Gold And Silver Continue To Gain Value As Multiple Events Support Safe-Haven Assets

Rising geopolitical tensions, recent drops in the yield of 10-year Treasury notes, dollar weakness, a highly accommodative Federal Reserve and concern about the rising national debt all collectively moved gold and silver to multiweek highs.

The last time gold traded to $1784 occurred on February 25. On that date, gold opened above $1800 and closed at $1775. The last time gold closed above today’s highs occurred on February 22. This week gold opened at $1745 and gained approximately $30 based on today’s close.

june gold april 16

As of 4:30 PM EST, gold futures basis the most active June 2021 Comex contract is currently trading up $9.80 (+0.55%) and is fixed at $1776.60. Silver basis, the most active May 2021 Comex contract, is currently trading up $0.061 (+0.23%) and fixed at $26.025. This follows yesterday’s strong gains in both precious metals. Seeing as on Thursday, gold futures gained $28.10, and silver futures gained $0.40.

silver April 16

Dollar weakness provided mild tailwinds as the dollar index is currently fixed at 91.54. The dollar traded at 92.21 on Monday and lost 67 points on the week. The result is that the dollar index was devalued by -0.067% this week.

The U.S. 10-year Treasury note traded lower this week and is now yielding approximately 1.56%. This week’s decline also provided solid tailwinds aiding the safe-haven asset class.

On Wednesday, April 14, Chairman Jerome Powell spoke virtually at the Economic Club of Washington DC. He addressed the concern that many economists have about the ever-growing national debt that has been created from fiscal stimulus as well as the monetary policy of the Federal Reserve.

In response to these concerns, Chairman Powell said that “The U.S. federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. The current level of debt is very sustainable. And there’s no question of our ability to service and issue that debt for the foreseeable future.”

In addition to that there is rising tension between the United States and Russia. Yesterday President Joe Biden signed an executive order imposing new sanctions on Russia based on information suggesting that they had interfered with our election as well as an increased amount of Internet hacking and other “malign activities,” which include sending additional troops to Ukraine as well as the continuation of persecution of Russian dissidents in specifics to Alexei Navalny.

In response to these issues, the White House issued an “Executive Order on Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation.” The full Executive Order can be read by following this link.

There is also increased tension with China. Today President Joe Biden met with the Japanese Prime Minister, Yoshihide Suga. According to CNBC, “The two leaders will gather in Washington in what will be the U.S. president’s first in-person summit with a foreign leader since his January inauguration. The meeting comes as the U.S. seeks to challenge China on issues ranging from human rights to unfair trade practices.”

These events collectively have been the driving force moving both gold and silver to gain value this week. All things being equal, they could continue to drive gold back above $1800 per ounce and silver above $28 per ounce.

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Wishing you, as always, good trading and good health,

Gary Wagner

 

Gold and Silver Surge As Yields Drop And Geopolitical Tensions Rise

As of 4:40 PM EST gold futures basis the most active June 2021 Comex contract is currently trading up $28.10 (+1.62%) and is fixed at $1764.40. Silver basis the most active May 2021 Comex contract, is currently trading up $0.40 (+1.57%) and fixed at $25.925.

gold april 15

The economy in the United States is exhibiting solid economic recovery which has raised genuine concerns that inflation will continue to rise. However, the largest force moving both gold and silver higher is yields dropping in 10-year notes, which fell today to yield 1.56%.

silver april 15

In addition to that, there is rising tension between the United States and China, as well as between the United States and Russia. In regards to the increased tension with China, it seems that Taiwan is once again a major concern to the current administration.

In addition, President Joe Biden today signed an executive order imposing new sanctions on Russia based on information suggesting that they had interfered with our election as well as an increased amount of internet hacking and other “malign activities” which include sending additional troops to Ukraine as well as the continuation of persecution of Russian dissidents in specifics to Alexei Navalny.

On April 15, the White House issued an “Executive Order on Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation.” The full Executive Order can be read by following this link.

The Executive Order is sanctioning Russia with financial sanctions, including a ban on U.S. financial institutions from participating in the primary market for the ruble as well as non-ruble denominated bonds. It also designates six technology companies run by Russia, accusing them of supporting the country’s intelligence services and block the property that they or their affiliates might detain in the United States, among other sanctions.

This Executive Order is certainly indicating that the administration is willing to impose rigid and far-reaching new sanctions against Russia.

Lastly, there is the issue of growing debt based upon the expenditures over the last two years in regards to reigniting the economy in the United States, which has been so severely affected by the pandemic. These events collectively could certainly be the impetus for both gold and silver to continue to rise higher as they have in trading today.

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Wishing you, as always, good trading and good health,

Gary Wagner

 

Gold Trades Lower Within A Narrow Trading Range

This high was hit after gold traded to a second low, or double bottom on the 30th and 31st of March. This follows the first low of the double bottom which occurred on March 8 when gold was traded to a low of $1673. The second low in the double bottom came in slightly above the former low at $1676.

Simply put, this shows that gold is still dominated by the bearish faction, with the bullish faction attempting to regain control now that we have had a higher low and a higher high than previous.

Today, gold futures basis the most active June contract gave up much of yesterday’s gains. Currently, June gold is fixed at $1736.50, a net decline of $11.10. Today’s close occurred just above the 21-day exponential moving average which is currently fixed at $1736 per ounce. Although gold has been trading sideways over the last eight trading days it is currently above the series of tops that occurred in mid-March. Our technical studies indicate that the selloff in gold which began at the beginning of January when gold was trading above $1940 concluded at the beginning of March. When the first lows of the double bottom occurred, that being said, momentum to the upside has been slow and tenuous at best but has the real potential to continue higher.

gold April 14

Resistance begins at gold’s 50-day moving average which is currently fixed at $1753.90, with the next level of resistance occurring at which is the 78% Fibonacci retracement. The data set used for this retracement begins at the new record high at $2088 and concludes at $1673, the first low of the double bottom we spoke about above.

Chairman Jerome Powell spoke virtually today at the economic club of Washington DC. He addressed the concern that many economists have about the ever-growing national debt that has been created from fiscal stimulus as well as the monetary policy of the Federal Reserve. In response to these concerns Chairman Powell said that “The U.S. federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. The current level of debt is very sustainable. And there’s no question of our ability to service and issue that debt for the foreseeable future.”

Although he said that there is no question that the Federal Reserve and U.S. government could service and issue that debt for the foreseeable future the fact of the matter is that current estimates put our expenditures in 2021 at 1.25% of GDP. That being said, it will be hard to fathom exactly what steps will be necessary to service the current level of debt. Also, any major change in interest rates would make that debt even more difficult to service. Many such analysts, including myself, continue to believe that we have not even begun to deal with the economic fallout that will follow our mounting debt. While all are in agreement that the current U.S. budget is on an unsustainable path, real solutions are needed, and no viable solutions have been presented.

