Gold – Testing Support

Gold – Testing Support 

Commentary for Friday, June 30, 2023 (www.golddealer.com) – Today gold closed up $11.90 at $1921.10, and silver closed up $0.22 at $22.81. Price movements in gold and silver this week were surprisingly small considering the truckload of US speculation regarding the Fed’s next move and rising world central bank interest rates. The fact that gold finished the week on a small upbeat note is a plus and sentiment that gold will hold current levels is rising but, in my opinion, this is a minority opinion. The US markets are closed on the 4^th of July holiday so don’t be surprised to see another week of limited price movements. But in this troubled world I would keep your seat belts fastened just in case. Last Friday gold closed at $1919.10 / silver at $22.33 – on the week gold was higher by $2.00 and silver was higher by $0.48.

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 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 above $1930.00 before settling in the $1925.00 range over a very confused problem relating to the Russian military. Putin aggression has always been problematic, but his control of the Kremlin has never been publicly challenged so potential geo-political fallout has moved to the backburner. Until Reuters woke up the world in its latest assessment: Russian mercenary leader: ‘We did not intend to overthrow government’ – “The Russian mercenary leader who led a mutiny that nearly reached Moscow said in a message released on Monday his forces had not intended to overthrow Russia’s government and had demonstrated the weaknesses in Russian security. In the first public remarks released since he was last seen on Saturday night smiling in the back of an SUV as he withdrew from a city occupied by his men, Yevgeny Prigozhin said his fighters had called off their campaign to avert bloodshed. “We went as a demonstration of protest, not to overthrow the government of the country,” Prigozhin said in an 11-minute audio message released on the Telegram messaging app. “Our march showed many things we discussed earlier: the serious problems with security in the country,” he said. He made no reference to his own present location, two days after he said he was leaving for Belarus under an agreement brokered by that country’s president to end his mutiny. Prigozhin shocked the world by leading the armed mutiny, only to abruptly call it off as his fighters approached the capital after racing nearly 1,000 km (600 miles). Russia’s three main news agencies reported on Monday that a criminal case against Prigozhin had not been closed, despite an offer of immunity having been publicized as part of the deal that persuaded him to stand down. Mikhail Mishustin, who leads Putin’s cabinet as his appointed prime minister, acknowledged that Russia had faced “a challenge to its stability”, and called for public loyalty. “We need to act together, as one team, and maintain the unity of all forces, rallying around the president,” he told a televised government meeting. There was no word about the revolt from Putin himself, who had said on Saturday the rebellion put Russia’s very existence under threat and vowed to punish those behind it. The Kremlin released a video from him congratulating participants of an industrial forum, containing no indication of when it had been filmed.”

I would not overemphasize this latest Russian mischief as it relates to safe haven demand. But this fresh news has brought geo-political demand back into focus. Providing one of those small red flags which come and go in a troubled world. Reminding everyone that there are complex reasons for making physical gold and silver bullion part of your financial planning.

On the day gold closed up $4.60 at $1923.70, and silver closed up $0.48 at $22.81.

On Tuesday gold opened solid, holding the high road towards $1930.00 but quickly dipped to lows around $1910.00 as consumer confidence soared. Washington (AP) – “The American consumer’s confidence jumped in June to its highest level in 18 months as a strong labor market continues to buoy the U.S. economy. The Conference Board reported Tuesday that its consumer confidence index rose to 109.7 in June from 102.5 in May.

That’s the highest the reading has been since January of 2022 and much higher than economists had forecast. The business research group’s present situation index — which measures consumers’ assessment of current business and labor market conditions — rose to 155.3 from 148.9 in May. Home prices also rose for the third straight month in April according to the S&P Case-Shiller index. And US durable goods beat expectations in May.”

The technical picture still favors gold, but the bulls have looked tired for a while and better than expected US economic news continues to build. This in turn gives the Fed greater interest rate latitude if inflation remains “sticky” which obviously is a negative for our shiny friend.

Today’s close confirms we are again testing $1900.00 support, but we are approaching an oversold condition in my opinion and public selling is drying up quickly.

