Gold Reaches New Record High Following Powell's Historic Speech

In a remarkable turn of events, gold futures have once again traded to a new record closing price of $2,533.60, following Federal Reserve Chairman Jerome Powell's pivotal speech at the Economic Symposium in Jackson Hole, Wyoming. The speech, which signaled a shift in monetary policy, has sent ripples through various financial sectors, including precious metals and U.S. equities.

Chairman Powell's declaration that "the time has come for policy to adjust" marks a significant turning point in the Federal Reserve's approach. He noted that inflation has contracted closer to the Fed's 2% target while expressing concern over the labor market's well-being.

Powell emphasized that current “labor market conditions are less tight than pre-pandemic levels in 2019, a year when inflation ran below 2%”. He further stated that it seems unlikely the labor market will be a source of elevated inflationary pressures in the near future, adding that he does not seek or welcome further cooling in labor market conditions.

The financial world has interpreted Powell's remarks as a clear indication that the Federal Reserve is prepared to begin a series of interest rate cuts. While no specific timeline was provided, market expectations are high for a rate cut at the upcoming Federal Open Market Committee (FOMC) meeting on September 18-19. The CME's FedWatch tool currently indicates a 71.5% probability of a 25-basis point cut and a 28.5% chance of a more aggressive 50-basis point reduction.

In response to these developments, gold futures continued its ascent, with the most active December contract reaching an intraday high of $2,561.20. By late afternoon, it had settled at $2,553.60, representing a modest gain of $4.90. This upward movement occurred despite a slight strengthening of the U.S. dollar, which gained 0.20% to reach 100.87 on the dollar index.
 

The dollar's performance is worth noting, as it experienced a sharp -0.83% decline on Friday, resulting in a -1.69%weekly decline. This took the dollar index its lowest value this year. Technical analysis suggests that the dollar could find support just below the 100 level on the index, based on lows observed in July 2023.

Today's continued strength in gold prices demonstrates that while the market had anticipated dovish comments from Chairman Powell and had partially priced in a September rate cut, the full impact of these expectations had not been fully realized. This is evidenced by the moderate price advance witnessed today.

The gold market's reaction to Powell's speech and the subsequent anticipation of policy shifts underscores the intricate relationship between monetary policy, economic indicators, and precious metal valuations. As investors and analysts digest the implications of the Fed's potential move towards monetary easing, gold's role as a safe-haven asset and hedge against economic uncertainty appears to be reinforced.

As we approach the September FOMC meeting, all eyes will be on the Federal Reserve's decision and any further guidance provided regarding the pace and extent of future rate cuts. The coming weeks promise to be a critical period for gold prices and the broader financial markets as they adjust to the evolving economic landscape and the major pivot that was announced by Powell regarding the monetary policy of the Federal Reserve.

Kitco Media

Gary Wagner

Time to Buy Gold and Silver

Tim Moseley

Wall Street experts and Main Street investors see gold climbing higher next week as momentum builds

Precious metals investors embarked on a now familiar roller coaster ride this week, but the ups and downs brought them back to nearly the same level, albeit an elevated one.

Spot gold opened the week trading around $2,505 per ounce, before dipping below the $2,500 level in the middle of the European trading session. North American investors found the yellow metal trading just below $2,490 per ounce at the open, and they promptly pushed it back above $2,500, where it traded throughout Monday, barring a few dips.

Gold prices hit their high-water mark for the week early Tuesday, in a sharp move up that began during the Asian trading session and continued throughout the day, with gold topping out above $2,530 per ounce 15 minutes after American markets began trading. The high was short-lived, however, as spot gold slid all the way back to $2,506 by noon Eastern.

The middle of the week was a period of consolidation that saw spot gold oscillate between $2,519 and $2,500, which was starting to look like solid support as the days wore on. But Thursday morning brought the release of worse-than-expected U.S. jobless claims, which drove gold from $2,503 at 8:30 a.m. down to the weekly low of $2,475 per ounce by 10:00 a.m. EDT.

From there, it was a slow and steady march higher over the final two days of the week, with spot gold double-topping back at $2,500 per ounce early Friday morning, before breaking decisively through resistance during Federal Reserve chair Jerome Powell’s highly anticipated address from Jackson Hole, which seemed to confirm that the central bank is prioritizing weakness in the employment market over lingering inflation.

