While we suspect the bombing of a hospital in Gaza has sparked the sharp upside extensions in gold and silver prices today, it is also possible that a measure of improved physical demand hope from stronger-than-expected Chinese data is adding to the bullish mix today.
While not a definitive supportive element in the early going, the dollar is poised just above a downside breakout point on the charts and could fail if estimates for US building permits match or come in below estimates.
However, with crude oil prices jumping by more than $2.00 overnight, fear of a broadening of the conflict in the Middle East creates the potential for a large flight to quality event and rekindles fear of inflation potential inspired by surging energy prices...[MORE]
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Oct 18 (Reuters) - Gold rose more than 1% on Wednesday after a deadly blast in Gaza raised fears of an escalation in the Middle East conflict and pushed investors towards safe-haven assets.
Spot gold rose 1.1% to $1,944.90 per ounce by 1131 GMT, its highest since Sept. 20. U.S. gold futures jumped 1.2% to $1,958.90...[LINK]
While outside market moves are not significant, gold is posting minimal gains despite strength in the dollar and weakness in treasury prices!
However, some international traders see risk premiums falling with the US presidential visit to Gaza with the idea that diplomatic efforts could calm the situation.
Unfortunately for the bull camp global economic activity is showing signs of slowing with global manufacturing softening and demand for industrial metals declining and that casts a shadow over precious metal markets...[MORE]
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Oct 17 (Reuters) - Gold prices edged higher on Tuesday as investors took stock of developments in the Middle East and awaited Federal Reserve Chair Jerome Powell’s speech later this week for cues on the U.S. interest rate path.
Spot gold was up 0.2% at $1,923.78 per ounce by 1122 GMT, and U.S. gold futures rose 0.1% to $1,936.70...[LINK]
Gold surged nearly 5.5% last week, spurred by safe-haven buying in the wake of the horrific October 7th attack on Israel. While downside retracement was seen on Monday, the initial push back above the $1900 level leaves the low end of the bear channel well protected for the time being.
Spot Gold Daily Chart through 10/16/2023
With an Israeli ground offensive into Gaza thought to be imminent, and amid worries that the conflict could expand, look for the yellow metal to remain underpinned. Iran has warned Israel of “far reaching consequences” should they launch a ground invasion.
Gold is garnering additional lift from rising hopes that the Fed is done raising rates this year. The CME’s FedWatch tool puts the probability of a November rate hike at just 5.2%, while the odds for a December rate hike stand at 32.7%.
While PPI rebounded in September to 2.2% y/y, and CPI held steady at 3.7%, members of the Fed still seem to be encouraged by the progress in the fight against inflation.
“Absent a stark turn in what I see in the data and hear from contacts … I believe that we are at the point where we can hold rates where they are,” said Philadelphia Fed President Patrick Harker. Raphael Bostic of the Atlanta Fed stated last week that he does not believe that the FOMC needs to hike again.
There is still a wide belief that the Fed’s next move is very data-dependent. The present stance has been categorized as a “hawkish hold.” As long as the trajectory for inflation is down, the central bank will likely keep rates as they are.
Monday’s low at $1908.23 now provides a good intervening support level ahead of the 38.2% retracement level of the rally off the $1810.46 low, which comes in at $1886.14.
On the upside, the next tier of resistance is found at $1947.46/$1953.06. A breach of this area would exceed the halfway back point of the entire decline off the $2067.00 high from May, shifting focus to the 61.8% retracement level at $1969.00.
As long as geopolitical tensions remain elevated and nearby supports are intact, setbacks into the range are likely to be viewed as buying opportunities.
While haven flows have gold and the dollar moving generally in tandem at the moment, keep an eye on that relationship for short-term directional cues.
Silver
Silver rose just over 5% last week as outside forces stoked market volatility. Despite the strong rally, additional gains are needed to set a more favorable technical tone.
Spot Silver Daily Chart through 10/16/2023
A rebound above $23.41 would constitute a 50% retracement of the decline from the May high at $26.14. It would also put silver back above its 100- and 200-day moving averages. This would have rather bullish implications.
A retreat below $21.80/75 would return focus to the bearish scenario that has dominated since the downside breakout of the large triangle pattern. Such a move would return focus to the $20.68 low from October 3 and highlight the low for the year at $19.90 once again.
While silver followed gold higher last week, the white metal is probably more concerned about the implications of another war on regional and global growth, as well as prices. If signs of stagflation begin to surface, silver would likely remain defensive.
PGMs
Platinum was comparatively subdued last week, rising a scant 0.5% with activity confined to the previous week’s range. Consolidative trading prevailed on Monday.
Spot Platinum Daily Chart through 10/16/2023
The short-term technical bias remains negative with platinum below the midpoint of the COVID-era range and all the important moving averages.
Palladium remains weak after sliding to fresh 5-year lows two weeks ago. The next support level to watch is defined by a measuring objective and a Fibonacci level at $1088.38/$1085.50.
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.
What goes up aggressively can correct aggressively, which is more the case in gold early today than in silver.
Clearly, the markets are not supported by weekend developments in Gaza, and with a thin US economic report slate today, the primary focus will likely be on an afternoon speech from the Feds Harker.
While the US intentions to contain the Middle East crisis are laudable, many times those types of efforts prove fruitless...[MORE]
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Oct 16 (Reuters) - Gold prices fell on Monday due to technical selling after a strong rally in the previous session, although concerns over a potential escalation in the conflict in the Middle East kept bullion above $1,900 per ounce.
Spot gold was down 0.9% to $1,915.10 per ounce by 1130 GMT after hitting its highest since Sept. 20. U.S. gold futures was down 0.7% to $1,928.60...[LINK]
While the dollar index overnight did not show a definitive downside extension, the charts and Fed news favor the bear camp in the Dollar which in turn favors the bull camps in both gold and silver.
Apparently, the meeting minutes from the September Fed meeting produced concern among Fed members with the threat against growth rising and perhaps paralleling the risk of inflation.
In fact, most Fed members viewed the economic outlook as highly uncertain resulting in a consensus of proceeding carefully before raising rates again...[MORE]
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Oct 12 (Reuters) - Gold extended gains to a two-week high on Thursday, as the dollar and Treasury yields ticked down on the Federal Reserve’s cautious tilt in tone ahead of a U.S. inflation print that could offer further rate cues.
Spot gold was up 0.5% at $1,882.59 per ounce by 1138 GMT, its highest level since Sept. 27. U.S. gold futures were up 0.4% at $1,895.40...[LINK]
Gold and silver prices continue to rise as this week's early financial market trends have extended into another session with higher equities, a weaker dollar, and most importantly sharp declines in implied US treasury yields.
We mention strength in the equity markets as we have detected bullish sensitivity in gold and silver to positive economic developments recently as if a portion of the trade is anticipating improved physical and investment demand from improved global economic sentiment.
Not surprisingly, the bull camp should be emboldened by the extensions down in treasury yields and the dollar as that removes significant headwinds and could become a very significant bullish theme if that action continues...[MORE]
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