Reuters (Deep Kaushik Vakil) – Gold firms on soft dollar, traders brace for Powell’s speech – “Gold climbed on Tuesday on a softer dollar, but was hemmed into a tight range as traders positioned for Federal Reserve Chair Jerome Powell’s speech and economic data that could offer clues on future interest rate hikes. “Gold is caught in the middle between a better-than-expected durable goods number, which keeps the Fed on path for a 1/4-point rate hike, and a weaker dollar,” said Bob Haberkorn, senior market strategist at RJO Futures. New orders for key U.S.-manufactured capital goods unexpectedly rose in May, but the prior month’s data was revised down. The dollar index eased 0.3%, making dollar-priced bullion more attractive for overseas buyers. Prices edged up in the previous session on risks from the short-lived mutiny in Russia. But for gold, “the key question is the extent to which the internal tensions within Russia or any potential toppling of the government might affect global monetary policy,” Commerzbank analysts wrote in a note. Gold has shed about 1.7% this month – set for a second consecutive monthly fall if losses hold – as bets for higher-for-longer U.S. interest rates dented the zero-yielding asset’s appeal and overshadowed its traditional safe-haven role to some extent. Investors were awaiting Fed Chair Jerome Powell’s upcoming speech, along with a trove of key economic data on Thursday. “Between now and Thursday, you’re going to see a drifting, no-man’s-land trading, sideways market here in gold, unless something else was to break,” said Haberkorn.”

On the day gold closed down $9.70 at $1914.00, and silver closed up $0.13 at $22.94.

On Wednesday gold moved lower for the second day and the bears continue to test $1900.00 support. Slow erosion of the bullish technical picture is also getting more difficult to ignore, especially when you consider gold’s 30-day pricing chart.

The price of gold has moved from a monthly high of $1980.00 to recent lows of around $1910.00. And with no fresh bullish news it’s easy for the professionals to lament lower prices created by a hawkish Fed. Even if Jerome is doing what he promised a few months ago.

This most recent drop in gold prices is not a big deal (4%) when you consider the bigger picture. It is not time to jump out the window. And making a positive case for market consolidation is a possibility because traders bought today’s weakness and gold settled almost unchanged.

But the bears are gaining strength so prices below $1900.00 are now a consideration. As Powell offers an assessment, the public understands that this process is not simply analytical. There is luck involved. The Fed is using what we used to call Kentucky windage when I was a kid.

Which increases investor uncertainty and makes for a nervous trade.

Reuters (Deep Kaushik Vakil) – Gold retreats on bets for hawkish Fed strategy – “Gold prices extended their slide on Wednesday to hit their lowest in 3-1/2 months on bets for interest rates remaining higher for longer, while traders positioned for a speech by Federal Reserve Chair Jerome Powell. “Although the market is pricing in a decent chance that the Fed is going to hike in July, the more relevant factor for gold is that the market has been simultaneously pricing out the number of cuts that we could expect over the next year,” said Daniel Ghali, commodity strategist at TD Securities. Markets were pricing in a 74% chance of a rate hike at the Fed’s next meeting in July, seeing little odds of any easing in monetary policy by the end of this year, according to the CME FedWatch tool. The dollar index firmed 0.4%, making gold less attractive for overseas buyers. “Good U.S. economic data remains a headwind for the yellow metal, as it likely keeps Fed officials reiterating a hawkish tone,” UBS analyst Giovanni Staunovo said. Sales of new U.S. single-family homes surged to the highest in nearly 1-1/2 years in May, while U.S. consumer confidence also jumped in June. Investors’ focus has shifted to Powell’s speech at a policy panel at the European Central Bank Forum in Portugal. “We still expect at some point the aggressive monetary policy tightening to weaken U.S. economic data and result in a change of tone by the Fed,” Staunovo added.”

On the day gold closed down $1.70 at $1912.30, and silver closed down $0.07 at $22.87.

On Thursday gold pricing continues to be volatile and uncertain as the New York domestic market opened steady but was rattled by a dip to session lows of $1892.00). Traders, however, bought the dip and gold closed the day shaky and only off a few dollars. Still, US GDP growth of 2% and weekly jobless claims moving lower will encourage rising bearish sentiment. Our parking lot and store business slowed considerably as the public senses lower prices may be in the offering. From a purely trading standpoint this looks like a typical bear raid and subsequent short-covering rally, as paper traders continue to test support. But such volatility does nothing to steady an already nervous market and will further erode gold’s technical picture.

