Blog posts of '2023' 'August'

While initial prices are softer today both gold and silver maintain bullish charts but will be heavily impacted by initial claims which are expected to show an increase in those claiming unemployment benefits.

In other words, the bull camp needs soft economic data to further the rate pause mantra which was given added credence overnight from comments from the Atlanta Federal Reserve president Bostic who indicated that US interest rates are "high enough".

However, the PCE data is typically a significant input into Fed decisions and that combined with the last significant cycle of monthly jobs news ahead of the September 14th Fed meeting should mean volatility and the potential for a trend signal for early September...[MORE]

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Aug 31 (Reuters) - Gold firmed near one-month highs on Thursday to cap this month’s losses as the odds of another U.S. interest rate hike were trimmed by data earlier this week pointing to a slowing labor market, while traders keep their eyes peeled for the upcoming inflation reading.

Spot gold was up 0.1% higher at $1,944.74 per ounce by 1003 GMT, close to its Aug. 2 high of $1,948.79 hit on Wednesday. U.S. gold futures were down 0.1% to $1,971.50...[LINK]

Despite minimal outside market headwinds gold enters the Wednesday session virtually unchanged and within striking distance of yesterday's upside breakout highs.

In a minimally supportive development overnight Harmony Gold showed a slight decline in the first half of production this year but managed to produce a profit. The company produced 1.47 million ounces of gold over the year compared with 1.49 million ounces and guidance of 1.4 million to 1.5 million ounces.

Unfortunately for the bull camp gold ETF holdings continue to decline with yesterday's outflow of 24,341 ounces expanding the year-to-date outflow to 4.3%...[MORE]

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Aug 30 (Reuters) - Gold was perched atop a three-week high on Wednesday as traders positioned for more U.S. economic readings that could further alter the odds of another interest rate hike by the Federal Reserve.

Spot gold rose 0.1% to $1,939.23 per ounce by 1152 GMT, its highest level since Aug. 7. U.S. gold futures also rose 0.1% to $1,967.40...[LINK]

Aug 29 (Reuters) - Gold edged lower on Tuesday due to a stronger dollar and an uptick in bond yields, while investors looked to upcoming data on the U.S. labour market and inflation which could influence the Federal Reserve’s interest rate decision next month.

Spot gold was down 0.3% at $1,914.72 per ounce at 1224 GMT. U.S. gold futures eased 0.2% to $1,942.40...[LINK]

Gold fell to a 5-month low of $1884.88 last week but was unable to sustain losses below $1900 despite rather hawkish FedSpeak from Chairman Powell at the Jackson Hole Symposium. The yellow metal was able to post a 1.3% weekly gain, its first in five weeks.

Powell acknowledged that inflation has come down some, but it remains too high. He warned that further rate hikes could be in the offing.

“We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”– Fed Chairman Jerome Powell

The 10-year Treasury yield reached 4.35% early last week, a level not seen since 2007. While rates moderated in subsequent trading this is likely attributable to profit-taking in advance of the Powell speech rather than any real shift in the perception of policy guidance.

The market certainly seems to be leaning toward “higher for longer” with perhaps some new risk for more rate hikes. However, the hawkish bias remains very much data-dependent.

This week happens to be chock full of U.S. data, including home prices, consumer confidence, GDP, PCE, and nonfarm payrolls. These data points and others in the weeks and months ahead will probably have a greater impact on the rate path than any Fed jawboning.

Interestingly, while the 10-year yield reached a 16-year high, the dollar index is thus far holding below the 104.24 high from May 31. It seems like the dollar should be garnering far more support from the rise in yields. And by extension, gold should be under greater pressure.

The greenback’s share of global reserves has gradually eroded over the past 20 years. News that BRICS membership will more than double as of January 1, 2024, and rumblings of a joint currency conspire to further undermine dollar hegemony.

Speculation that the BRICS currency will at least partially be backed by gold makes for a pretty compelling case to lighten dollar exposure in favor of the yellow metal. This investment theme is already being embraced by a number of central banks.

Silver

Silver snapped back smartly last week, gaining more than 6%. It was the white metal’s second consecutive higher weekly close.

While China has taken a measured approach to stimulus thus far, there seems to be a growing expectation that the Chinese government will deliver more robust measures to prevent a recession in the world’s second-largest economy.

With substantial currency reserves at its disposal, China has the means for large-scale fiscal stimulus. There is historic precedence as well.

However, silver is not out of the woods yet. The range that was established in June and July remains intact at this point. I’m also not seeing the recent gains mirrored in the copper market.

Despite last week’s rally, silver ETFs saw outflows of 6.3 Moz. Holdings are down 3.6% YTD.

Until investors come back to the market, I have to consider the downside still vulnerable. However, the longer-term supply/demand dynamics remain favorable.

PGMs

Platinum rose nearly 4% last week. It was the second consecutive higher weekly close and an additional upside extension (2.6%) was seen on Monday. Most of the declines off  

Here too, while the long-term fundamentals remain broadly favorable, higher U.S. rates and the negative impact on auto demand, as well as persistent worries about the Chinese economy are seen as limiting to the upside.

Palladium continues to consolidate at the low end of the range, still within striking distance of multi-year lows.

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

While the gold trade this morning is showing positive action, optimism is seemingly based on the slim idea that gold "held up" well against last week's hawkish Fed guidance.

However, hedge fund managers reduced their net long last week and gold ETF holdings last week reduced their gold holdings by a very significant 257,994 ounces.

Year-to-date gold ETF holdings are down 4.2%! Similarly, silver ETF holdings last week declined by 6.3 million ounces with holdings year-to-date down 3.6%...[MORE]

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