Silver Price Prediction – Prices Form Doji Day which is a Sign of Indecision

Silver moved sideways on Friday, forming a doji day despite a stable dollar and rising yields. The greenback was able to gain traction as yields surged higher in the wake of the Fed’s commentary. The U.S. data was mixed. Despite softer than expected PMI and Jobless claim data released on Thursday, the Fed’s message that they will begin to taper bond purchases by the end of the year. The market is now pricing in a 25-basis point hike by September of 2022 and a 50% chance of a second hike by December 2022. Higher yields will help buoy the dollar, which should eventually weigh on the yellow metal.

[fx-broker slug=fxtm]

Technical analysis

Silver prices formed a doji day following an inside day which is a sign of indecision. Prices are poised to test resistance near the 10-day moving average at $22.91. Target support is seen near the September lows at 22.03. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The medium-term positive rate is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation. The relative strength rebounded and then moved lower after testing the oversold trigger level of 30.

Silver Weekly Price Forecast – Silver Markets Give Up Early Gains for the Week

Silver markets have initially rallied during the course of the week to show signs of strength again, but then turned around quite drastically on Friday to test the $22 level. The $22 level is important from what I can see, and if we were to break down below there it is likely that the silver market will fall apart. This of course is a very important level, and therefore I think that it is only a matter of time before we break down there based upon what I am seeing right now.

SILVER Video 27.09.21

At this point, the market certainly looks as if it is threatening this move, but if we were to turn around and take out the top of the inverted hammer, that could send silver much higher. That point in time would send the market looking towards the 50 week EMA near the $24.62 level. Breaking above there, then it is likely that the market goes looking towards the $26 level.

All things been equal, this is a market that continues to see a lot of back and forth, and of course the US Dollar Index has a negative correlation to it, so you need to see how that behaves in order to get an idea how this will. If the US dollar falls apart, that will help silver, and of course vice versa, as silver is so highly sensitive. Silver of course has been underperforming gold, and that continues to be a major factor to trading this market. All things been equal, this is a market continues to see noisy trading more than anything else.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Forecast – Silver Markets Bounce From Significant Support

Silver markets have gone back and forth during the course of the trading session on Friday as the $22 level underneath has offered quite a bit of support. That being the case, the market is likely to continue to see this area as important, but if we break down below the $22 level, it is likely that this market falls apart, and opens up a move towards the $20 level.

SILVER Video 27.09.21

On the other, if we were to turn around and break above the $23 level, then it opens up the possibility of a move towards the $24 level. The $24 level has been an area where we have seen a lot of selling pressure, and therefore it is likely that we would continue to see that as a barrier for the longer-term move. All things been equal, this is a market that is also facing the 50 day EMA as major resistance as well, and therefore I think it is only a matter of time before we see the market selloff on signs of exhaustion.

Pay attention to the US Dollar Index, as the value of the US dollar can have a major influence on what happens next. Keep in mind that the US Dollar Index has a major negative correlation to this market, so if the dollar starts to rally again, that will almost certainly see send the silver market much lower. On the other hand, if the US dollar falls apart, that could send the silver market much higher. All things been equal, there is a lot of choppy volatility in this general vicinity, so you need to be cautious about your position size.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Test Of Support At $22.10

Silver Is Under Pressure Ahead Of The Weekend

Silver has recently made an attempt to settle below the support at $22.10 while the U.S. dollar gained ground against a broad basket of currencies.

The U.S. Dollar Index managed to gain significant upside momentum and moved to the resistance level at 93.40. Treasury yields managed to get to multi-week highs which was bullish for the U.S. dollar and bearish for precious metals. In case the U.S. Dollar Index manages to settle above the resistance at 93.40, it will move towards the next resistance level at 93.75 which will be bearish for silver and gold price today.

Meanwhile, gold continues its attempts to settle below the support level at $1750. It looks that gold gets some support from safe-haven buying, but it remains to be seen whether it will be sufficient enough to push gold back above $1750. In case gold finally manages to settle below the support at $1750, it will head towards the next support level at $1720 which will be bearish for silver.

Gold/silver ratio received strong support near the 77 level and rebounded above the 78 level. In case gold/silver ratio gets to the test of the 79 level, silver will find itself under more pressure.

Technical Analysis

silver september 24 2021

Silver has recently tried to settle below the support at $22.10 but failed to develop sufficient downside momentum and rebounded towards $22.30.

In case silver finally manages to settle below $22.10, it will head towards the next support level which is located at $21.90. A move below this level will push silver towards the support at $21.65.

On the upside, silver needs to settle back above $22.30 to have a chance to gain upside momentum in the near term. The next resistance level is located at $22.60.