For more information on our service, simply use this link.

Wishing you, as always, good trading and good health,

Gary Wagner

Part 2: Higher CPI Should Boost More Than Just Gold Prices

BTC is trading at approximately $60,500. This marks the first close above $60,000 for Bitcoin futures, and I believe we will see $65,000 by week’s end.

-excerpt from previous article on 4/12/2021.

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. 20 of the 21 indexes rose compared to the previous month, most notable energy of which gasoline saw a 9% rise. Combined there was a 0.6% increase in the month of March. This beat out the increases seen over the last six months and brought the CPI up to a 2.6% increase over March 2020.

Tuesday main

This number came in above estimates and we did see a rise in the price of gold and silver but also Bitcoin and Ethereum. It looks like we will indeed see $65,000 in BTC as today’s record high came in about $500 short of that at $64,450. Where will Bitcoin go to from here?

Tues chart #2

My prediction of a new record this month in April is that we will reach at minimum $69,600 this is based on Elliot Wave models and Fibonacci extensions. Although it has the potential to go even higher. In tandem to this we will see Ethereum trade to the prices I mentioned yesterday, today we saw an equal rise of about 5% on the day. The month of April will be big for Bitcoin.

tuesday chrt 1

The Consumer Price Index Indicates Growing Inflation

Inflation via the CPI came in above expectations by economists. The numbers showed that the CPI gained +0.6%, which was 10 points above consensus and the highest single month tally since June 2009. When compared to year over year which is considered a more modest inflation metric the CPI is +2.61%.

According to the U.S. Bureau of Labor Statistics, “The gasoline index continued to increase, rising 9.1 percent in March and accounting for nearly half of the seasonally adjusted increase in the all-items index. The natural gas index also rose, contributing to a 5.0-percent increase in the energy index over the month. The food index rose 0.1 percent in March, with the food at home index and the food away from home index both also rising 0.1 percent.”

According to Reuters, “The gasoline index continued to increase, rising 9.1 percent in March and accounting for nearly half of the seasonally adjusted increase in the all-items index. The natural gas index also rose, contributing to a 5.0-percent increase in the energy index over the month. The food index rose 0.1 percent in March, with the food at home index and the food away from home index both also rising 0.1 percent.”

The CPI, along with dollar weakness were both major factors in taking gold and silver futures higher. As of 5:36 PM EST gold futures basis, the most active June 2021 Comex contract is fixed at $1746.20, after factoring in today’s $13.50 (+0.78%) gain. Silver futures basis, the most active May contract gained almost $0.54 (+2.16%) and is currently fixed at $25.405. The dollar lost 0.314 points in trading today and is currently fixed at 91.83. Also, the U.S. 10-year Treasury note was down by 3.9 basis points and currently has a yield of approximately 1.62%, declining after the release of today’s CPI data.

gold April 13

Spot or forex gold, according to the Kitco Gold Index, gained $13.10 in trading today. On closer inspection, dollar weakness accounted for $4.85, with the remaining $8.25 gain directly attributable to traders bidding the precious metal higher. Spot or forex silver is currently fixed at $25.33. Only $0.07 can be attributed to dollar weakness with the remaining $0.47 a direct result of trading activity.

silver April 13

The question with the most recent CPI numbers is whether or not the inflation pressure is temporary or a sign that inflation will continue to rise. Fawad Razaqzada, a market analyst at ThinkMarkets, said, “Inflation will probably pick up further and the numbers for the next few months may appear abnormally large as base effects from the 2020 lockdowns skew the data,”

The Federal Reserve’s revised mandate has indicated that they will let inflation run hot above its former 2% benchmark in lieu of focusing on their mandate of maximum employment. This will undoubtedly continue to have a bullish affect gold and silver.

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Wishing you, as always, good trading and good health,

Gary Wagner

 

Traders Wait for U.S. Consumer Price Index Numbers

According to Wikipedia, “A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households. A CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.”

Bloomberg today reported that CPI inflation has risen to 5.5% in March. According to the report, “retail inflation rose further in March as fuel and transportation costs increased alongside some categories within the food basket.”

A poll by Bloomberg is forecasting March retail inflation at 5.4%. They also reported that consumer price index inflation stood at 5.52%, which is almost ½ a percent increase from February’s numbers which came in at 5.03%. In January 2021, the CPI data came in at 4.06%. Their pre-release numbers were created by the Ministry of statistics and program implementation today.

According to Aditi Nayar, core inflation computed by ICRA ltd. rose to 6% in March, chief economist at the rating agency.

With inflation moving higher, we have gold futures reacting in a tepid manner selling off today by a total of $12.60 (-0.73%) and is currently fixed at $1732 per ounce. The primary force taking gold lower today was rising yields in the U.S. 10-year Treasury note. Today, the yield moved up to 1.671% in trading today with the 30 year treasury bond moving lower, yielding 2.337%.

gold April 12

As reported by CNBC, “Treasury yields rose slightly on Monday after Federal Reserve Chairman Jerome Powell on Sunday reiterated the central bank’s commitment to maintaining loose monetary policy.”

The Federal Reserve could undoubtedly come under pressure with strong economic forecasts regarding the second quarter of this year. Recent projections indicate that economists are forecasting the second quarter of this year to grow by more than 9%. In addition to strong growth, the March jobs report’s expectations are extremely strong, indicating a hiring surge.

CNBC projects that are unemployed Americans will return to the workforce in large numbers. Economists polled by Dow Jones expect to see 675,000 jobs added in March as the economy reopened more broadly and the number of vaccinated people increased. The unemployment rate is forecast to fall to 6% from 6.2% in February.”

There is no question that there has been a tremendous uptick in economic growth in the United States. Concurrently we also see inflation beginning to heat up as it has risen month over month since January. If the projections are correct, this could have an extremely bullish undertone for gold. It will have to overcome the recent rising yields of 10 year treasury notes that have put gold under pressure.

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Wishing you, as always, good trading and good health,

Gary Wagner

Gold Futures Retrace Much Of This Week’s Gains

Gold futures basis the most active June 2021 Comex contract lost $14.10 in trading today.

gold april 9

Dollar strength was a minor component in today’s price decline. Today the dollar index gained 0.111 points or 0.12%. The vast majority of today’s decline was attributed to market participants bidding the precious yellow metal lower. Interestingly this was the exact opposite of yesterday’s price gains with the majority of gains due to market participants actively buying that dip and dollar weakness contributing only a fractional component of yesterday’s $14.90 gain.

