowan noted. “If we see positive price action, we can expect subscriptions to go up, resulting in buying demand for BTC.”

“If you look at the periods Feb and March, you can see a huge explosion in volume coupled with explosive upwards price action,” Cowan added.

“This signals climactic action – often a sign that the big holders have distributed their holdings – and it is entirely expected that these types of moves result in: 1) Prices often moving higher but on much lighter volumes, as the retail investors and their FOMO puff prices a little higher — the challenge is always what power the retail guys have to sustain the price levels once the FOMO dies down; and 2) The price then tending to move sideways, entering a range which is essentially what has happened for the last 3 months ($60,000 to $70,000),” Cowan said.

“BTC is currently at the bottom of its range so support would be expected to halt further falls if the range is to be maintained,” he concluded.

Macro trader and economist Alex Krüger is confident that support will hold and sees Bitcoin and the broader crypto market rallying higher in the second half of 2024.

“My outlook for Bitcoin remains very bullish into year-end,” Krüger said in an interview with Arca chief investment officer Jeff Dorman. “And if that happens… it just makes sense that it carries everything with it. Like when Bitcoin is going up usually everything goes up. It is that simple.”

“[Over the] mid-term like into 2025 the market should keep on rallying,” Krüger added. “Market, in this case, is the S&P 500 index, the NASDAQ, risk assets, equities, and the exchange-traded funds (ETFs), they finally linked Bitcoin and Ethereum to the macro side on a permanent basis now. This correlation comes back and forth. It’s definitely there.”

Krüger said he sees the current environment as one “where risk assets perform very well,” and his “macro view towards year-end is that leaving aside the [US general] elections that are very momentous and should drive very significant volatility, which I think would give very good entry points for risk assets.”

Altcoins fall into the red amid Bitcoin's weakness

The majority of altcoins in the top 200 fell into the red as Bitcoin trended lower in the afternoon, with only a handful of tokens managing to post gains on the day.

WEMIX (WEMIX) was the top performer, increasing by 28.5%, followed by gains of 11.2% and 9.3% respectively for Fetch.ai (FET) and Blast (BLAST). Blur (BLUR) was the biggest loser, falling 15.4%, while Arweave (AR) lost 11.2%, and Curve DAO Token fell 9.7%.

The overall cryptocurrency market cap now stands at $2.25 trillion, and Bitcoin’s dominance rate is 53.2%.

Time to Buy Gold and Silver

Tim Moseley

Gold price sidelined as silver drops sharply, unable to hold 50-day moving average

Gold price sidelined as silver drops sharply, unable to hold 50-day moving average teaser image

While gold prices have meandered listlessly through the day, it’s silver that has suffered, with the metal falling sharply below its 50-day moving average, a critical support level analysts have been watching.

Gold continues to trade within a tightening range between $2,300 and $2,350 an ounce. August gold futures last traded near session lows at $2,331.10 an ounce, down 0.57% on the day.

However, silver has significantly underperformed its sister metal. July silver futures last traded at $28.915 an ounce, down 2% on the day. The selling pressure picked up momentum when the metal was unable to hold support at the 50-day moving average of $29.925 an ounce.

Gold has actually outperformed silver in the last three sessions pushing the gold/silver ratio back above 80 points, near its highest level since mid-May.

According to some analysts, silver is more sensitive to U.S. dollar moves, which has recovered from Monday’s selloff. The U.S. dollar index last traded at 105.62, up 0.10% on the day.

The U.S. dollar continues to be driven by the Federal Reserve’s monetary policy as expectations ebb and flow around when the central bank will cut interest rates. Commodity analysts have pointed out that gold has been able to weather this volatility a little better because it is seen as a stronger safe-haven asset than silver.

Although a rate cut would benefit silver, if the U.S. central bank is forced to cut rates because the U.S. economy is slowing, that could weigh on the precious metal’s industrial demand.

Analysts have said that critical support to watch in the silver market comes around $28.60 and $28.70.

Akhtar Faruqui, a market analyst at FXStreet.com, said in a note Tuesday that silver’s technical picture is turning negative.

“The momentum indicator Moving Average Convergence Divergence (MACD) suggests a bearish bias for silver,” he said. "This configuration indicates that the overall trend might still be positive as the MACD line is above the centerline. However, the momentum is weakening as the MACD line is below the signal line.”

Faruqui added that in the current environment, he could see silver prices falling to $28.00, with the potential to test support at $27.76 an ounce.

Although gold and silver continue to struggle in the near term as investors focus on interest rates, many analysts continue to see lower prices as a tactical opportunity to gain exposure, as both precious metals remain in a solid uptrend.

While gold has the upper hand on silver as a monetary metal, analysts have noted that the grey metal continues to benefit from the green energy transition as solar power demand drives industrial consumption.

At the same time, silver’s industrial demand also makes it a more attractive inflation hedge compared to gold.

Looking ahead, analysts expect gold and silver to remain fairly range-bound ahead of Friday’s Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred inflation gauge.