If silver gets above $22.60, it will move towards the resistance at $22.90. A successful test of the resistance at $22.90 will open the way to the test of the next resistance level which is located at $23.20.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Friday, Sep. 24 – Gold Below and Back Above $1,750

The gold futures contract lost 1.63% on Thursday, as it retraced its Monday’s-Wednesday’s advance after rebounding from $1,750 price level. On Thursday a week ago, gold broke below the recent local lows as series of the U.S. economic data releases along with the rallying U.S. dollar led to a sell-off in precious metals. The yellow metal came back to $1,750 price level. This morning the market is trading sligthly above $1,750 again, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.8% higher, as it is retracing some of yesterday’s decline. What about the other precious metals? Silver is 0.7% higher, platinum is 0.8% lower and palladium is 0.5% higher. So precious metals’ prices are higher this morning.

Yesterday’s Unemployment Claims release has been worse than expected at 351,000 and the Flash Manufacturing PMI/ Flash Services PMI releases have been as expected. Today we will get the New Home Sales and a speech from the Fed Chair Powell at 10:00 a.m.

Where would the price of gold go following Wednesday’s FOMC release? We’ve compiled the data since January of 2017, a 54-month-long period of time that contains of thirty eight FOMC releases. The following chart shows average gold price path before and after the FOMC releases for the past 38 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.51% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, September 24

  • 4:00 a.m. Eurozone – German ifo Business Climate
  • 10:00 a.m. U.S. – Fed Chair Powell Speech, New Home Sales

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor.

By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Silver Hovers Near 10-Month Low Amid Hawkish Fed – Where Next For Prices?

Silver prices slumped to their lowest level since November 2020 as Fed policymakers cleared the way to reduce its $120 billion in monthly asset purchases “soon” and hinted interest rate hikes may follow more quickly than expected.

The slight hawkish tilt was signalled in a new policy statement and economic projections that showed nine of 18 Fed officials ready to raise interest rates next year in response to inflation that the central bank now expects to run at 4.2% this year, more than double its 2% target rate.

The Fed also expects a slowdown in the GDP growth, which combined with rapidly surging inflation, may lead to stagflation risk ahead.

Such a scenario would provide a supportive environment for precious metal prices in the medium and long term.

Currently, Silver prices are trading sideways in a very tight range, which ultimately indicates a big move is on the horizon. The only question now, is which way.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Bullish Risk-on Market Sentiment and a More Hawkish Fed Take Gold Prices Lower

The first punch occurred yesterday as the Federal Reserve concluded its September FOMC meeting in which revealed a more hawkish demeanor. They penciled in the potential for one rate hike in 2022, which was absent from the last interest rate projection or dot plot. As expected, they did not announce a date on which tapering would begin nor the rate at which they would taper their monthly asset purchases. However, many analysts correctly predicted that there would not be a concrete announcement of a taper timeline and start date until November, with the earliest starting date December of this year or the first quarter of next year.

Reaction to the FOMC meeting in U.S. equities was the polar opposite of the effect it had on the safe-haven asset gold. In the case of U.S. equities, they were able to focus upon the strong retail sales numbers that were reported earlier this month. Forecasts by economists polled on consumer spending predicted that there would be a decline of 0.8%, while another poll indicated that there would be a decline of 1.8%. In this case, the analysts underestimated pent-up consumer demand, which resulted in consumers increasing their retail spending by +0.8%. However, if you stripped out automobile sales from the report by the U.S. Census Bureau, the actual increase would have been + 1.8%.

Strong consumer spending might have been a catalyst taking U.S. equities dramatically higher with the Dow Jones industrial average gaining 500 points on the day and closing at 34,764.82, a gain of 1.48%. The NASDAQ composite gained 1.04% and closed at 15,052.2438. The Standard & Poor’s 500 gained 1.21% and closed at 4448.98.

gold daily

While equities traders seemed unfazed by a more hawkish monetary policy going forward, the same cannot be said for either the U.S. dollar or gold which both traded lower on the day. Gold futures basis the most active December 2021 Comex contract lost $36 and closed at $1742.80 in New York. Concurrently the dollar index gave up 0.38% and closed at 93.105. Silver also sustained a drawdown, losing 1.69% on the day with the most active December contract settling at $22.52.

silver 923

In the case of gold and silver, it seemed as though market participants disregarded the upcoming vote on Monday of next week to raise the debt ceiling. There are tremendous implications if they are unable to come to a bipartisan agreement. This could cause the government to shut down some essential services and also create issues concerning the United States servicing interest payments on its debt.

The Fed did leave rates vis-à-vis the Fed funds rate between zero and 25 basis points, but they also moved the timeline up for liftoff.