Silver basis the most active May 2021 Comex contract lost $0.26 today after gaining $0.28 on Thursday. Currently silver futures are fixed at $25.325.

silver april 9

Bitcoin futures which are traded on the Chicago Mercantile continued in their price ascent, gaining $520 today and is currently fixed at $58,675 per coin.

While yesterday’s gains in the precious metals and U.S. equities were a direct result of the minutes released from last month’s FOMC meeting, the minutes underscored the current mandate of the Federal Reserve which has not changed since interest rates were dropped to between 0 and ¼%. Additionally, they continue to add $120 billion per month to their asset balance sheets through purchasing United States bonds and mortgage-backed securities.

The Federal Reserve continues to be aligned with the majority of central banks worldwide, with both the world bank and the Federal Reserve continuing to have an extremely accommodative monetary policy. In fact, on Tuesday the IMF backed the Fed’s decision to be patient and continue to keep interest rates extremely low with the intent of maintaining the current interest rate for years to come.

The International Monetary Fund through the central banks of its member nations continues to its intent to maintain an extremely accommodative monetary policy. In their latest global financial stability report they sent a strong message that there continues to be a need for the current dovish demeanor of central banks worldwide. Both entities are acutely aware that we live in a global economic world in which positive movement in any major country has a spillover effect to other countries and that raising rates too quickly could easily stifle the economic rebound witnessed in the United States and to a lesser extent in Europe.

Chairman Jerome Powell’s statement continues to propose that any rise in inflation is transitory and will be short-lived.

In disagreement, William Watts wrote an article in MarketWatch yesterday. The author spoke about his deep concern that there is the biggest inflation scare in 40 years which will become apparent extremely soon.

“It’s unclear whether inflation will see a lasting comeback, but a booming, stimulus-fed economy rebounding from the COVID-19 pandemic seems all but certain to send some near-term inflationary shock waves through financial markets in coming months.” He cites Christopher Wood, global head of equity strategies at Jeffrey’s in a note written on April 4 that states “there has been a sudden surge in demand following a supply shock which is a classic recipe for a pickup in inflation.”

Of course, if inflation does begin to ratchet up higher it will have an extremely bullish impact on gold and silver because it will devalue the U.S. dollar which has an inverse relationship between the price of those two precious metals. He also warned that investors should be paired for the biggest inflation scare in America on the reopening of the economy since the early 1980s when former Fed Chairman Paul Volcker crushed double-digit inflation by the late 1970s.

Which leads to the question he ponders, which is just how long-lasting will inflationary bout continue? And how the Federal Reserve will respond should that occur? Higher inflation will lead to higher gold and silver prices and have tremendous bearish implications for U.S. equities.

The Fed has also agreed that they will let inflation run hot in lieu of their primary mandate (which is maximum employment) above its former target of 2%. Also, members of the Federal Reserve have stated that they will let inflation run hot for an unspecified amount of time.

Unquestionably upticks in inflation will take gold and silver higher so the question becomes which hypothesis is correct? The analysts or the chairman of the Federal Reserve?

For more information on our service, simply use this link.

Wishing you, as always, good trading and good health,

Gary Wagner

 

Gold Futures Surged Higher on Dollar Weakness and Inflation Concerns

gold April 8

Dollar weakness was partially responsible for today’s gains, but the majority of gains were due to market participants bidding the precious yellow metal higher as active buyers. Silver basis the most active May 2021 Comex contract gained $0.28, and is currently fixed at $25.525.

silver April 8

In both gold futures and spot pricing it was dollar weakness that partially supported higher gold and silver pricing. The dollar index lost 40 points, or -0.40% and is currently fixed at 92.10. According to the KGX (Kitco Gold Index) spot gold is currently fixed at $1755.80 which is a net gain of $18.20 on the day. On closer inspection market participants bid the precious metal higher by $11.10. Concurrently dollar weakness contributed an additional $7.10 of value to a troy ounce of gold.

kgx april 8

Bitcoin futures which trade on the Chicago Mercantile gained $1735 today, remaining extremely strong with a single coin valued at $58,045.

Much of today’s gains in the precious metals and U.S. equities is directly tied to minutes of last month’s FOMC meeting, which were released yesterday. In addition, the Federal Reserve is not standing alone in their mandate to continue to provide extremely accommodative rates vis-à-vis their Fed’s funds rate which is currently set between 0 and ¼%. Additionally, they continue to add an additional $120 billion per month to their asset balance sheets through purchasing United States bonds and mortgage-backed securities.

The Federal Reserve is not alone in its monetary policy mandate. On Tuesday the IMF backed the Fed’s decision to be patient and not rock the boat by moving interest rates up higher too quickly. The International Monetary Fund made it crystal clear that they intend also to maintain an extremely accommodative monetary policy. In their latest global financial stability report they sent a strong message that there continues to be a need for the current dovish demeanor of central banks worldwide. Both entities are acutely aware that we live in a global economic world in which positive movement in any major country has a spillover effect to other countries, and that raising rates too quickly could easily stifle the economic rebound witnessed in the United States and to a lesser extent in Europe.

Today Chairman Jerome Powell attended a virtual spring meeting sponsored by the International Monetary Fund and the World Bank. He acknowledged that there are a number of factors coming together to support a brighter Outlook for the economy in the United States. Stating that those factors have been instrumental in putting the nation “on track to allow a full reopening of the economy fairly soon.” However, he also spoke about the caveat saying that many Americans who were out of work will struggle to find new jobs because some industries will likely be smaller than they were before the pandemic, as well as a statement saying that “It’s important to remember we’re not going back to the same economy. This will be a different economy.”

While the IMF and the Federal Reserve both continue to maintain their extremely accommodative policies as such, they could have a profound and negative impact on both the euro and United States dollar. This most likely will result in both of those currencies losing value over time and that in turn has created new concerns about rising inflation rates.

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Wishing you, as always, good trading and good health,

Gary Wagner

Gold Consolidates After Five Days Of Solid Gains

Today’s nominal declines resulted from a combination of minor dollar strength, an uptick in yields on the 10-year U.S. Treasury notes, and market participants bidding both precious metals lower.

gold april 7

As of 5:15 PM EST, gold futures basis, the most active June 2021 Comex contract gave up $4.50 (-0.26%) and is currently fixed at $1738.50. Silver futures basis, the most active May 2021 Comex contract declined by $0.027 (-0.11%) and is presently fixed at $25.20.

silver april 7

According to the Kitco Gold Index (KGX), spot or forex gold is currently fixed at $1737.60 after factoring in today’s decline of $6.00. On closer inspection, $3.90 of that decline is directly attributable to sellers, with the remaining decrease of $2.10 a result of nominal dollar strength. Currently, the U.S. dollar index is fixed at 92.41 after gaining 0.062 points or +0.07%.

kgx f april 7

The minutes from last month’s FOMC meeting were released today. They indicated that Federal Reserve members unanimously recommended leaving the Fed funds rate between zero and 1/4 %. This is consistent with the Fed’s mandate to leave interest rates where they are at least throughout 2021 and very likely until 2022 or 2023.