Reuters (Deep Kaushik Vakil) – Robust US data drags gold under $1,900/oz for first time since March – “Gold prices on Thursday retreated below the key psychological $1,900 level for the first time since mid-March, clobbered by a volley of robust U.S. economic readings that boosted the dollar and bond yields. U.S. jobless claims unexpectedly fell last week, pointing to continued labor market strength that also helped to prop up gross domestic product in the first quarter. The dollar index firmed 0.4%, making bullion less attractive for overseas buyers, while benchmark 10-year Treasury yields rose. “It was a one-two punch taking gold another leg lower … and then the hawkish central banks haven’t helped out at all,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.  Federal Reserve Chair Jerome Powell said most of the central bank’s policymakers expect they will need to raise interest rates at least twice more by year’s end with U.S. inflation well above the 2% goal and a labor market that’s still very tight. Prices came under pressure from the dollar’s strength, ETF outflows, and resilient equity markets, Streible added. While gold is considered a hedge against inflation, rising interest rates dull non-yielding bullion’s appeal. Bullion has dropped more than 3% so far in June and looks set to end the quarter in negative territory for the first time since September 2022, as traders pushed back expectations for an end to the rate hike cycle. Traders now awaited May’s personal consumption expenditure (PCE) data, the Fed’s favored inflation gauge, due on Friday.”

On the day gold closed down $3.10 at $1909.20, and silver closed down $0.28 at $22.59.

On Friday gold again surprised bearish sentiment in Hong Kong ($1900.00) by reversing those overnight losses and pushing the domestic New York trade back towards $1920.00. This trading pattern has been typical this week and shows that while gold traders may be in transition, there remains a remnant of bullish optimism. I would not overplay this kind of pricing oscillation, relative to bullish sentiment. It allows the paper trade to sell the rallies. And as long as they continue to buy the dips bearish sentiment is slowed to some degree. This will give the bulls some breathing room during this transition. This could also be used to suggest a solid bottom in the coming months if the dips become less in the coming months.

Reuters (Deep Kaushik Vakil) – Gold heads for quarterly fall with more rate hikes on horizon – “Gold was bound for its first quarterly decline in three on Friday, squeezed by expectations for more U.S. interest rate hikes, but moderate inflation prints offered bullion some respite on the day. Prices have shed 2.8% this quarter, dropping from just shy of all-time highs at $2,072 on U.S. banking jitters in May to its first break below $1,900 since mid-March on Thursday. The banking crisis “brought the 10-year yield lower because it was thought that the Fed was going to have to stop raising rates … that all got thrown out the door with the last rate hike,” pressuring gold, said Daniel Pavilonis, senior market strategist, RJO Futures. The dollar index and 10-year Treasury yields were both set to gain this quarter, eroding gold’s appeal for investors holding other currencies. U.S. consumer spending slowed sharply in May, while inflation by the Fed’s preferred personal consumption expenditures index rose at a year-on-year pace of 3.8%, easing from April’s 4.4% pace. Gold prices rose after the data, as traders bet the Fed was slightly less locked in to a July interest rate hike, trimming its chances to 85% from nearly 90% earlier. Rate hikes lift bond yields and in turn raise the opportunity cost of holding non-yielding bullion. “The narrative is now getting digested by the market, where core inflation is still sticky in your economy and you’re still doing well, which justifies higher rates for longer,” said Harshal Barot, a senior consultant at Metals Focus.”

On the day gold closed up $11.90 at $1921.10, and silver closed up $0.22 at $22.81.

Platinum closed up $6.70 at $904.50, and palladium closed down $5.40 at $1213.40.

Jim Wycoff (Kitco) “Technically, the gold futures bears have the overall near-term technical advantage. A six-week-old price downtrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures 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 the overnight high of $1,917.80 and then at this week’s high of $1,943.40. First support is seen at the overnight low of $1,908.10 and then at $1,900.00. The silver bears have the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing July futures prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $23.00 and then at this week’s high of $23.15. Next support is seen at this week’s low of $22.30 and then at the June low of $22.14.”

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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