Inflationary projections by the Federal Reserve are now anticipating the potential for a more sustained level of inflation which could be the underlying data that the Federal Reserve used to pencil in a rate hike next year which was a defined shift from their former monetary policy in regards to lifting off to normalize rates.

gold weekly

For those who would like more information, simply use this link.

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

Gary Wagner

 

Silver Price Forecast – Silver Markets Continue to Show Volatility

Silver markets have gone back and forth during the trading session on Thursday, as the silver markets continue to offer more chop than anything else. There is a certain amount of negativity in this market, but the market seems to be trying to determine whether or not the $22 level and overall support can hold. That being said, the market is likely to continue to see the area as a target for short sellers, and if we break down below there it is likely that we could go much lower. At that point, the market is likely to go looking towards the $20 level.

SILVER Video 24.09.21

On the other hand, if we turn around and break above the $23 level on a daily close, we might get a little bit of a pop towards the $24 level. A lot of questions about silver remain right now, as the market continues to see a lot of uncertainty when it comes to the global growth situation, and of course the demand for silver from an industrial standpoint. Beyond that, we also have to pay close attention to the US dollar, because it has a lot to say as to where we are going next.

With that being the case, I think that the US Dollar Index is worth paying attention to, because of the negative correlation between the greenback and silver. We are most decidedly in a downtrend at the moment, so I look at rallies with suspicion currently. That being said, the real barrier above is the $24 level, so if we can break above that massive red candle, then I might be a bit more convinced to start buying again.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Mixed As Treasury Yields Rise

Silver Is Mostly Flat Despite Weaker Dollar

Silver is currently trying to settle back below the support at $22.60 while the U.S. dollar is under strong pressure against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the support level at 93.10 and is trying to settle below the 93 level. In case this attempt is successful, the U.S. Dollar Index will move towards the 20 EMA at 92.85 which may provide some support to silver and gold price today.

It should be noted that weaker dollar has so far failed to provide material support to precious metals today as Treasury yields moved closer to multi-week highs. Currently, the yield of 10-year Treasuries is trying to settle above 1.37%. In case this attempt is successful, it will move towards the key resistance at 1.38% which will be bearish for silver.

Gold is testing the support level at $1750. If this test is successful, gold will gain additional downside momentum and move towards the support at $1720 which will be bearish for silver.

Meanwhile, gold/silver ratio managed to settle below 77.50 and is moving towards the 77 level. A move below this level will open the way to the test of the support at 76.55 which will be bullish for silver.

Technical Analysis

silver september 23 2021

Silver failed to settle above the resistance at $22.90 and is testing the support at $22.60. A successful test of this level will push silver towards the next support at $22.30.

In case silver settles below $22.30, it will move towards the support at $22.10 A move below this level will open the way to the test of the next support at $21.90.

On the upside, silver needs to settle above the resistance at $22.90 to have a chance to develop upside momentum in the near term. The next resistance level is located at $23.20. If silver gets above $23.20, it will move towards the 20 EMA at $23.35.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Thursday, Sep. 23 – Gold Remains Above $1,750 Price Level

The gold futures contract gained 0.0.3% on Wednesday, as it fluctuated within a short-term consolidation following last week’s Thursday’s decline of 2.1%. On Thursday a week ago, it broke below the recent local lows as series of the U.S. economic data releases along with the rallying U.S. dollar led to a sell-off in precious metals. The yellow metal came back to $1,750 price level. This morning the market is trading sideways again – despite yesterday’s FOMC release, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.4% higher, as it is trading along $1,770 price level. What about the other precious metals? Silver is 0.3% higher, platinum is 0.5% higher and palladium is 1.3% lower. So precious metals’ prices are slightly higher this morning.

Yesterday’s Existing Home Sales has been as expected at 5.88 million. The FOMC release led to an increase in an intraday volatility but gold went basically sideways. Today we will get the Unemployment Claims and Flash Manufacturing PMI/ Flash Services PMI releases.

Where would the price of gold go following Wednesday’s FOMC release? We’ve compiled the data since January of 2017, a 54-month-long period of time that contains of thirty eight FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. The latest FOMC Statement release came out on July 28. Gold price was 1.4% higher 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 38 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.51% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Thursday, September 23

  • 3:30 a.m. Eurozone – German Flash Manufacturing PMI, German Flash Services PMI
  • 7:00 a.m. U.K. – Monetary Policy Summary, Official Bank Rate, Asset Purchase Facility, MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes
  • 8:30 a.m. U.S. – Unemployment Claims
  • 9:45 a.m. U.S. – Flash Manufacturing PMI, Flash Services PMI
  • 10:00 a.m. U.S. – CB Leading Index m/m

Friday, September 24

  • 4:00 a.m. Eurozone – German ifo Business Climate
  • 10:00 a.m. U.S. – Fed Chair Powell Speech, New Home Sales

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Silver Price Forecast – Silver Markets Continue Bounce

Silver markets have shown the $22 level to be massive support, as we have bounced a bit, and at this point in time it looks as if we are trying to figure out whether or not that massive level will hold. If it does get broken down below, silver will more than likely collapse at that point. I would anticipate a move to the $20 level rather quickly, as there should be a lot of “thin air” underneath. This would also have a lot to do with the US dollar more likely than not, as a strengthening US dollar certainly will work against the value of silver.