After a double-top near $2,517 per ounce shortly after 11:00 a.m. EDT, gold settled into a narrower range on either side of $2,510 for the duration of Friday's trading session.

The latest Kitco News Weekly Gold Survey shows a solid majority of both industry experts and retail investors believe gold will rise above this week’s recent all-time highs.

“Gold set a record high on Tuesday near $2531.75 in the spot market and consolidated for the rest of the week,” said Marc Chandler, Managing Director at Bannockburn Global Forex. “The week’s low was set Thursday slightly below $2471. The dollar was mostly softer and interest rates lower. I expect the US dollar and rates to trade firmer over the next week or so, in the run-up to the US jobs report on September 6.”

“The yellow metal can make a new high, but the momentum indicators are getting stretched and my outlook for the dollar and rates suggests gold may have a consolidative phase,” Chandler added. “Initial support may be in the $2460-70 area.”

“Higher,” said Adam Button, head of currency strategy at Forexlive.com. “There is no sense in fighting the momentum.”

Darin Newsom, Senior Market Analyst at Barchart.com, sees gold prices trending lower during the days ahead. “I will stick with this direction for another week based on the idea Dec gold’s short-term trend (daily close-only chart) has turned down,” he said. “The downside target is near $2,493.”

Kevin Grady, President of Phoenix Futures and Options, said the gold market is squarely focused on the Fed’s expected rate cuts, and with good reason.

“They’re talking about the rate cuts,” he said. “Now we're starting to see it's 55 percent that they're going to be able to do a 50-basis point cut instead of a quarter, but I think that the rates are going down. You've seen the central banks are buying, so I think that's the key right now, is the right people are buying it. You're getting a ripe, fresh environment for gold. I think new highs are ahead for gold.”

Grady said that gold’s performance even in a high-rate environment means that the precious metal will fly higher once rates begin to fall. “We've been waiting for that, and gold has been steady, holding up the whole time, even with all these Fed meetings where you're getting no rate cut,” he said.

“I think right now the time is prime for gold. It's like the perfect storm in a positive way for gold, so I think you're going to be seeing higher prices.”

Grady sees gold trading around $2,500 going into the September meeting and thinks that level could act as a floor once the first rate cut goes through, but the real support is somewhat lower.

“We've been hitting lower levels, there's been some levels that we've held down there, like $2460, that's the level for me,” he said. “I know a lot of people look at $2,500, but that's more of a psychological number. I think you look at that support number, what it held, and that's what I would be looking for.”

Grady also believes the massive 800,000-plus revision to the last 12 months’ jobs data has solidified the Fed’s resolve to lower interest rates. “I think it’s going to spur the rate cuts,” he said. “I think they should have cut at the last meeting. They should have at least done a quarter point as a signal for the market to get ready.”

“It's tough, anytime you're thinking about doing a 50-basis point cut right away,” he added. “To me, that shows, ‘Oh, we missed the window.’ I think you do it incrementally, that's the way to do it. But I do think that things are softening. You saw when the U. S. market's going down, a lot of these global markets are following suit. I think that it should be September.”

“I don't think they're going to do 50 basis points, but that revision, that would be the one thing to spark it.”

Grady thinks that the rate cuts are not the end of the story, however, because the overall economy is still very inflationary, and the cuts could increase those pressures.

“They're going to be cutting rates into an environment that's extremely inflationary and still hasn't come off,” he said. “It's going to be really interesting.”

This week, 12 analysts participated in the Kitco News Gold Survey, with a solid majority of Wall Street seeing potential gains above this week’s fresh all-time highs. Seven experts, or 58%, expect to see gold prices rise during the week ahead, while two analysts, or 17%, believe gold will trade lower next week. The remaining three experts, representing 25% of the total, predicted a sideways chop for the precious metal.

Meanwhile, 225 votes were cast in Kitco’s online poll, with Main Street investors more bullish on balance than their expert counterparts. 146 retail traders, or 65%, looked for gold prices to rise next week. Another 41, or 18%, expected the yellow metal to trade lower, while 38 respondents, representing the remaining 17%, saw prices consolidating during the week ahead.

Market participants will be focused on key inflation data next week, with July’s U.S. Personal Consumption Expenditures (PCE) Index on Friday the clear highlight. Markets will also receive U.S. Durable Goods Orders for July on Monday and August Consumer Confidence on Tuesday, with weekly jobless claims and U.S. Preliminary Q2 GDP released on Thursday morning.