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

Tim Moseley

Gold rises on weaker dollar as investors eye multiple economic reports, including PCE

Gold futures saw modest gains on Monday, primarily driven by a weakening dollar. As of 4:15 PM ET, the most active August gold contract settled at $2,345.90, up $11.20 or 0.48%. The dollar index declined by 0.35% to 105.491, contributing significantly to gold's upward movement.

Investors are bracing for a busy final week of the month, with several crucial economic reports on the horizon. The Conference Board's June Consumer Confidence report, due Tuesday, is expected to show a slight decline to 100, down two points from the previous month.

Thursday will bring a flurry of economic data. The Commerce Department is set to release its third and final revision of the first-quarter GDP, projected to remain steady at 1.3%. Additionally, advance readings for May's goods trade balance and wholesale inventories will be published. Analysts anticipate a 0.1% decline in durable goods orders.

The week's most anticipated report is the May Personal Consumption Expenditures (PCE) data from the Commerce Department. According to a Reuters poll of economists, the headline PCE is expected to remain unchanged month-over-month while showing a 10-basis-point decrease to 2.6% annually.

Investors will closely monitor the Federal Reserve's preferred inflation measure, the core PCE, which excludes volatile food and energy prices. Forecasts suggest monthly and annual readings of 0.1% and 2.6%, respectively, both lower than April's figures.

Several Federal Reserve officials are scheduled to speak throughout the week. Mary Daly, president and CEO of the San Francisco Federal Reserve, addressed the San Francisco Commonwealth Club, emphasizing the need for higher interest rates to curb demand and inflation. Her remarks will be followed by speeches from Fed governors Lisa Cook and Michelle Bowman later in the week.

While economic reports and Fed comments will largely influence gold prices, the CME's FedWatch tool indicates that traders currently see a 67.7% probability of a rate cut in September.

Kitco Media

Gary Wagner

Time to Buy Gold and Silver

Tim Moseley

NY Fed warns of risk to major U.S. banks, 'something amiss in the banking system,' says Soloway

NY Fed warns of risk to major U.S. banks, 'something amiss in the banking system,' says Soloway teaser image

here is something "amiss" in the U.S. banking sector, says Gareth Soloway, Chief Market Strategist at VerifiedInvesting.com, warning that big institutional players are "unloading" the stocks of big banks.

"I'm hearing a lot of chatter about the big banks unloading bad debt right now, trying to get ahead of some sort of crisis looming," Soloway tells Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "Because interest rates are so high, the amount of losses in mortgage-backed securities potentially rival what we saw in 2008 and 2009. In addition, the commercial real estate market is in tatters. And these are all things that banks are holding on their balance sheets."

Soloway points to the SPDR S&P Regional Banking ETF (KRE), noting the formation of a bear flag pattern since the banking crisis lows of April last year. Watch the video above for Soloway's breakdown.

There has also been a technical breakdown in the stocks of some of the bigger banks, including JPMorgan, according to Soloway.

"This trend line breakdown just started on JPMorgan, Citigroup has already broken down," Soloway added. "There are signs that something is amiss within the banking system, whether it's the bear flag in the KRE or in these bigger banks. There are some bigger players that are unloading the big banks here."

Federal Reserve Chair Jerome Powell commented on the banking sector at the June press conference following the central bank's two-day monetary policy meeting.

"The banking system has been solid, strong, well-capitalized lending. We've seen good performance by the banks. We had turmoil early last year, but banks have been focusing on bringing up their liquidity, bringing up their capital, and having risk management plans in place. So, the banking system seems to be in good shape," Powell said.

Soloway reacted to Powell's comment by pointing out that the Fed Chair would never come out and say there is a big issue in the banking system. "Think about the fire that would spread in the market crash that would ensue if he said that," Soloway noted.

Soloway's warning comes as the New York Fed's Liberty Street Economics blog cautioned of U.S. big banks facing growing spillover risks from non-banks.

During periods of increased market volatility, liquidity demand accelerates, putting pressure on banks as non-banks look for loans and lines of credit. This could trigger "vectors of shock transmission and amplification, forcing authorities to intervene and do so en masse," the post said, adding that the disruptions "could be rather severe."

At the same time, the Federal Reserve pointed to weaknesses in four of the biggest banks on Wall Street regarding how they would handle their own failures.

According to a joint statement released Friday by the U.S. central bank and the Federal Deposit Insurance Corporation, the regulators spotted shortcomings in the so-called "living wills" of JPMorgan, Bank of America, Goldman Sachs Group, and Citigroup.

"For the four banks with an identified shortcoming, the letters describe the specific weaknesses resulting in the shortcoming and the remedial actions required by the agencies," the agencies said.

Soloway also revealed the black swan event investors need to pay close attention to in the year's second half. Watch the video above for insights.

In addition, Soloway shared his technical analysis of gold, silver, and Bitcoin. Watch the video above for his short-term and long-term price forecasts.

Kitco Media

Anna Golubova

Time to Buy Gold and Silver

Tim Moseley