Gold – Rising Bearish Sentiment

Gold – Rising Bearish Sentiment  

Commentary for Thursday, Nov 9, 2023 (www.golddealer.com) – Today gold closed up $12.70 at $1964.20, and silver closed up $0.18 at $22.83. Another week of trouble for the bulls as gold’s technical picture falters, crude oil weakens, and Fed hawkishness seems resolute. (Reuters) – “Oil prices slid over 2% on Wednesday to their lowest in more than three months on concerns over waning demand in the U.S. and China.  “The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance,” ING analysts Warren Patterson and Ewa Manthey said in a note to clients, referring to crude supply conditions.” It is interesting that at the same time, today’s New York cash market surged to highs on the day ($1964.20). My sense is that gold has become oversold, traders covered, creating a short covering rally. But this last-minute pop to the upside may instead suggest fresh escalation in the Middle East, which has prompted safe haven buying. Rising bearish sentiment has slowed our trading volume – so caution is warranted. We will be closed tomorrow (Friday) for Veterans Day. USPS & Banks are open. Last Friday gold closed at $1991.50 / silver at $23.20 – on the week gold was down $32.73 and silver was off $0.37.

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 continued to settle, moving from highs on the day ($1988.00) to lows on the day ($1979.00). A typical trade these days, with a negative bias as the bulls lose steam and yet the still positive technical picture constrains the bears.

This week we will hear from a host of important Fed insiders including Chief Powell himself on Thursday. So, there could yet be some fireworks which may provide support to the flagging bullish sentiment. And ETF holdings continue lackluster, joining this bearish party.

Still, a confused Middle East picture, and the possibility of increased hostility may refresh safe haven bullion demand. The holiday season may also help, suggesting an increase in gold jewelry sales and gift giving in the US. At the same time jewelers in India are optimistic even though gold prices have gained 20% since the last Diwali.

At the same time, investors are less optimistic, turning cautious. Gold struggles because its last official short-term bottom was in October, around $1825.00.

Today’s physical investor is somewhere between optimistic and pessimistic. That weird kind of middle ground that slows the action somewhat, but there is not enough conviction in either group to establish a diffident trend. So, for now the jury is out as to whether gold is settling at the upper end of that range around $1950.00 or insiders expect a test of the most recent lows.

FXEmpire (Vladimir Zernov) – Gold, Silver, Platinum Forecasts – Gold Pulls Back As Treasury Yields Rebound – Silver and platinum are also moving lower as traders focus on rising yields. “Gold pulls back as traders focus on the rebound in Treasury yields. It looks that gold needs additional positive catalysts to settle above the $2000 level. From the technical point of view, gold remains stuck near the support at $1975 – $1985. A move below $1975 will push gold towards the support at $1940 – $1950. Silver is moving lower as traders wait for additional catalysts that could push it out of the current trading range. In case silver manages to settle above the resistance at $23.40 – $23.60, it will head towards the next resistance level, which is located in the $25.00 – $25.30 range. Platinum is losing ground amid a broad pullback in precious metals markets. Platinum did not manage to settle above the resistance at $925 – $935. In case platinum moves below the 50 MA at $910, it will head towards the support at $880 – $890.”

On the day gold closed down $9.90 at $1981.60, and silver closed down $0.05 at $23.15.

On Tuesday the price of gold began moving lower in the overnight Hong Kong and London markets, perhaps reflecting a disappointing miss in China’s economic picture. But its weakness in the US cash market confirms my suspicions that gold has lost its momentum and will look to consolidate at lower levels. The pricing spread on the day moved between $1967.00 and $1956.00 as gold settled solidly in the red by the close. There is enough confusion in the world to cushion this weakness in the short term. The most recent October low ($1850.00) also held up in early September. This technical plus supports the bullish contention that if $1850.00 is actually tested, the price of gold at that time would present an oversold market and traders would be looking for a significant short covering rally.