Traders will also pay attention to comments from the Fed’s Christopher Waller early Wednesday morning, and Raphael Bostic on Thursday afternoon.

James Stanley, senior market strategist at Forex.com, thinks gold prices will trend lower next week. “I think we’ll see some profit taking and a pullback to test below $2500, but I’m not expecting any bearish sequences to be long-lasting at this point,” he said. “More of a pullback than a reversal.”

John Weyer, Director of the Commercial Hedge Division at Walsh Trading, said he was surprised at how many market participants expected Powell’s Jackson Hole speech to deliver new information.

“I've been chuckling to myself how many people are looking for action today, as if the Fed's going to step out of their norm of clear forecasting and tipping the hat on what they want to do and when they're going to do it,” he said. “I think today's comments are basically, he's not rocking the boat for anything they've said previously, and I feel like they're on a schedule to take some action in September.”

“One thing they've been good at in recent vintage is they tell you what they're going to do, and they stick to it, they don't throw you any surprises,” he added. “And I think they're continuing down that path.”

Weyer believes that this week's massive revision to the last 12 months of jobs data gives the Fed cover to cut deeper than 25 basis points. “It got us to the idea that their first action could be 50 basis points,” he said. “I think that was set up a few weeks back as well. And I think that change, from previous signals and his comments at the last Fed meeting, hinted that perhaps they might be open to, based on data, as they always point to, a more aggressive action at the beginning. They've been saying for as long as these concerns started, ‘we're going to point to the data, we're going to rely on the data, we're going to go off data. They didn't reverse or throw something new, so I think they've already given the hint.”

“I'm going 50 basis points,” Weyer said. “There are still some people who are skeptical, they think that's too much for first action, but I think they realize the new data tells them they have to take action. Other people want to say they're doing that because they waited too long. Maybe they did. We don't know until after. But it certainly gives them license to perhaps go more aggressive at the front end.”

In terms of market levels, Weyer said that while a round number like $2,500 gets a lot of attention, it may be a little too high to act as support.

“When you get to those large numbers, that becomes a psychological level as well,” he said. “You have to consider all the participants now who are new, or pay attention to these things, as opposed to the everyday participants that have to go hedge the markets. I think $2,500 is a good area. We've got some stuff here, $2,450 as well, but I think the psychological and the technical are going to hold there.”

“These are areas, not exact numbers,” he added. “If over the course of a few weeks, you get to $2,480 on a chart, it's not that far off.”

"What will be interesting to see is, if they take action and rates go lower, what gold continues to do,” Weyer said. “It's become a safe haven play for sure, but what tells me that maybe it might slow down is silver's making a good move today but in a lot of the recent strong moves to the upside with gold, there's been a not as big a move for silver, which is more of an industrial use. That tells me there's a lot of noise around gold as well, that may not have the support to continue to move higher."

"Silver slowed down a bit because it's a practical metal, it has much more uses than gold. The attraction of gold is the same as it was a thousand years ago. You get many people in times like these, concerns about rates, concerns about the economy, concern about inflation, geopolitical concerns. I don't know that they sustain some of those moves to the upside,” he said. “But somewhere between $2,500 and $2,450, should be some support in there.”

Michael Moor, Founder of Moor Analytics, expects the yellow metal is likely in for a period of consolidation during the week ahead. “On a higher timeframe: The solid trade above 21475-84 projects this upward $151 minimum, $954 (+) maximum. We have attained $415.4. This is ON HOLD,” he said. “On a lower timeframe basis: The trade above 23276 (-2 tics per/hour) warned of decent strength—we have attained $236.2. This is ON HOLD.”

“The solid trade back below 25403 warns of solid pressure, likely for days,” Moor added. “I would CAUTION we came shy of higher timeframe exhaustion at 25752 with a 25704 high and rolled over into a lower timeframe bearish correction/trend against the move up from 24038, but what could possibly be a higher timeframe correction against the move up from 19339—and if so the minimum target would be 23950. Decent trade below 25173 (+3.3 tics per/hour) will project this downward; but if we break below here decently and back above decently, look for decent strength. Solid trade back above 25405-07 will once again warn of solid strength.”

And Kitco Senior Analyst Jim Wyckoff sees both the technical picture and fundamental factors favoring price gains for gold next week. “Higher as charts, fundamentals remain overall bullish,” he said.

