Gold – Optimistic!

Commentary for Thursday, March 28, 2024 (www.golddealer.com) – Today gold closed up $26.80 at $2217.40, and silver closed up $0.17 at $24.80. This has been another great week for metals. Higher prices, more positive buzz and larger physical buy orders suggest an optimistic outlook. And perhaps even higher prices over the longer term. Of course, this optimism is fueled by the notion that interest rates are heading lower by the summer months. Fed Governor Waller throws up a cautionary flag claiming that economic data may delay or reduce the number of rate cuts. Still, this is a great time for reflection on how physical ownership of gold and silver bullion keeps everyone honest in this upside down world of unfunded debt and government intervention. We are closed tomorrow, March 29^th – Good Friday. The commodity and stock markets are also closed. Last Friday gold closed at $2158.10 / silver at $24.69 – on the week gold was higher by $59.30 and silver was higher by $0.11.

Please note that FedEx is no longer asking for delivery signatures. They are scanning IDs. We have complained to FedEx, but they remain resolute. Scanned identification is safer, but if you have a problem with this decision, please make your feelings known to FedEx. Unfortunately, the present delivery time for the USPS alternative is 2-3 weeks.

Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on a new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.

On Monday the price of gold moved through $2178.00 in the early trade as the US dollar loses steam and gold’s technical picture gathers attention. The expectation of lower interest rates is an old bullish adage, but the theory still underpins this rising market. As does the possibility of a “soft” economic landing. These optimistic views make for an upbeat gold trade.

Pricing will likely remain steady and quiet, as this trading week ends on Thursday. The US markets are closed on Good Friday. Traders typically pack up and leave early for the long weekend. The phone is not exactly ringing off the hook to buy gold at these levels. The public is not selling much but remains watchful of economic changes which might slow our economy and prompt a hawkish Fed response. The fact that gold held early gains on the close is always a plus.

Reuters (Sherin Elizabeth Varghese) – Gold firms as traders position for US data – “Gold prices firmed on Monday as investors positioned for key economic data and comments from Federal Reserve officials this week for further clues on the timing of interest rate cuts signaled by the U.S. central bank. Spot gold was up 0.5% at $2,175.21 per ounce, as of 1306 GMT, while silver rose 0.5% to $24.78. The weekly initial jobless claims print due on Thursday, followed by the U.S. core personal consumption expenditure (PCE) price index data on Friday. The PCE data is the Fed’s preferred inflation gauge and any market reaction to it will be seen only next week on account of the Good Friday holiday. “Higher-than-expected PCE figures may prompt spot gold to pare some of its month-to-date gains,” said Han Tan, chief market analyst at Exinity Group. Tan said elevated gold prices reflected expectations that Fed rate cuts were just around the corner. “Furthermore, as Fed Chair Powell himself stated last week, a sudden and unexpected deterioration in the US jobs market may jolt the Fed into a more aggressive policy easing cycle, which in turn would be a boon for gold bugs.” Gold prices hit record peaks last week after Powell said the U.S. central bank is still likely to reduce rates by three-quarters of a percentage point by the end of 2024. A slew of Fed officials are expected to speak this week. Traders are pricing in a 73% probability of a June rate cut, according to the CME FedWatch Tool, up from 60% before the Fed’s March policy meet held last week. Among autocatalysts, platinum gained 1.8% to $909.70 and palladium climbed 3.6% to $1,020.45. Demand for palladium from the auto industry will be supported for longer after last week’s new U.S. emissions law changes, which will effectively allow for more catalyzed car sales in coming years, analysts at Heraeus said.”

On the day gold closed up $16.70 at $2174.80, and silver closed up $0.06 at $24.75.

On Tuesday the price of gold challenged $2200.00, but traders aggressively sold the rally, and, on the day, gold finished almost unchanged. It was interesting that consumer confidence is moving lower, given the relative optimism regarding the US economy. The last time I went shopping you had to fight for a parking space. Food and gas prices continue to move higher which may be the reason that the US consumer is not happy.