SILVER Video 23.09.21

To the upside, if we can get above the $23 level, then it is likely that we will see an attempt to reach towards the $24 level, an area where we have seen a massive amount of selling pressure. With that in mind, I think that we are about to get an explosive move, but obviously silver is very choppy and noisy. With that in mind, keep your position size relatively small, as I would anticipate noise being a major problem for this market. Silver has volatile under the best of circumstances, and with all of the concerns that we have around the world, it is very likely that silver will be a dangerous market if you are not careful. Position sizing will be everything at this point.

However, if we do break down below the $22 level, I am more than willing to get aggressive to the short side, as it could open up quite a bit of downward pressure at this point in time.

For a look at all of today’s economic events, check out our economic calendar.

How Do You Get Inflation Under Control?

With the USD Index and U.S. Treasury yields the main fundamental drivers of the PMs’ performance, some confusion has arisen due to their parallel and divergent moves. For example, sometimes the USD Index rises while U.S. Treasury yields fall, or vice-versa, and sometimes the pair move higher/lower in unison. However, it’s important to remember that different economic environments have different impacts on the USD Index and U.S. Treasury yields.

To explain, the USD Index benefits from both the safe-haven bid (stock market volatility) and economic outperformance relative to its FX peers. Conversely, U.S. Treasury yields only benefit from the latter. Thus, when economic risks intensify (like what we witnessed with Evergrande on Sep. 20), the USD Index often rallies while U.S. Treasury yields often fall. Thus, the economic climate is often the fundamental determinant of the pairs’ future paths.

For context, I wrote on Apr.16:

The PMs suffer during three of four possible scenarios:

  1. When the bond market and the stock market price in risk, it’s bearish for the PMs
  2. When the bond market and the stock market don’t price in risk, it’s bearish for the PMs
  3. When the bond market doesn’t price in risk, but the stock market does, it’s bearish for the PMs
  4. When the bond market prices in risk and the stock market doesn’t, it’s bullish for the PMs

Regarding scenario #1, when the bond market and the stock market price in risk (economic stress), the USD Index often rallies and its strong negative correlation with the PMs upends their performance. Regarding scenario #2, when the bond market and the stock market don’t price in risk, U.S. economic strength supports a stronger U.S. dollar and rising U.S, Treasury yields reduce the fundamental attractiveness of gold. For context, the PMs are non-yielding assets, and when interest rates rise, bonds become more attractive relative to gold (for some investors).

Regarding scenario #3, when the stock market suffers and U.S. Treasury yields are indifferent, the usual uptick in the USD Index is a bearish development for the PMs (for the same reasons outlined in scenario #1). Regarding scenario #4, when the bond market prices in risk (lower yields) and the stock market doesn’t, inflation-adjusted (real) interest rates often decline, and risk-on sentiment can hurt the USD Index. As a result, the cocktail often uplifts the PMs due to lower real interest rates and a weaker U.S. dollar.

The bottom line? The USD Index and U.S. Treasury yields can move in the same direction or forge different paths. However, while a stock market crash is likely the most bearish fundamental outcome that could confront the PMs, scenario #2 is next in line. While it may (or may not) seem counterintuitive, a strong U.S. economy is bearish for the PMs. When U.S. economic strength provides a fundamental thesis for both the USD Index and U.S. Treasury yields to rise (along with real interest rates), the double-edged sword often leaves gold and silver with deep lacerations.

In the meantime, though, with investors eagerly awaiting the Fed’s monetary policy decision today, QE is already dying a slow death. Case in point: not only has the USD Index recaptured 93 and surged above the neckline of its inverse (bullish) head & shoulders pattern, but the greenback’s fundamentals remain robust. With 78 counterparties draining more than $1.240 trillion out of the U.S. financial system on Sep. 21, the Fed’s daily reverse repurchase agreements hit another all-time high.