The minutes from the March FOMC meeting began by stating, “Rates implied by interest rate futures maturing over the next several years rose notably over the intermeeting period, reportedly reflecting a reassessment by market participants of the expected path of the target range for the federal funds rate. Since the January meeting, the date of the first increase in the target range for the federal funds rate implied by a straight read of market pricing moved notably earlier to the first quarter of 2023, and the implied target rate at the end of 2023 rose around 50 basis points.”

While there are strong indications that, in many ways the economy in the United States is beginning to rebound and strengthen as news to the costs incurred by the United States government recently released has been alarming.

According to The Hill, “The federal deficit roared to $736 billion in the first four months of the 2021 fiscal year.” The Hill forecasts that are national debt for 2021 is on track to reach 2.3 trillion resulting in White House advisors to say that the U.S. economic outlook is in a ‘really grave situation’.

US-Gross-National-Debt-2011-through-2021-04-02-detail

To put that in perspective the current forecast revealed through tradingeconomics.com states that, “Government Debt to GDP in the United States is expected to reach 125.00 percent by the end of 2021, according to Trading Economics global macro models and analysts’ expectations.”

While the financial equities markets continued to score sizable gains and hit new record highs, it comes on the back of growing national debt. Our national debt in the United States is now the largest recorded debt in history. The economic fallout that could surface from this mounting debt will continue to support higher gold prices vis-à-vis a falling U.S. dollar.

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Wishing you, as always, good trading and good health,

Gary Wagner

 

Gold Rises Aided By Dollar Weakens, Lower Yields And Dovish Central Banks Worldwide

The low last week was $1677. Gold prices have since risen to almost $70 in just about a week. In the last four trading days the U.S. dollar has been in a defined downtrend after trading to a high of 93.50 on March 31 and settling today at 92.29, a decline of 1.12% over the last four trading days.

Concurrently yields on U.S. 10-year Treasury notes have also fallen and are currently yielding approximately 1.657%. As of 5:15 PM EST gold futures basis, the most active June 2021 Comex contract is currently fixed at $1744.40 after factoring in today’s gains of $15.60 (+0.90%).

gold April 6

Spot gold also had respectable gains today. According to the KGX (Kitco Gold Index), physical gold is currently bid at $1743.60 after factoring in today’s gains of $15.10. On closer inspection, dollar weakness provided $5.50, with the remaining gains of $9.60 directly attributable to market participants bidding the precious yellow metal higher.

kgx april 6

Silver also gained dramatic ground today, with the most active May 2021 Comex contract gaining $0.43 (+1.73%) and is currently fixed at $25.21. As in gold, the vast majority of today’s gains are directly attributable to market participants actively buying. Spot silver is currently fixed at $25.15, after factoring in today’s $0.31 gain. According to the KGX, dollar weakness accounted for only eight cents of today’s gains, with the remaining $0.23 a direct result of market participants actively buying the precious white metal.

silver april 6

Another primary factor currently influencing precious metals’ price is statements made by the European Central Bank today. According to MarketWatch, “Officials at the International Monetary Fund on Tuesday backed the Federal Reserve’s decision to be patient about pulling back its easy monetary policy stance despite the improved outlook for the U.S. economy.”

In an article penned by Greg Robb titled “IMF facts go-slow Fed,” he cited that the latest global financial stability report underscored the need for the monetary policy to remain accommodative. In fact, the Federal Reserve continues its extremely accommodative monetary mandate. It continues to add $120 billion monthly to its asset balance sheet and continues to keep interest rates between 0 and ¼%.

Gita Gopinath, the IMF’s chief economist, was asked if the Federal Reserve should change its current policy or not. He said that the “Fed’s policy of moving gradually is consistent with its mandate.”

In other words, central banks worldwide will continue to provide a monetary policy that will increase the probability of a robust worldwide economic recovery. More importantly, both the IMF and the Federal Reserve have pledged to continue to be transparent and not change their current mandate without giving sufficient advance warning. These actions by central banks worldwide should continue to devalue their major currencies and, as such, provide bullish market sentiment for the precious metals.

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Wishing you, as always, good trading and good health,

Gary Wagner

 

Gold Futures Closed Fractionally Higher on Dollar Weakness and Selling Pressure

Dollar weakness was responsible for all of today’s gains as market participants bid the precious yellow metal lower by actively selling today.

gold april 5

After the three-day holiday weekend, U.S. equities had respectable gains with the Dow Jones Industrial Average gaining just over 393 points, which is a net gain of 1.13% and closed at its highest recorded price level of 33,527.19. The S&P 500 also closed at a new record high after factoring in today’s 58-point gain (+1.44%)., Currently, the index is at 4077.91. Although the NASDAQ composite did not close at a new all-time high it had the largest percentage gains of the three major indices. After factoring in today’s 225-point gain (+1.67), the heavy tech index closed at 13,705.59. A major bounce in the FANG stocks was largely responsible for today’s sizable gains in the NASDAQ with Facebook, Google, Microsoft, and Tesla providing strong tailwinds which led to the 1.67% gain in the NASDAQ.

In both gold futures and spot pricing it was dollar weakness that held any losses to a minimum. The dollar index lost 44 points, or -0.47% and is currently fixed at 92.61. According to the KGX (Kitco Gold Index) spot gold is currently fixed at $1728.10 which is a net decline of $2.20 on the day. On closer inspection market participants bid the precious metal lower by $9.50. Concurrently dollar weakness contributed $7.30 of value resulting in today’s marginal decline of $2.20.

gold HA chart

The cryptocurrencies, specifically Bitcoin futures which trades on the Chicago Mercantile Exchange closed, in essence, unchanged but still remained extremely strong with a single coin valued just shy of $60,000 at $59,525.

While gold futures were able to eke out a fractional gain the same cannot be said for silver. Silver futures basis the most active May contract lost approximately 3 ½ cents in trading today (-0.15%) and is currently fixed at $24.915.

Today Reuters reported that the service sector gauge surged to a record high in March based on strong growth in new orders.