Our walk in trade is buying gold and silver bullion as optimism is on the rise, which encourages higher levels. A slightly weaker dollar today supports recent gains in gold. But you could make the case that the dollar is overbought. And will eventually weaken relative to the 3 month chart.

This would coincide with the bullish lower interest rate theory. If correct, the optimistic view would be that the price of gold may attempt all-time highs by June of this year.

Reuters (Polina Devitt) – Gold firms on weaker dollar, focus on US inflation data – “Gold prices rose on Tuesday supported by a weaker dollar as investor focus turns to U.S. inflation data due later this week, which could shed more light on the timing of the Federal Reserve’s first interest rate cut this year. Spot gold rose 0.9% to $2,191.71 per ounce by 1315 GMT. Gold hit a record high of $2,222.39 last week after Fed policymakers indicated they still expected to reduce interest rates by three-quarters of a percentage point by end-2024 despite recent high inflation readings. “Unless there is significant news that indicates a speeding up of rate cuts, gold is unlikely to hit a new record high before Easter,” said Nitesh Shah, commodity strategist at WisdomTree. “However, we expect new records to be broken by the end of the year,” he said. According to WisdomTree, gold prices may top $2,350 in the first quarter of 2025. Traders are pricing in a 64% probability that the Fed will begin cutting rates in June, according to the CME Group’s FedWatch Tool. The dollar index , meanwhile, slipped 0.1% against its rivals, making gold less expensive for other currency holders. Focus is now on U.S. core personal consumption expenditure price index data due on Friday. Gold prices are also supported by elevated physical demand from Chinese households amid some concerns about the prospects for the country’s real estate and stock market. This helped offset softening demand from price-sensitive Indian buyers. Purchases by central banks, which are less price sensitive than retail consumers, also remain strong, providing further support to the metal. China’s central bank has been the most active buyer since late 2022. “The motivating factor for their gold purchases is diversification away from the G7 currencies, after these currencies were weaponized in 2022 following the Russia-Ukraine war,” Shah said. Spot silver rose 0.3% to $24.75, both platinum and palladium added 0.7% – to $908.90 and $1,011.99 respectively.”

On the day gold closed up $0.80 at $2175.60, and silver closed down $0.27 at $24.48.

On Wednesday the price of gold was again off to a good start, challenging $2200.00 in early trading before turning choppy and finishing the day in the green. The bulls are looking for even higher prices and a positive technical picture encourages momentum play.

There is talk that these higher prices in gold has created a faltering gold market in India, and indeed it has. India represents a large sector of the physical market and has always been very price conscious. Yet patient, so waiting for an expected turnaround from their viewpoint is typical. But I think this delay will dimmish considerably as India realizes that a Fed rate cut in a few months is expected and lower interest rates usually mean higher gold prices.

FXEmpire (Vladimir Zernov) – “Gold tests resistance at $2190 – $2200 as Treasury yields pull back. Demand from central banks stays strong, and gold has a good chance to climb above the $2200 level.” I can’t remember a time when the stage was set so nicely for higher gold prices. The fogginess of rising interest rates, usually a big downer for gold, has moved to the sidelines. The dovish turn in Fed policy has obviously created fresh excitement. While it’s a good idea to remind yourself that sentiment is transitory. Even here, higher prices are the popular opinion. Good show as our English friends are fond of saying. Yes, good show indeed!