Please see below:

Graphical user interfaceDescription automatically generatedSource: New York Fed

To explain, a reverse repurchase agreement (repo) occurs when an institution offloads cash to the Fed in exchange for a Treasury security (on an overnight or short-term basis). And with U.S. financial institutions currently flooded with excess liquidity, they’re shipping cash to the Fed at an alarming rate. And while I’ve been warning for months that the activity is the fundamental equivalent of a taper – due to the lower supply of U.S. dollars (which is bullish for the USD Index) – the psychological effect is not the same. However, as we await a formal taper announcement from the Fed, the U.S. dollar’s fundamental foundation remains quite strong.

Furthermore, with the Wall Street Journal (WSJ) publishing a rather cryptic article on Sep. 10 titled “Fed Officials Prepare for November Reduction in Bond Buying,” messaging from the central bank’s unofficial mouthpiece implies that something is brewing. And while the Delta variant and Evergrande provide the Fed with an excuse to elongate its taper timeline, surging inflation has the Fed increasingly handcuffed.

As a result, Goldman Sachs Chief U.S. Economist David Mericle expects the Fed to provide “advance notice” today and set the stage for an official taper announcement in November. He wrote:

While the start date now appears set, the pace of tapering is an open question. Our standing forecast is that the FOMC will taper at a pace of $15bn per meeting, split between $10bn in UST and $5bn in MBS, ending in September 2022. But a number of FOMC participants have called instead for a faster pace that would end by mid-2022, and we now see $15bn per meeting vs. $15bn per month as a close call.”

On top of that, with stagflation bubbling beneath the surface, another hawkish shift could materialize.

To explain, I wrote on Jun. 17:

On Apr. 30, I warned that Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), was materially behind the inflation curve.

I wrote:

With Powell changing his tune from not seeing any “unwelcome” inflation on Jan. 14 to “we are likely to see upward pressure on prices, but [it] will be temporary” on Apr. 28, can you guess where this story is headed next?

And with the Fed Chair revealing on Jun. 16 what many of us already knew, he conceded:

TextDescription automatically generatedSource: CNBC

Moreover, while Powell added that “our expectation is these high inflation readings now will abate,” he also conceded that “you can think of this meeting that we had as the ‘talking about talking about’ [tapering] meeting, if you’d like.”

However, because actions speak louder than words, notice the monumental shift below?

TableDescription automatically generatedSource: U.S. Fed

To explain, if you analyze the red box, you can see that the Fed increased its 2021 Personal Consumption Expenditures (PCE) Index projection from a 2.4% year-over-year (YoY) rise to a 3.4% YoY rise. But even more revealing, the original projection was made only three months ago. Thus, the about face screams of inflationary anxiety.

What’s more, I highlighted on Aug. 5 that the hawkish upward revision increased investors’ fears of a faster rate-hike cycle and contributed to the rise in the USD Index and the fall in the GDXJ ETF (our short position).

Please see below:

Chart, line chart, histogramDescription automatically generated

And why is all of this so important? Well, with Mericle expecting the Fed to increase its 2021 PCE Index projection from 3.4% to 4.3% today (the red box below), if the Fed’s message shifts from we’re adamant that inflation is “transitory” to “suddenly, we’re not so sure,” a re-enactment of the June FOMC meeting could uplift the USD Index and upend the PMs once again. For context, the FOMC’s July meeting did not include a summary of its economic projections and today’s ‘dot plot’ will provide the most important clues.

Please see below:

TableDescription automatically generated

Finally, with CNBC proclaiming on Sep. 21 that the Fed is “widely expected to indicate it is getting ready to announce it will start paring back its $120 billion in monthly purchases of Treasuries and mortgage-backed securities,” even the financial media expects some form of “advance notice.”

A picture containing text, bottle, darkDescription automatically generatedSource: CNBC

The bottom line? While the Delta variant and Evergrande have provided the Fed with dovish cover, neither addresses the underlying problem. With inflation surging and the Fed’s 2% annual target looking more and more like wishful thinking, reducing its bond-buying program, increasing the value of the U.S. dollar, and decreasing commodity prices is the only way to get inflation under control. In absence, the Producer Price Index (PPI) will likely continue its upward momentum and the cost-push inflationary spiral will likely continue as well.