“A measure of U.S. services industry activity surged to a record high in March amid robust growth in new orders, in the latest indication of a roaring economy that is being boosted by increased vaccinations and massive fiscal stimulus.”

The record numbers reported from the Institute of Supply Management (ISM) coupled with Friday’s jobs report which revealed that the United States added 916,000 jobs last month (which is the largest monthly gain since August) clearly underscores that the economy in the United States is truly rebounding as the economic scenario in the United States continues to gain momentum. Considering those factors gold and silver prices held up rather well.

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Wishing you, as always, good trading and good health,

Gary Wagner

 

Multiple Indications of a Reversal in Gold and Silver

In fact, gold traded to an intraday low on Tuesday of just below $1680. Gold prices have been under pressure for quite some time as a multitude of factors have been directly responsible for the lower pricing. Rising yields on 10-year U.S. Treasury notes, a strong dollar in the United States, U.S. indices reaching all-time record highs on multiple occasions have directly attributed to the price decline witness in gold.

While most analysts acknowledge that both gold and silver prices are in an oversold condition, up until yesterday, we did not see any signs of a potential recovery. That is not the case currently. Yesterday we were able to identify not only Japanese candlestick patterns but other technical indicators as well, which are in confluence with the bullish reversal patterns.

Chart 1(a daily candlestick chart of gold futures), which goes back to the lows achieved in March 2020. This chart contains one major Fibonacci retracement sequence, which begins at the lows of March 2020 when gold was trading at $1450 up until the record high of August when gold prices reached $2088 per ounce. On closer inspection, we can see that on multiple occasions, each time gold prices sold under pressure and reached approximately $1680. At this critical level we saw solid support come in leading to a key reversal in gold pricing.

Chart 1 - gold chart

The first example occurs between April and June 2020 when on five different occasions, market forces took gold pricing to around $1680. Four consecutive bottoms were hit during those months. With the first three occurrences gold was able to reverse and trade higher, then stall at around $1750 before retracing back to the bottom at $1680. On the fourth bottom during that multi-month period gold reversed as well; however, on this occasion it marked the beginning of a rally which would conclude at the all-time high of $2088 per ounce in August. From August up until the last few days gold has had a slow and methodical multi-month correction taking it to the last two occasions when gold hit the lows at $1680.

chart 2 - gold chart 2 with EB

At the beginning of March 2021 gold prices once again hit that price point. In the first instance we did see a key reversal of gold which once again stalled at approximately $1740. From there gold formed a rounded top until it once again reached $1680 on Tuesday of this week.

Yesterday’s action created a variation off a two-candle key reversal pattern called an engulfing bullish. The reason I am labeling it a variation is that this pattern in its truest form will have the second candle open below the real body of the first and close above it. In the most current instance yesterday’s candle opened slightly above the prior close, thereby creating a variation of this pattern.

Engulfing bullish patterns require defined criteria to contain valid tradeable information. The first requirement is that this pattern must occur after a defined downtrend, a criteria gold certainly meets. Following the identification of the two-candlestick pattern, there must be a third candlestick which confirms the engulfing bullish. This candle is composed of a green candle (meaning it closed above its opening price) containing a higher high, and a higher low, as well as a higher close than the prior green candle. That is what occurred in today’s trading activity with gold futures up approximately $13. If there is an effective close above this price point it could be signaling a key reversal indicating that the selling pressure has abated and that the bullish faction is once again regaining control.

chart 3 - silver daily

Just as in gold, silver formed a simple key reversal pattern called a piercing line. A piercing line begins after the market has been in a defined downtrend, a criteria silver also meets. The first candle in the pattern trades to a lower low than the previous low and is a large red candle is seen in chart 3. It is followed by a green candle which opens below the close of the prior red candle and then closes at or above the midpoint of the red candle. This candle also requires a confirming candle on a closing basis to be considered a strong and valid signal. That is exactly what occurred with silver continuing to gain value after yesterday’s strong gains.

The fact that both gold and silver hit intraday lows that put those metals in a technically oversold scenario, coupled with the fact that they occurred at key support levels, and finally were followed by confirming candles in both cases suggests that we could see both precious metals rally from this point. For that reason, that we believe it likely that what we are witnessing is the end of this most recent leg of the correction and the beginning of a rally. Whether it is a longer-term move, or just a short reversal that keeps both metals in a defined trading range is yet to be determined.

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Wishing you, as always, good trading and good health,

Gary S. Wagner

Gold Pops Above $1700, After Having The Worst Quarterly Loss In Five Years

What was largely attributed by many analysts as short covering during the last trading day of the quarter and market participants buying the dip. That being said gold lost just under 10% of value in the first quarter of this year challenging the record of the last quarter of 2016. In October 2016 gold hit a high of $1322 and hit a low of $1125 in December. It would take gold prices five quarters to regain the losses incurred in the last quarter of 2016.

Quarterly gold chart

Multiple factors contributed to the dramatic decline in gold prices during the first quarter of this year such as rising yields in the 10-year U.S. Treasury note, low inflation expectations, a dramatic rise in the cryptocurrency bitcoin and a strong U.S. equities markets which took all three major indexes to all-time record highs during this quarter.

Concurrently these gains come on the heels of President Biden’s proposal for a $2.3 trillion infrastructure plan. In a speech given in Pittsburgh today the president laid out his “America Jobs Plan” which he called the “next major initiative” since implementing his Covid-19 relief bill roughly three weeks ago.

According to a fact sheet released by the White House, “While the American Rescue Plan is changing the course of the pandemic and delivering relief for working families, this is no time to build back to the way things were. This is the moment to reimagine and rebuild a new economy. The American Jobs Plan is an investment in America that will create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China.”

The White House fact sheet said that the infrastructure component of the president’s plan would, “modernize 20,000 miles of highways, roads, and main-streets. It will fix the ten most economically significant bridges in the country in need of reconstruction. It also will repair the worst 10,000 smaller bridges, providing critical linkages to communities. And, it will replace thousands of buses and rail cars, repair hundreds of stations, renew airports, and expand transit and rail into new communities.”

With the cost of approximately $2 trillion allocated over the next eight years president Biden’s proposal would according to the White House generate millions of jobs, and be largely funded by the nation’s corporations. However, his call to fund the project with higher corporate taxes will face strong resistance from the business community as well as Republican lawmakers making the initiative harder to pass.

The largest component of this proposal wants to allocate $621 billion to infrastructure which would rebuild roads, bridges, public transit as well as electric vehicle charging stations. The proposal also will allocate $111 billion to replace lead water pipes and upgrade sewers.

According to the Associated Press economists estimate that it could push growth above 6% this year. If president Biden is able to enact his infrastructure plan and economists are correct in that it will push growth above 6% it would certainly continue to pressure gold pricing.