Reuters (Harshit Verma) – Gold falls 1% as dollar firms, traders brace for Fed speeches – “Gold fell 1% to a two-week low on Tuesday on a firmer dollar, with traders positioning for interest rate cues from a host of Federal Reserve speakers this week. “Gold prices appear to be heading lower after a failure to push above the $2,000 an ounce key resistance, (that) prompted some profit taking, (and) appears to be being driven by a stronger US dollar which is higher across the board,” said Michael Hewson, chief market analyst at CMC Markets. The dollar index rose 0.4%, making bullion more expensive for overseas buyers. Gold gained more than 7% in October as the conflict in the Middle East boosted safe-haven demand. The gold market is waiting for further dovish signals from the U.S. central bank before the rally can continue, said Carlo Alberto De Casa, market analyst at Kinesis Money. Investors now await a host of speeches from Fed officials this week, with the spotlight on Chair Jerome Powell, who is due to speak on Wednesday and Thursday. Investors see a 90% chance of the Fed leaving rates unchanged in its December meeting, and a 75% chance of introducing a cut as early as June next year, according to CME FedWatch tool. However, Fed Bank of Minneapolis President Neel Kashkari said the central bank likely has more work ahead of it to control inflation. “If we see some sort of tepid demand (in the Treasury auctions this week) … that could put upward pressure on yields again and put some downside pressure on gold,” said Kyle Rodda, financial market analyst at Capital.com. Spot silver fell 2.2% to $22.52 per ounce and platinum eased 1.2% to $894.73. Palladium slipped 1.2% to $1,093.27 and was down 39% for the year so far. “Substitution from palladium to platinum and more electric vehicles being sold will likely push the metal into a structural surplus next year,” UBS said in a note, adding it sees prices targeting $1,050 per ounce in the second half of 2024.”

On the day gold closed down $14.80 at $1966.80, and silver closed down $0.64 at $22.51.

On Wednesday the New York cash market for gold quickly moved to daily lows around $1950.00 helped by a deteriorating technical picture and still struggling against a rising dollar. And you will have to look hard for optimistic bullish commentary as even the gold ETFs look elsewhere for hedging options. Think about our relative economic territory and you will have valuable insight into the nature of the gold trade. Just 6 months ago everyone was bullish and talking about higher prices for gold. Today, the opposite is true, most everyone is bearish and talking about lower prices for gold. The point I’m trying to make is that sentiment and therefore commentary for any commodity is volatile and subject to quick changes in the wind.

Does it create “happiness” when gold sells off from $2050.00 and dips to recent lows of $1850.00? Of course not, but it does slow down the momentum trade. Which helps us view pricing realistically and with a view as to value. It’s also a good idea to approach this notion with what Davy Crockett called Kentucky windage – but it’s not just guesswork.

This approach allows us to consider choices which might be overlooked when highly negative sentiment prevails, and the bullish scenario is downbeat.

Can you benefit when gold commentary turns overly bearish? It depends on your inclination, which for the most part is already wired into your thinking. If you are pessimistic (which is not necessarily a bad thing) you will assume the worst. If optimistic or a student of world history, you will look for opportunities.

I believe the technical floor ($1850.00) may hold up surprisingly well. This is no revelation as veteran buyers believe that gold will make all-time highs in the next decade. Price averaging and bargain hunting makes good sense to them in a down market.