Reuters (Kavya Balaraman and Anjana Anil) – Gold climbs as investors look ahead to key US inflation data – “Gold prices gained on Wednesday as investors awaited U.S. inflation data that could cast further light on the Federal Reserve’s policy path. Spot gold was up 0.6% at $2,191.88 per ounce as of 09:53 a.m. EDT (1353 GMT). U.S. gold futures rose 0.6% to $2,190.50. On investors’ radar is the U.S. Core Personal Consumption Expenditures Price Index (PCE) data for February, due on Friday. The index rose 0.3% in January. “We’ll have to see whether or not U.S. inflation here domestically is soft enough to provide this clear path to lower rates in the coming months,” said Alex Turro, senior market strategist at RJO Futures. He expects range-bound price action for the session as investors come into the sidelines ahead of the report. Gold hit a record high last week after the U.S. central bank’s policymakers indicated they still expect to reduce interest rates by three-quarters of a percentage point by end-2024, despite recent high inflation readings. Traders now see a 70% chance of a June rate cut by the Fed. Lower interest rates reduce the opportunity cost of holding bullion. “Central banks continue to report ongoing gold purchases, driven by their desire to diversify their currency reserves. This is offsetting the weakness from investment demand, which focuses more on U.S. rate-cut expectations,” said UBS analyst Giovanni Staunovo. Meanwhile, India’s gold imports are set to plunge by more than 90% in March from the previous month as banks cut imports after record-high prices hit demand.

On the day gold closed up $15.00 at $2190.60, and silver closed up $0.15 at $24.63.

On Thursday gold moved higher, encouraged by a solid technical and economic picture. I would suggest that because the price of gold is higher by a whopping $157.00 this past month traders will be looking for profit-taking. The long Easter weekend begins today because of Good Friday. Look for some settling next week but there is more than enough good news for the bulls to hold this trading range, plus or minus $100.00. I don’t believe there is much downside with our solid economic numbers. It would take a real pessimist to rain on this latest bullish run in gold.

Reuters (Kavya Balaraman and Anjana Anil) – Gold rises towards best month in more than a year, US data in focus – “Gold prices climbed on Thursday and were set to log their best month in over a year, bolstered by strong safe-haven demand, U.S. interest rate cut expectations and central bank buying. Spot gold gained 0.5% to $2,204.99 per ounce as of 10:20 a.m. EDT (1420 GMT), eyeing its best month since November 2022 gaining around 8% so far, and a second straight quarterly rise. U.S. gold futures edged 0.7% higher to $2,204.80. Gold hit a record high last week after the U.S. Federal Reserve anticipated three rate cuts in 2024. Traders are currently pricing in a 64% chance of a June rate cut, according to CME’s FedWatch tool. “More signs of cooling price pressures may reinforce expectations around the Fed cutting rates – ultimately boosting appetite for gold. However, a sticky report will likely drag the precious metal lower,” said FXTM senior research analyst Lukman Otunuga. The U.S. core personal consumption expenditure (PCE) price index report is due on Friday, which could help investors gauge the Fed’s policy stance. However, Fed Governor Christopher Waller indicated on Wednesday that recent economic data could warrant a delay or reduction in the number of interest rate cuts. Silver fell 0.2% to $24.60 per ounce, platinum rose 1.6% to $907.80 and palladium added 3.1% to $1,014.17. All three metals were bound for monthly gains.

On the day gold closed up $26.80 at $2217.40, and silver closed up $0.17 at $24.80.

Platinum closed up $11.80 at $907.70, and palladium closed up $30.50 at $1009.50.

On Friday we are closed for Good Friday. The commodity markets are also closed.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the solid overall near-term technical advantage. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the contract high of $2,246.60. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $2,170.80. First resistance is seen at the overnight high of $2,234.40 and then at the contract high of $2,246.60. First support is seen at the overnight low of $2,207.50 and then at $2,200.00. The silver bulls have the overall near-term technical advantage but have faded recently. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at last week’s high of $25.975. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at this week’s high of $25.055 and then at $25.50. Next support is seen at this week’s low of $24.445 and then at $24.22.

Brothers and Sisters, thank you for your friendship. If you have unusual circumstances, need cash or a special favor – talk to Harry or Eric or Ken Slater. We are now back to our traditional business model. Thank you for your patience. Blessings. Richard Schwary

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