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Wishing you, as always, good trading and good health,

Gary S. Wagner

 

The Tale Of Two Americas Regarding The Pandemic And Its End

There is a dichotomy between the optimism expressed by market participants that the pandemic and recession have run their course and we will soon return to a new normal, versus the reality of the recent uptick in new Covid cases across the United States.

This dichotomy has had a profound impact on not only individuals but also the financial markets. As yields moved higher, the dollar gained strength resulting in the precious metals trading lower. Gold basis the most active April 2021 Comex contract lost $30.90 (- 1.8%) today, and silver basis the most active May 2021 Comex contract gave up $0.77, a total decline of (-3.11%), and is currently fixed at $24 per ounce.

daily gold

The higher yields for U.S. Treasury notes and the sharp decline in both gold and silver pricing is a reflection of optimism that the rollout of the vaccine has created hopefulness which can be seen in the consumer confidence index for March, which came in at 109.7. That is up over 20 points from February’s revised numbers, which came in at 90.4.

At the same time, there has been an alarming uptick in the number of Covid 19 cases in the United States as reported by the CDC. According to CNN, new cases of the virus have spiked up by 22% when compared to the numbers of the prior week. According to Rochelle Walensky, Director at the CDC, “I know that travel is up, and I just worry that we will see the surges that we saw over the summer and over the winter again.”

Add to that the new variants, in particular the B.1.1.7 variance that is spreading rapidly throughout the United States. It appears that not only is this variant more contagious but deadlier as well.

Another major difference in this recent uptick of Covid infections is the age group. Now that many Americans over 65 years old have received their vaccinations, the age group for most new cases reported is in the age of 20 to 45-year-old Americans.

The question becomes, while there has been real and genuine progress are market participants getting ahead of themselves in regards to their optimism? As more and more states relax their safety mandates, the question of whether or not they are acting too soon despite warnings by health experts.

In regards to the recent and strong decline in gold and silver pricing, dollar strength has absolutely played a defined role. However, the vast majority of the decline seen over the last couple of weeks was a direct result of market participants actively selling both gold and silver. When we look at a monthly chart of gold futures in the last eight months, there was only one month that resulted in gold closing higher, which was December 2020.

gold monthly chart

As long as yields in U.S. Treasury notes continue to climb, not only will we see the dollar gain strength but also increased pressure on both gold and silver pricing.

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Wishing you, as always, good trading and good health,

Gary S. Wagner

Dollar, Rising Yields, and Cryptocurrency Utilization Pressure Gold Lower

Gold futures basis the most active April 2021 Comex contract gave up $22.30 and is currently fixed at $1710.00. Spot gold, according to the KGX (Kitco Gold Index), gave up $21.60 and is currently fixed at $1711.70. Dollar strength accounted for nominal damage amounting to a decline of $4.30. However, the remaining $17.30 decline today was directly attributable to traders bidding the precious yellow metal lower.

GC daily

kgx march 29

The U.S. dollar index gained 16 points or + 0.17% and is currently fixed at 92.935. Dollar strength occurred concurrently with rising yields in the U.S. 10-year Treasury notes, which is currently fixed at 1.714%.

dollar vs gold daily line chart

While both dollar strength and rising yields in U.S. government notes pressured gold, prices lower, it was the utilization of cryptocurrencies by Visa that took both Bitcoin and Ethereum substantially higher. Bitcoin futures gained 6.87%, or $3715 taking the futures price to $57,775 per coin.

BTC Futures

According to businessinsider.com, “U.S. payments firm Visa announced Monday that it would enable the use of USD Coin to settle payment transactions on its platform.

Visa piloted the payment option via payment platform Crypto.com and planned to allow more partners the same route later this year.”

Jack Forestell. Visas Executive Vice President and Chief Product Officer said, “Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors.”

According to this article, a partnership between Visa and digital asset bank Anchorage was used to carry out its first USD coin transaction this month, processing a payment via crypto.com to its own Ethereum address at the bank. Since the USD coin is a stablecoin and pegged to the U.S. dollar it can be held without the need for a bank account similar to Bitcoin and does not contain the typically larger transaction fees associated with the transfer of money.

In an exclusive report Reuters reported visas move to allow payment settlement using cryptocurrency. “Visa Inc said on Monday it will allow the use of the  cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.”

This follows last week’s announcement by Elon Musk that Tesla will accept bitcoin to purchase its electric vehicles, which marks a significant change and step forward for the use of cryptocurrency in commerce.

According to Cuy Sheffield, head of crypto at Visa, “We see increasing demand from consumers across the world to be able to access, hold and use digital currencies, and we’re seeing demand from our clients to be able to build products. That provides that access for consumers.”

These moves by Tesla and other major financial firms such as Visa, BNY Mellon Bank, BlackRock Inc., and MasterCard Inc. clearly illustrate that many major financial corporations are embracing digital currencies leading the way for them to become an integral component of investment portfolios. As such, they could continue to pressure the safe-haven asset class such as gold.

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Wishing you, as always, good trading and good health,

Gary S. Wagner.

 

This Is What It Looks Like When The Dollar Goes From Bearish To Bullish

In December of 2016, the dollar index rose to a high just above 103. Of course, the dollar index is literally a measurement of the United States dollar relative to six other currencies, which include the euro (57.6%), the Japanese yen (13.6%), the British pound (11.9%), the Canadian dollar (9.1%), the Swedish Krona (4.2%) and the Swiss franc (3.6%).

chart 1 dollar daily line chart

As you can see in chart 1, a line chart of the dollar index from December 2016 to current pricing, after reaching a high in December of 103, the dollar index fell to just above 88 in January, mid-February, and March 2018. The three lines represented in red magenta and green represent simple moving averages with the 50-day moving average, as the short-term green line, the 100-day moving average drawn in magenta, and the long-term 200-day moving average in red. From its fall from 103 to 88, you can see these three moving averages, for the most part, in full bearish alignment. This occurs when the order of the averages puts the 200-day as the highest value, followed by the 100-day in the middle and finally the 50-DMA as the lowest value.