In conclusion, the gold miners underperformed gold once again on Sep. 21 and the relative weakness is profoundly bearish. Moreover, while the USD Index was roughly flat, Treasury yields rallied across the curve. And while Powell will do his best to thread the dovish needle today, he’s stuck between a rock and a hard place: if he talks down the U.S. dollar (like he normally does), commodity prices will likely rise, and inflation will likely remain elevated. If he acknowledges reality and prioritizes controlling inflation, the U.S. dollar will likely surge, and the general stock market should suffer. As a result, with the conundrum poised to come to a head over the next few months (maybe even today), the PMs are caught in the crossfire and lower lows will likely materialize over the medium term.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Silver Price Daily Forecast – Test Of Resistance At $22.90

Silver Gains Ground Ahead Of Fed Interest Rate Decision

Silver is currently trying to settle above the resistance at $22.90 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle below the support level at 93.10. If the U.S. Dollar Index manages to settle below this level, it will head towards the support at 92.80 which will be bullish for silver and gold price today. Weaker dollar is bullish for precious metals as it makes them cheaper for buyers who have other currencies. However, it remains to be seen whether U.S. dollar will be able to gain additional momentum ahead of the Fed Interest Rate Decision.

Meanwhile, gold remains stuck near the resistance at $1775. A move above this level will push gold towards the resistance at $1800 which will be bullish for silver.

Gold/silver ratio gained strong downside momentum today and managed to get below the 78 level. Currently, gold/silver ratio is trying to settle below the support at 77.65. In case this attempt is successful, gold/silver ratio will move towards the 77 level which will be bullish for silver.

Technical Analysis

silver september 22 2021

Silver managed to settle above the resistance at $22.60 and is testing the next resistance level which is located at $22.90. In case this test is successful, it will move towards the resistance at $23.20.

A successful test of the resistance at $23.20 will open the way to the test of the next resistance which is located at the 20 EMA at $23.45. If silver manages to settle above the 20 EMA, it will gain additional upside momentum and head towards the resistance at $23.80.

On the support side, the previous resistance at $22.60 will serve as the first support level for silver. A move below this level will push silver towards the support at $22.30. If silver manages to get below $22.30, it will head towards the next support level at $22.10.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Wednesday, Sep. 22 – Gold Calm Ahead of FOMC

The gold futures contract gained 0.82% on Tuesday, as it extended its rebound following last week’s Thursday’s decline of 2.12%. On Thursday, it broke below the recent local lows as series of the U.S. economic data releases along with the rallying U.S. dollar led to a sell-off in precious metals. The yellow metal came back to $1,750 price level. This morning the market is retracing some of yesterday’s advance, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.1% lower, as it is trading along $1,770 price level. What about the other precious metals? Silver is 1.1% higher, platinum is 1.5% higher and palladium is 3.4% higher. So precious metals’ prices are mixed this morning.

Yesterday’s Housing Starts/ Building Permits releases have been better than expected. The markets will be waiting for today’s FOMC Monetary Policy Statement release at 2:00 p.m. and the FOMC Press Conference at 2:30 p.m. We will most likely see an increase in volatility.

Where would the price of gold go following the FOMC release? We’ve compiled the data since January of 2017, a 54-month-long period of time that contains of thirty eight FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. The latest FOMC Statement release came out on July 28. Gold price was 1.4% higher 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 38 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.51% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Wednesday, September 22

  • 10:00 a.m. U.S. – Existing Home Sales
  • 2:00 p.m. U.S. – FOMC Statement, Federal Funds Rate, FOMC Economic Projections
  • 2:30 p.m. U.S. – FOMC Press Conference
  • Tentative, Japan – BOJ Press Conference
  • All Day, Japan – Bank Holiday

Thursday, September 23

  • 3:30 a.m. Eurozone – German Flash Manufacturing PMI, German Flash Services PMI
  • 7:00 a.m. U.K. – Monetary Policy Summary, Official Bank Rate, Asset Purchase Facility, MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes
  • 8:30 a.m. U.S. – Unemployment Claims
  • 9:45 a.m. U.S. – Flash Manufacturing PMI, Flash Services PMI
  • 10:00 a.m. U.S. – CB Leading Index m/m

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Silver Price Prediction – Prices Rebound as the Dollar Eases

Silver prices rebounding off support levels as the dollar eased and U.S. yields continued to gring downward. The risk-off trade took a breather on turn-around Tuesday, allowing silver prices to gain traction as the dollar finally eased.  Gold prices rebounded for a second straight trading session allowing silver prices to gain a toe hold. Prices were oversold, and the technicals point to a relief rally. Housing starts advanced 3.9% to an annual rate of 1.615 million units last month, the Commerce Department said on Tuesday.

[fx-broker slug=fxtm]

Technical analysis

Silver prices rebounded from key support levels seen near the August and December lows at 21.95. If prices are able to close above this level for consecutive days it will likely generate a bounce from an oversold condition. Prices remained below resistance seen near the 10-day moving average, at 23.33. Target support is seen near the August lows at 22.10. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic is printing a reading of 18, below the oversold trigger level of 20, which could foreshadow a correction.

Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover signal. This sell signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Silver Price Forecast – Silver Markets Holding Onto Support Level

Silver markets rallied a bit during the trading session on Tuesday but gave back the very top of the candlestick as we are seeing a bit of hesitation. As you can see on the chart, the market has been selling off quite drastically for a while, so it should not be a huge surprise to see us try to take out the $22 level underneath, opening up the possibility of even deeper selling. The market breaking down below the $22 level will more than likely offer an opportunity for silver to drop down towards the $20 level, over the longer term of course.

SILVER Video 22.09.21

Pay attention to the US dollar, because if it continues to strengthen, that will certainly work against the value of silver itself. Furthermore, the market is likely to continue seeing a lot of hesitation in general, because quite frankly silver is highly sensitive to the idea of industrial demand. Quite frankly, it looks like there are a lot of concerns out there when it comes to growth, and of course the credit market in China. As long as there is more of a “risk off” attitude out there, then it makes a certain amount of sense that silver itself would fall, mainly due to the fact that silver is considered to be a very volatile and “risk on” type of market.

Regardless, you can see that the significant selling of the last couple of weeks has barely been pushed back against, suggesting that we have further to go to the downside rather quickly, and once we break below the $22 level, I suspect there is a slew of stop loss orders there to push this market much lower.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Resistance At $22.60 Stays Strong

Silver Tries To Gain More Ground

Silver has recently made an attempt to settle above the resistance at $22.60 but lost momentum and pulled back closer to $22.30 while U.S. dollar was mostly unchanged against a broad basket of currencies.

The U.S. Dollar Index is currently stuck in the range between the support at 93.10 and the resistance at 93.40. It remains to be seen whether foreign exchange market traders are ready for big moves ahead of the Fed Interest Rate Decision which will be released on September 22. In case the U.S. Dollar Index gets above 93.40, it will head towards yearly highs near 93.75 which will be bearish for silver and gold price today.

Meanwhile, gold is testing the resistance at $1775. In case this test is successful, gold will gain additional upside momentum and head towards the next resistance level at $1800 which will be bullish for silver.

Gold/silver ratio received strong support near the 78 level and moved back above the 79 level. RSI is in the overbought territory, but there is enough room to gain additional upside momentum. If gold/silver ratio moves closer to the 80 level, silver will find itself under more pressure.

Technical Analysis

silver september 21 2021

Silver is trying to get above the resistance level at $22.60. If it manages to settle above this level, it will head towards the next resistance level which is located at $22.90.

A successful test of the resistance at $22.90 will open the way to the test of the next resistance level at $23.20.

On the support side, the nearest support level for silver is located at $22.30. In case silver declines below this level, it will move towards the support at $22.10. If silver settles below this level, it will head towards the next support at $21.90. A successful test of the support at $21.90 will push silver towards the support level which is located at $21.65.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Rebound As Traders Rush To Buy The Dip

Traders Are Ready To Buy Stocks After Pullback

S&P 500 futures are moving higher in premarket trading as traders look ready to buy stocks after yesterday’s sell-off.

Yesterday, markets were worried about a potential default of China’s developer Evergrande. These fears have almost evaporated today as many analysts stated that the risk of financial contagion was low while traders focused on the opportunity to buy stocks at a discount.

It looks that many market participants were waiting for a 5% pullback so they were ready to push the “buy” button when this opportunity presented itself. Traders began to buy stocks in the last hour of yesterday’s trading session, and this positive momentum remains intact in today’s premarket trading.

Housing Starts Increased By 3.9% In August

U.S. has just released Building Permits and Housing Starts reports for August. Building Permits increased by 6% month-over-month in August compared to analyst consensus which called for a decline of 1.8%. Housing Starts grew by 3.9% compared to analyst consensus of 2%.

It remains to be seen whether these reports will have a material impact on the market as some traders look focused on buying the recent dip while others would prefer to wait for the results of the Fed meeting.

Precious Metals Rebound As Dollar Declines

Today, the U.S. dollar found itself under pressure against a broad basket of currencies while foreign exchange market remained nervous ahead of the Fed Interest Rate Decision and commentary which will be released tomorrow.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has moved away from yearly highs and is trying to settle below the support level at 93.10.

Weaker dollar provided material support to precious metals today which is good for gold mining stocks and silver mining stocks. Currently, gold is trying to settle above the resistance at $1775 while silver is testing resistance at $22.60.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Tuesday, Sep. 21 – Gold’s Short-Term Rebound

The gold futures contract gained 0.71% on Monday, as it continued to fluctuate following last Thursday’s decline of 2.12%. On Thursday, it broke below the recent local lows as series of the U.S. economic data releases along with the rallying U.S. dollar led to a sell-off in precious metals. The yellow metal came back to $1,750 price level. This morning the market is extending a short-term consolidation above that support level, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.2% higher, as it is trading above $1,760 price level. What about the other precious metals? Silver is 1.4% higher, platinum is 1.8% higher and palladium is 3.8% higher. So precious metals’ prices are higher this morning.

