With the dollar posting a higher high overnight the lower low in the gold and silver markets was to be expected.
Yesterday gold ETF holdings declined for the eighth straight session with a rather substantial reduction of 176,980 ounces bringing the year-to-date change in holdings to -2.8%. Silver ETF holdings saw a third straight day of outflows with year-to-date holdings now down 2.6%.
In retrospect, the failure to see gold and silver benefit from the Fitch downgrade of US credit highlights a prevailing bearish sentiment in the precious metal markets...[MORE]
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Aug 3 (Reuters) - Gold steadied on Thursday after data showing a deterioration in euro zone business activity triggered some safe-haven inflows, but bullion held near three-week lows on a stronger dollar and higher bond yields.
Spot gold was nearly flat at $1,934.29 per ounce by 1204 GMT, having hit its lowest since July 11. U.S. gold futures fell 0.3% to $1,969.80...[LINK]
While the dollar did not post a higher high for the move in the overnight action it remains a headwind for the gold bull camp.
Given the lack of a recovery in gold and silver following the downgrade of US credit by the rating agency Fitch the market is not sensitive to flight to quality issues.
In a second negative story, the World Gold Council indicated that Indian gold demand in the 2nd quarter declined by 7% from last year and suggested the slumping demand was the result of persistent record-high Rupee gold prices which reduced affordability and turned off consumer interest...[MORE]
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August 2 (Reuters) - Gold prices gained on Wednesday, helped by some safe-haven bids after Fitch downgraded the United States’ top credit rating, but an uptick in the dollar capped bullion’s gains.
Spot gold was up 0.5% to $1,952.79 per ounce at 1133 GMT, while U.S. gold futures rose 0.6% to $1,989.90...[LINK]
August 1 (Reuters) - Gold retreated on Tuesday as the dollar firmed and hopes of a soft landing for the U.S. economy dented safe-haven demand for bullion.
Spot gold eased 0.5% to $1,954.49 per ounce by 1136 GMT, while U.S. gold futures dropped 0.9% to $1,953.70...[LINK]
Gold is consolidative just below the midpoint of the May-June range as the market assesses the implications of last week’s Fed rate hike and better-than-expected economic data. The yellow metal ends July with a gain of 2.4%, breaking a 2-month losing streak.
Spot Gold Daily Chart through 7/31/2023
Last week the Fed hiked rates by 25 bps, and it was widely accepted it would be the last one for some time. However, on Thursday Q2 advance GDP came in at 2.4%, above expectations of 1.9%. In addition, durable goods orders surged 4.7% in June, well above market expectations of 1.8%.
These robust data are evidence that the U.S. economy continues to hum along at a respectable pace, despite the marked rise in interest rates over the past 16 months. More hawkish members of the Fed could now conceivably argue there is room for another rate hike. Fed funds futures are currently showing a 20% probability for a 25-bps hike in September.
While the Fed’s favored measure of inflation cooled to 4.1% in June, versus 4.6% in May, there are lingering worries in the market that a second wave of inflation could be in the offing. The national average for a gallon of regular gas jumped 13¢ last week reaching an 8-month high.
I’m often asked why gold didn’t fare better during this inflationary period. The answer lies in the Fed’s aggressive response in raising the Fed funds rate by 525 bps in just over a 1-year period. During that time, gold only corrected 22%, from $2070.63 (just shy of the all-time high) to $1614.92.
Most of those corrective losses have already been retraced, so I would argue that gold held up remarkably well in the face of the most aggressive tightening campaigns in recent history.
The long-term trend remains bullish with the market trading less than $110 off the all-time high. Setbacks into the range are likely to be viewed as buying opportunities.
Silver
Silver closed down more than 1% last week, weighed by persistent concerns that the health of the Chinese economy, and an uptick in the probability of another Fed rate hike in September.
Spot Silver Daily Chart through 7/31/2023
A firmer tone emerged over the past two sessions on the heels of strong U.S. and Japanese data. While the Chinese economy continues to show signs of weakness, the government announced supports for light industry on Friday and then measures to boost consumer spending on Monday.
Such stimulus offers support for both precious and industrial metals. If the Chinese economy continues to struggle, additional (and larger) stimulus would be likely, providing underpinning for the metals.
I like that the 20-day SMA successfully contained the downside last week. Renewed tests above $25 would bode well for a retest of the high from July 20 at $25.27. Penetration of the latter would clear the way for a challenge of the highs for the year at $26.09/14.
PGMs
Platinum fell 2.8% last week, notching a second consecutive lower weekly close. A fresh 2-week low was set on Monday before the market snapped back to close nearly 2% higher on the day.
Spot Platinum Daily Chart through 7/31/2023
The outside day with a higher close bodes well for upside follow-through on Tuesday. Strong economic data from the U.S. and Japan, along with Chinese stimulus are supportive factors.
The longer-term supply and demand dynamics remain broadly supportive. Dips into the range are likely to be viewed as buying opportunities.
Palladium has been corrective to consolidative over the past several weeks. While a short-term bottom may be in place at $1185.18, the trend remains bearish.
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.
Despite favorable internal demand news, the #gold market starts off under pressure from strength in the #dollar and signs of higher global interest rates.
While comments from a Chinese state planner indicating they will push for an expansion of household consumption sounded like the 6th stimulus announcement, that news combined with a slight improvement in Japanese manufacturing PMI readings for July should have been more supportive of gold, #silver, and many physical commodities.
Unfortunately for the bull camp gold ETF holdings last week fell by 329,000 ounces with a decline on Friday of 50,383 ounces putting year-to-date holdings down 2.3%...[MORE]
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July 31 (Reuters) - Gold pared losses and was poised for its best month in four on Monday as top central banks switch to a more cautious posture about further moves in their year-long round of global monetary tightening.
Spot gold was unchanged at $1,959.50 per ounce by 1132 GMT after slipping as much as 0.5% earlier. U.S. gold futures ticked 0.1% lower to $1,959.30...[LINK]