Reuters (Ashitha Shivaprasad) – Gold lacks momentum as traders seek more Fed cues – “Gold prices retreated for a third straight session on Wednesday as investors looked for fresh cues on the U.S. central bank’s interest rate stance, while palladium hit a five-year low. The dollar index ticked 0.1% higher, making greenback-priced metals less alluring for other currency holders. “Traders will start looking at economic data and potential actions from the U.S. central bank. Gold will react based on whatever the data is showing,” said Daniel Ghali, commodity strategist at TD Securities. “It is hard to see a catalyst for further upside in gold without a notable deterioration in the data.” A slew of Federal Reserve officials on Tuesday maintained a balanced tone on the central bank’s next decision, but noted they would focus on more economic data and impact of higher long-term bond yields. Fed Chair Jerome Powell is set to speak at 2:00 p.m. ET on Thursday. Gold is sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding the non-yielding asset. “The risk premium gold gained from the Israel-Hamas war is eroding. If you see an escalation in the conflict, then gold can get some momentum behind it,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. Bullion gained over 7% in October as the conflict in the Middle East boosted safe-haven demand. Elsewhere, palladium hit its lowest levels since 2018 at $1,007.73 earlier in the session and was down 1.2% at $1,042.72. Platinum eased 2.2% to $871.92. In the palladium market, “demand is evaporating at pretty fast pace led by smaller production of internal combustion engines and it is also being substituted with platinum in auto catalysts components,” Ghali added. Both metals are used in emissions-controlling devices in cars.”

On the day gold closed down $15.30 at $1951.50, and silver closed up $0.14 at $22.65.

On Thursday weakness in the price of gold has the bulls hiding under the bed. This has created one of those typical anomalies encountered in a confused market. The public is not standing in line to buy, and at the same time they are not selling their gold or silver bullion.

That being said, today gold surged higher in the domestic market despite the current downtrend reminding everyone that there are more than a few unanswered questions as to our current monetary policy. This confusion takes continued patience. The last FOMC confab for this year will be on December 12th and 13th – and will offer a Summary of Economic Projections. Santa Clause will be warning investors to make sure their seat belts are fastened!

Reuters (Ashitha Shivaprasad) – Gold holds some gains after Fed’s Powell speaks; palladium sinks – “Gold held on to some gains on Thursday after Federal Reserve Chair Jerome Powell reiterated the need for higher interest rates to rein in inflation, while auto-catalyst palladium fell below the $1,000 an ounce level for the first time since 2018. Powell said Fed officials “are not confident” that interest rates are yet high enough to finish the battle with inflation, sending the U.S. dollar and Treasury yields higher. “Powell’s comments are less dovish than hoped which has prevented a further advance in gold, though it has broken a three-day losing streak,” said Tai Wong, a New York-based independent metals trader.

“Gold seems likely to stay in a range under $2,000 as geopolitics is still exercising an outsized influence.” Bullion has fallen over $40 after hitting $2,000 last week when escalating tensions in the Middle East boosted safe-haven inflows. Silver was up 0.4% to $22.6. “Gold could move above $2,100 in the second quarter of 2024 and the catalyst will be the Fed needing to start cutting rates,” said Bart Melek, head of commodity strategies at TD Securities. Traders pushed out bets on the Fed’s likely first interest-rate cut to June of next year from May earlier. Lower interest rates boost zero-yield bullion’s appeal. Palladium slipped 5.5% to $992.69, hitting its lowest level since 2018. “Large short positions have exacerbated the downside risk for palladium,” Standard Chartered analyst Suki Cooper said.

“In the near term, supply curtailments have not materialized, and demand has been weaker than expected following the UAW strike action.” Platinum fell 0.8% to $859.49.”

On the day gold closed up $12.70 at $1964.20, and silver closed up $0.18 at $22.83.

Platinum closed down $8.80 at $856.60, and palladium closed down $51.30 at $1005.20.

Jim Wycoff (Kitco) – “Technically, December gold futures prices hit a three-week low early on today. The bulls have the slight overall near-term technical advantage but need to show more power soon to keep it. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at Wednesday’s high of $1,977.50 and then at $1,985.20. First support is seen at today’s low of $1,948.20 and then at $1,935.00. December silver futures bears have the slight overall near-term technical advantage. Prices are starting to trend lower on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the October high of $23.88. The next downside price objective for the bears is closing prices below solid support at the October low of $20.85. First resistance is seen at $23.25 and then at $23.50. Next support is seen at this week’s low of $22.375 and then at $22.00.”

We are closed Friday – Veterans Day and thank veterans for their service with a snappy salute. Our staff have served in the Army, Navy, Air Force, and Marines. We understand what a snappy salute looks like and why it’s important to those who serve.  

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

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