Yesterday’s NAHB Housing Market Index release has been better than expected at 76. The stock market suffered and decline and gold was gaining. Today we will get the Housing Starts/ Building Permits releases at 8:30 a.m.

The markets will be waiting for tomorrow’s FOMC Monetary Policy Statement release.

Where would the price of gold go following Wednesday’s FOMC release? We’ve compiled the data since January of 2017, a 54-month-long period of time that contains of thirty eight FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. The latest FOMC Statement release came out on July 28. Gold price was 1.4% higher 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 38 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.51% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Tuesday, September 21

  • 8:30 a.m. U.S. – Housing Starts, Building Permits, Current Account
  • Tentative, Japan – Monetary Policy Statement, BOJ Policy Rate

Wednesday, September 22

  • 10:00 a.m. U.S. – Existing Home Sales
  • 2:00 p.m. U.S. – FOMC Statement, Federal Funds Rate, FOMC Economic Projections
  • 2:30 p.m. U.S. – FOMC Press Conference
  • Tentative, Japan – BOJ Press Conference
  • All Day, Japan – Bank Holiday

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Gold Recovers as Worldwide Equites Sell Off

The worldwide equity selloff began overseas and then continued into the U.S. equities markets. At its low today the Dow Jones industrial average was down 900 points before recovering. The Dow gave up 614 points in trading today and closed at 33,970.47, resulting in a net decline of 1.78%. The NASDAQ composite lost 2.19% and is currently fixed at 14,713.9030. The S&P 500 lost 1.70% and is currently fixed at 4357.73.

gold sept 20

As of 5:56 PM EDT gold futures basis, the most active December 2021 contract is currently up to $13.30 and fixed at $1764.70. Silver did sustain a mild selloff closing lower by 0.41%, and after factoring in today’s decline of a little over nine cents, it is currently fixed at $22.245.

silver sept 20

Reuters reported that “Wall Street plunged on Monday as fear of contagion from a potential collapse of China’s Evergrande prompted a broad selloff and sent investors fleeing equities for safety.”

They also added that “the equity selloff in the United States was a result of concerns of solvency of the Chinese property group Evergrande. “Gold rose on Monday as fears about the solvency of Chinese property group Evergrande sparked a flight to safe-haven assets, but gains were capped by strength in the dollar ahead of the U.S. Federal Reserve’s policy meeting. Spot gold rose 0.5% to $1,762.66 per ounce by 1753 GMT. U.S. gold futures settled 0.8% higher at $1,765.40.”

The Chinese property to developers has accumulated over $300 billion in debt mostly with the Central Bank of China.

The Federal Reserve will meet tomorrow and begin September’s FOMC meeting, which will conclude on Wednesday. Market participants and traders hope to gain more clarity as to the timeline in which the Federal Reserve will begin to taper their monthly asset purchases of $120 billion (80 billion in U.S. debt and 40 billion in mortgage-backed securities).

There is genuine uncertainty as to what actions the Federal Reserve will take in regards to their current monthly asset purchases. Their asset balance sheet has swelled to above $8 trillion in assets. However, their primary focus has been upon maximum employment, a major component of their dual mandate which is maximum employment and annual inflationary levels of around 2%. They have let inflation run much hotter in lieu of achieving their maximum employment goal. Believing that the majority of the current level of inflation is transitory, the Federal Reserve has let inflation run to 5.3%, based upon the latest CPI numbers released last week.

However, the most recent jobs report was extremely disappointing and deeply below expectations and forecasts from economists polled by the Wall Street Journal. The expectation was that the August jobs report would indicate an additional 700,000+ new jobs added to payrolls, and the actual number was a tepid 235,000 new jobs added last month.

The weak August jobs report will be weighed against the most recent report by the U.S. Census Bureau, which indicated robust consumer spending last month, resulting in $618 billion, up 0.8%. Economists polled were looking for August consumer spending to be down between -0.8 to -1.8. If you strip out consumer spending on automobiles and trucks, the actual gain for the month of August is 1.8%.

These two reports show an interesting mix between new jobs added and consumer spending. While the jobs report was disappointing and weak at best, consumer spending rose far past the expectations given by economists. Therefore, the Federal Reserve will be faced with making a decision based on strong consumer spending and weak growth in jobs. That will certainly influence their decision as to when they will begin to taper.

For those who would like more information, simply use this link.

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

Gary Wagner