After hitting the lows in March and April 2018, the dollar index began a slow and methodical climb to a higher value, and you can see the relative points between April and July 2018 when the moving average has moved into full bullish alignment. The exact opposite of bearish alignment, you have the 200-day moving average on the bottom, followed by the 100-day moving average in the middle, and finally the 50-day moving average on top. Although there are points in which the 50-day moving average crosses below and then back above the 100-day moving average, for the most part, they stayed in bullish alignment up until May 2020. By July of last year, the three moving averages moved back into full bearish alignment and maintained their respective positions up until this last week.

chart 2 dollar index current

Chart 2 is an enlargement showing the most current data. At the beginning of this year, the dollar index had still been spiraling lower until reaching a low of 89.42 in January and then moving higher to its current pricing of 92.73. That means that the dollar index gained over 3% in value in the first quarter of this year. More so, for the first time since June 2020, it appears as though the shortest-term moving average (50-day) is about to cross above the 100-day moving average. On a technical basis, this would be the first strong signal that the prevalent bearish market sentiment that has existed since March 2020 has subsided and could be signaling a shift in market sentiment from bearish to bullish.

chart 3a gold and the dollar

The obvious reason this is so important to market participants involved in gold is that the precious yellow metal is paired against the dollar, which means that there are two major factors changing the daily price of gold. The first, of course, is market sentiment, whether market participants are actively buying or selling. The second is dollar weakness or strength. Chart 3 is a line chart with gold (gold) overlaid against the U.S. dollar (green). It is clearly visible that since the beginning of 2021, we have seen dollar strength and concurrently weakness in gold pricing.

Whether or not this trend will remain will be dependent on the timeline for the United States to have an economic recovery taking it from the recession caused by the pandemic in March of last year to the strong economy that occurred prior to the pandemic.

The answer to the question posed above not as easy to answer as one might think. While it is clear that we have made incredible headway from the worst of the recession, many unknowns still exist as to how long it will take for the United States to make a full economic recovery.

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Wishing you, as always, good trading and good health,

Gary S. Wagner

Back To The Basics; Strong Dollar And Stable Treasury Yields Take Gold Lower

A strong U.S. equities markets which hit numerous all-time highs over the last six months and Bitcoin’s rising value being prevalent as causes for both gold and silver pricing to trade under pressure. However, it has been dollar strength, coupled with the recent rise in yields of U.S. Treasury 10-year notes that have been the most recent factors pressuring the safe-haven asset class.

According to Reuters, “Gold fell on Thursday as U.S. Treasury yields nudged up and the dollar hit a four-month high, denting the non-yielding metal’s appeal.”

As of 5 PM EST, the dollar is trading approximately 0.4% higher, with the dollar index currently up 0.355 points and fixed at 92.885. The last time the U.S. dollar traded at this value was the last week of October 2020, before dropping in November 2020. The dollar fell until the beginning of 2021, when it hit an intro week low just above 89.20.

dx 325

The 10-year Treasury notes have been rising since the first week of March when yields were just above 1.4%. Currently, the yield on the 10-year notes is fixed at 1.614%. Both a strong dollar and higher yields are occurring concurrently with stronger U.S. equities markets which had modest gains in trading today. The Dow Jones industrial average gained 199.42 points, or +0.62%, and is currently fixed at 32,619.48. Both the NASDAQ Composite and S&P 500 closed fractionally higher on the day. Collectively these three factors, dollar strength, higher yields, and strong U.S. equities, have contributed to pressuring both gold and silver pricing lower.

Today’s price action in gold certainly contained some intrinsic volatility. After opening at $1733.20, it sank to a low of $1720.30 and then quickly moved to its intraday high today of $1744.80 before once again trading under pressure. As of 5 PM EST, the most active April 2021 Comex contract was trading down by $7.80 (-0.45%) and fixed at $1725.40. Silver also closed in New York with a loss of approximately 0.4%. The most active May 2021 Comex contract is currently fixed at $25.14.

chart 1 gold

On a technical basis, gold remains bearish. After hitting a low during the second week of March at approximately $1670, gold prices climbed to $1750 before consolidating and moving sideways and slightly lower. The three major moving averages are in complete bearish alignment.

This means that the 200-day moving average is at the highest value currently at $1859.70. The 100-day moving average comes in just below that price point at $1827.20, with the short-term 50-day moving average currently fixed at $1785.20. More alarming is they are once again beginning to show signs of divergence as the respective moving averages move farther away from each other in price. Currently, our technical studies indicate that there is major resistance in gold at $1768.80, which corresponds to a 50% retracement of the rally that began in mid-March 2020 when gold was trading at $1450 to the new record high achieved in August at $2088. Gold prices would have to move above $1768 before we had solid technical confirmation that the bulls have begun to regain control of price action. There is solid support for gold at $1680 to $1700.

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Wishing you, as always, good trading and good health,

Gary S. Wagner

 

Powell And Yellen Conclude Their Two-Day Congressional Testimony

In short, their testimony resulted in dollar strength as it did yesterday. Also, unlike yesterday, yields in 10-year U.S. Treasury notes declined slightly. The 10-year note is currently fixed at 1.617%, after being fixed at 1.629% yesterday.

However, the key difference between the two days of testimony was that gold was able to overcome market forces creating strong headwinds and close higher on the day, which did not occur on the first day of testimony by Powell and Yellin.

gold march 24

As of 5:42 PM EST, gold futures basis, the most active April 2021 contract, is currently fixed at $1733.40, after factoring in today’s gain of $8.30 (+0.48%). Gains in gold pricing did not erase the 0.74% decline that occurred in trading yesterday. However, what was remarkable is that these gains occurred in conjunction with a stronger dollar.

si 324

The dollar gained +0.30%, which is a total of 27 points and is currently fixed at 92.62. This was the second consecutive day in which the dollar closed higher. Yesterday the U.S. dollar closed higher as the dollar index gained 62 points or 0.68% in trading.

us dx 324

The easiest way to illustrate the strong demand, which is the outcome of bullish market sentiment in gold against the tide of dollar strength, is to look at the KGX (Kitco Gold Index). According to the KGX, spot gold is currently fixed at $1734.60. This is a net gain in trading today of $6.90. However, dollar strength actually took $5 per ounce away from its value, but strong bullish market sentiment moved the precious yellow metal higher to the tune of $11.90, which is how gold ended up closing higher by $6.90 on the day when there was moderate dollar strength.

gld kgx 324

Silver continued to spiral to lower pricing, although in percentage gains, there was not the strong selling pressure which resulted in a 2.63% decline yesterday. Today the most active May 2021 contract currently is fixed at $25.19, which is a decline of only 0.18%. Spot silver actually gained $0.05 in trading today and is currently fixed at $25.07. Just as in gold fractional or moderate buying took silver pricing $0.12 higher, with dollar strength taking away $0.07 of those gains resulting in a net gain in spot silver today of $0.05.