At the time of writing, spot gold last traded at $2,509.97 per ounce for a gain of 1.02% on the day but a nearly flat reading of 0.13% on the week.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Family offices lean into gold amid economic uncertainty

After years of being shunned by investors in search of alpha, gold has seen a resurgence in interest from both retail investors and institutional outfits since 2022, and a new survey of family offices shows that allocating towards gold is increasingly a long-term and strategic play.

2024 has been a banner year for the precious metal as it has been one of the best-performing assets, rising over 16% year to date and outpacing most major asset classes, according to the mid-year outlook of the World Gold Council (WGC).

“If you look at gold over the long term, it’s grown at around 8% a year in US dollar terms, and if you look over the last 25 years, it has outperformed the MSCI World total return index,” said Louise Street, Senior Markets Analyst at the WGC.

According to Adrian Murdoch, editorial director at Campden FB, the results of the Campden Wealth Family Office Gold survey, conducted in partnership with the WGC, showed that “many family offices” currently had gold in their portfolios. “Interestingly, more than half of those who had gold in their portfolios regarded their allocation as strategic,” Murdoch said.

This observation was confirmed by Oliver Wilhelm, Global Head of Advisory and Individual Solutions at SOLIT, who told Campden FB that gold is a “hedge against inflation as its value tends to increase when the purchasing power of fiat currencies decreases.”

Wilhelm said some investors view gold as “a form of insurance for their investment portfolio” as it offers protection against “unforeseen events that could impact other classes and, perhaps most simply of all, it is a reliable asset for preserving wealth over the long term.”

Wealthy families may choose to invest in gold as a way to safeguard their assets and pass on wealth, he added. “Investing in gold can provide wealthy families with a way to diversify their portfolio, protect their wealth, and potentially generate returns in both stable and uncertain economic environments,” Wilhelm told Campden FB.

But not everyone is keen to hold gold, the survey found, with the most commonly cited reason for opting to hold other assets being that gold has no income or cash flow.

“This criticism goes back to Warren Buffet, who said, gold has no return and therefore no chance of compounding his wealth,” explained Wilhelm. “Buffet is right in saying that gold has no yield, but he is wrong in concluding that his wealth would not have been appreciated by holding gold.”

He noted that the dollar price of a gold ounce has risen over the past 15 years, with an average value appreciation of around 9% per year.

Despite some family offices shunning the yellow metal, “the outlook for gold remains positive,” Murdoch wrote. He pointed to recent headlines, “like ‘Asia family offices pile into gold as hedge against market turmoil’ at AsianInvestor,” which he said “indicates how much family offices are joining the rush to gold to hedge their portfolios against market uncertainties both at home and abroad.”

He also noted that the WGC’s June survey of North American asset owners showed that “the top drivers to investing in gold among this audience are gold’s role as a proven diversifier (32%) and changes in US dollar strength (32%). Its diverse demand base, limited production and inflation-hedging characteristics are also positive drivers.”

Murdoch said the main question on investors’ minds “is whether gold’s momentum can continue or if it is running out of steam.”

“For gold, we believe the catalyst could come from falling rates in developed markets, that attract Western investment flows, as well as continued support from global investors looking to hedge bubbling risks amid a complacent equity market and persistent geopolitical tensions,” the WGC said.

“In short, while absolute allocation may not be large, gold remains a cornerstone piece to many family office portfolios as a diversification and wealth preservation tool, especially in view of the prevailing market conditions and fragmented geopolitical landscape,” Murdoch concluded.

Kitco Media

Jordan Finneseth

Time to Buy Gold and Silver

Tim Moseley

Gold solidly down on profit-taking ahead of Jackson Hole

Gold and silver prices are lower, with gold posting sharp losses, on profit taking by the shorter-term futures traders and position-squaring just ahead of one of the most important gatherings of central bank officials this year. A rally in the U.S. dollar index and rising U.S. Treasury yields today are also unfriendly outside-market forces for the two precious metals. December gold was last down $28.80 at $2,518.90. September silver was down $0.365 at $29.17.

The marketplace awaits the annual Jackson Hole, Wyoming Federal Reserve symposium of world central bankers that begins later today. Past years have seen central bank officials make markets-moving pronouncements at the confab. Fed Chairman Powell is slated to speak at the symposium on Friday morning and may give some guidance on the size of an expected U.S. interest rate cut in September.

