Blog posts of '2024' 'May'

Gold has plunged more than 4% from Monday's record high at $2449.34. The yellow metal fell $42.57 on Wednesday and is off another $35 today.

 

Silver has tumbled nearly 7% from Tuesday's 11-year high at $32.38!

Losses are mounting as markets unwind rate cut expectations in the wake of Wednesday's release of the minutes from the last FOMC meeting.

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While the declines yesterday in gold and silver were blamed on fear of hawkish statements from the last Fed meeting minutes, the declines this morning are the result of a realization of hawkish news from the actual release.

Apparently, the Fed had a debate on whether policy was tight enough to bring inflation down as quickly as was hoped for and some policymakers were disappointed in the economic information they have seen since the March meeting.

Therefore, a minimal higher high for the move in the US dollar adds to the liquidation bias in markets that were significantly overdone into the recent highs...[MORE]

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While today could be a very critical pivot point for gold from a macroeconomic perspective, (US Fed meeting minutes release, 20-year US treasury bond auction, and existing home sales) it should be noted that internal fundamentals remain generally positive.

In fact, gold ETF holdings have now risen for six straight days and silver ETF holdings yesterday jumped by a notable 2.8 million ounces.

In a minimal and perhaps temporary negative development, gold saw a forecast overnight from Commerzbank suggesting gold prices will fall back to $2300 in the second half of this year. Countervailing the bearish $2300 price projection by Commerzbank is a forecast from Morgan Stanley of a target of $2760 an ounce...[MORE]

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PG Comment: I wouldn't consider a retreat to $2300 bearish. That's just 4.6% below the current price. Now if we go the $2760 first...that's another story.

Volatility has expanded and is likely to stay elevated with gold and silver continuing to march to their own drummer.

The dollar and treasuries have held within a narrow range over the prior four trading sessions with a very minimal downtrend bias seen in both markets.

It should be noted that gold ETF holdings are beginning to rise consistently, with last week posting an inflow of 230,227 ounces, and with the addition of 135,000 ounces in just the last two sessions...[MORE]

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With an overnight explosion in prices, gold reached a new all-time high while silver posted explosive gains and the highest price since February 2013!

With the battle heating up in Gaza, a slight shift in the US Fed policy pendulum in favor of the doves last week, and a strong close last week on rising open interest should leave gold in a position to forge even higher all-time highs.

However, the silver market could become the sleeper market as a cheap gold substitute, especially with a surprise upside extension overnight, given silver is significantly cheaper than gold, and with silver still well below all-time high levels above $50 from decades ago...[MORE]

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