One of the primary topics that are at the forefront of the minds of market participants shaping their market sentiment is that although the United States is showing some economic growth, Europe continues to be plagued with continued issues from the pandemic. Germany, as well as Poland, are currently back in lockdown stages as they try to get a handle on the pandemic. America is not an island, and although we are showing some economic recovery, a global economic recovery will be absolutely necessary for the American economy to thrive. We live in a global trading economy in which all countries, to some degree, are dependent upon other countries to continue economic growth and expansion. America’s economy can only recover to a certain degree without the rest of the world being able to accomplish the same.

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Wishing you, as always, good trading and good health,

Gary S. Wagner

 

Powell And Yellen Begin Their Two-Day Congressional Testimony

In short, their testimony resulted in dollar strength which was the primary factor taking gold prices lower. As of 5 PM EST gold futures basis, the most active April 2021 contract is currently fixed at $1725.50, after factoring in today’s decline of $12.50 (-0.72%). Simple math determines that only 0.10% was attributable to market participants selling the precious yellow metal, with the remaining decline directly attributable to a strong dollar. The U.S. dollar closed higher as the dollar index gained 62 points, or 0.68%, and is currently fixed at 92.365.

gold march 23

Silver pricing was hit much harder today, with the most active May 2021 contract currently fixed at $25.095, which is a decline of 2.63%. This means that the vast majority of today’s decline in silver can be directly attributed to market participants actively selling the precious white metal.

silver march 23

This also can be clearly illustrated when we view the KGX (Kitco Gold Index). In the case of spot gold, the KGX is currently fixing the price at $1727.20, which is a net decline of $12.10 on the day. Of the $12.10 decline, dollar strength contributed $10.40, with the remaining decline of $1.70 attributable to selling pressure. Silver’s loss, however, was mainly due to selling pressure which resulted in today’s 2.60 % decline. The KGX is currently fixing spot silver at $25.01, which is a net decline of $0.73 per ounce. Selling pressure accounted for 2.24% or $0.58, with the remaining $0.15 decline directly attributable to dollar strength.

kgx march 23

One of the primary topics that were discussed during the first day of testimony was the health of the U.S. economy, which has seen a tremendous contraction due to the

Covid-19 global pandemic.

The disparity between current market sentiment by market participants, the Fed, and Treasury is the optimism regarding how quickly the United States will recover from the pandemic as well as the real possibility of rising inflation which has led to skepticism regarding the Federal Reserve’s current monetary policy of keeping interest rates (Fed funds) between zero and 25 basis points (1/4%). This optimism has led to rising yields in U.S. treasury 10-year notes, which are currently fixed at 1.627%

According to MarketWatch, Michael Armbruster, managing partner at Altavest, told the publication, “Even though we have seen a reprieve in Treasury yields over the last few days, we remain in a rising interest rate environment, and that is negative for gold and silver. We probably need to see the equity markets break before we get a policy change from the Fed…that could change the price trajectory for precious metals.”

He also added that “For gold bugs, it is likely to remain a tough market for the next three to six months.”

On a bullish note, he spoke about the long-term prospects of gold pricing, citing that he is “still bullish on gold rebound over the longer term if a mega $3 trillion bill gets through Congress but in immediate term, gold is being influenced by 10-year bond yields.” He believes that this could cause a rise in interest rates sooner than most people expected.

We have seen gold and silver both being subjected to selling pressure created by a number of factors. These include dollar strength, rising yields in Treasury notes, as well as recent rebalancing to favor U.S equities over safe-haven assets.

us dx 323

The real question becomes as to whether or not market participants are correct in their more optimistic view of a recovery than the Federal Reserve.

If, in fact, they have correctly predicted a much faster recovery than the Federal Reserve believes, then we could see both gold and silver continue to trade under pressure. However, if the market sentiment is ahead of itself and overly optimistic, we would see a return to a bullish demeanor in both gold and silver

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Wishing you, as always, good trading and good health,

Gary S. Wagner

 

It’s The Risk-On Market Sentiment Taking Gold Fractionally Lower

Currently, the dollar is down 0.17% and fixed at 91.77. The 10-year note also declined from the highs witnessed last week and is currently fixed at 1.679%. Bitcoin futures are currently trading down by 5.13% and fixed at $55,910. It seems that the dollar, Bitcoin, and 10-year notes, which have been the primary reasons that the precious metals downside pressure, have subsided at least for the moment.

Rather it seems to be portfolio balancing as market participants moved back into the tech-heavy NASDAQ composite with specific companies rebounding after trading under pressure for the last two weeks. The NASDAQ composite showed gains head and shoulders above the S&P 500 as well as the Dow, gaining 1.26% in trading today. The composite index is currently at 13,374.94, up approximately 160 points.

Tesla, for example, is currently up to $22.84 and fixed at $677.50 per share. Amazon is up to $44 and is currently fixed at $3119. Shopify is up to $35.72 and fixed at $1156.98, And Nvidia is up to $13.28 and fixed at $526.94.

Another reason cited for today’s decline in precious metals was Turkey. Both their currency and equities markets tumbled after President Erdogan fired the head of their central bank. MarketWatch reported that “Turkey’s currency and stocks collapsed after the abrupt termination of its central bank head, a move that led investors to take a cautious stance toward risky assets on Monday.”

gold 2 march 22

In an article penned by Steve Goldstein, he quoted Phoenix Kalen, a strategist at the French bank Societe Generale, “With Naci Agbal’s removal from the CBRT, Turkey loses one of its last remaining anchors of institutional credibility. During his short tenure, Agbal had succeeded where various predecessors had not – in cultivating trust in the central bank’s inflation-targeting framework, in restoring monetary policy independence, in encouraging international investors to re-engage with the crisis-prone Turkish narrative, in driving an 18.0% rally in the lira against the dollar, and most crucially – in arresting and even reversing the damaging trend of dollarization in the economy.”

gold march 22

Market sentiment shifting towards equities and the issues reported in Turkey have been the primary causes taking gold fractionally lower, with the most active April 2021 Comex contract down $2.90 and fixed at $1738.80. However, silver is experiencing a much sharper decline, currently down 1.77%, taking the most active May 2021 Comex contract to $25.85 an ounce, after factoring in today’s decline of $0.47.

silver march 22

Government spending has already allocated four trillion last year, in addition to the most recent aid package costing $1.9 trillion. Now the Biden administration is considering adding an additional $3 trillion worth of debt as it looks at two additional recovery packages. The $3 trillion would be spent to improve infrastructure, climate change, and reducing economic inequities, according to the New York Times. CNBC reported that “The White House is going to propose splitting the mammoth initiative into two bills, though Republican support for either plank could be hard to secure as Biden aims to increase taxes on corporations and the wealthiest Americans.”

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Wishing you, as always, good trading and good health,

Gary S. Wagner