U.S. stock indexes are slightly lower at midday. Trader/investor attitudes have been more upbeat the past few sessions, as seen by the S&P 500 and Nasdaq stock indexes hitting four-week highs this week.

The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are up and are trading around $73.45 a barrel. The benchmark 10-year U.S. Treasury note is presently fetching 3.875%.

Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,600.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,450.00. First resistance is seen at $2,550.00 and then at the contract high of $2,570.40. First support is today’s low of $2,506.40 and then at $2,500.00. Wyckoff's Market Rating: 8.0.

September silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $31.00. The next downside price objective for the bears is closing prices below solid support at $28.00. First resistance is seen at this week’s high of $30.035 and then at $30.50. Next support is seen at this week’s low of $28.78 and then at $28.50. Wyckoff's Market Rating: 6.0.

(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

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

Tim Moseley

Gold prices catch a modest bid as Fed minutes signal a rate cut in September

The gold market is holding near its session highs and is seeing limited bullish momentum as the minutes from the Federal Reserve’s July monetary policy meeting provided some guidance for investors.

While the Federal Reserve left interest rates unchanged last month, the minutes showed that there was some support for a rate cut.

“All participants supported maintaining the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, although several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision,” the minutes said.

However, in the broader view, economists have said that the minutes continue to lay the ground work for the central bank to cut interest rates next month.

“Participants viewed the incoming data as enhancing their confidence that inflation was moving toward the Committee's objective. The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” the minutes said.

Although the minutes support expectations of a 25 basis point rate cut in September, economists note that they don’t add anything new to the broader outlook.

“There are no big surprises here but this paints a picture of the Fed on track to cut in September,” said Adam Button, head of currency strategy at Forexlive.com.

Markets already see a 100% chance of a rate cut next month and see a roughly 30% chance of a 50-basis point move.

In initial reaction to the minutes, the gold market has managed to recover its losses but is trading in roughly neutral territory. December gold futures last traded at $2,552.30 an ounce, up 0.06% on the day.

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

Tim Moseley

Gold hits all-time record high; more upside likely

Gold prices are modestly higher in midday U.S. trading Monday. December Comex gold futures today notched a record high of $2,549.90. Spot (cash) gold prices hit a new all-time high of $2,521.00 overnight. Bullish charts and safe-haven demand are driving the yellow metals prices higher and more upside is likely. Silver is sharply up and is likely to continue to be supported by gold’s price updraft. December gold was last up $7.50 at $2,545.40. September silver was up $0.531 at $29.37.

Broker SP Angel said today in a dispatch that gold prices started to climb Friday afternoon on reports China’s central bank has given new gold- import quotas to Chinese banks, “triggering speculation of a renewed wave of buying.” Chinese 10-year yields fell to record lows last week, with institutions rushing to buy over concerns of growth slowdown and deflation. “As a result, Chinese buyers are seeking alternative safe-haven protection, with gold an obvious candidate,” said the broker.

Also supporting gold are still lingering concerns about an Iranian military strike against Israel. However, it’s possible an Israeli-Hamas ceasefire agreement is close at hand. That could change Iran’s calculus on attacking Israel following recent Israeli assassinations of Hamas and Hezbollah officials.

U.S. stock indexes are higher at midday. The marketplace has significantly reduced its anxiousness regarding an impending U.S. economic recession after last week’s strong U.S. retail sales report for July. Reports said Goldman Sachs has cut its U.S. recession odds to just 20%.

Traders are awaiting the annual Jackson Hole Federal Reserve symposium that begins later this week. Past years have seen central bank officials make markets-moving pronouncements at the confab. Fed Chairman Powell is slated to speak at the symposium Thursday morning.

The key outside markets today see the U.S. dollar index solidly lower. Nymex crude oil prices are solidly lower and are trading around $74.75 a barrel. The benchmark 10-year U.S. Treasury note is presently fetching around 3.85%.

Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,600.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,450.00. First resistance is seen at the overnight contract/record high of $2,549.90 and then at $2,575.00. First support is seen at today’s low of $2,523.70 and then at $2,500.00. Wyckoff's Market Rating: 8.5.

September silver futures bulls and bears are on a level overall near-term technical playing field. Bulls have momentum on their side now. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at $27.50. First resistance is seen at $30.00 and then at $30.50. Next support is seen at the overnight low of $28.78 and then at $28.50. Wyckoff's Market Rating: 5.0

(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

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

Tim Moseley