Daily Gold News: Thursday, Jan. 20 – Gold Price Remains Above the Recent Highs

The gold futures contract gained 1.70% on Wednesday, as it broke above the previous local highs. Investors reacted to Russia-Ukraine tensions, among other factors. The market got closer to its mid-November consolidation of around $1,850-1,875. It marks the nearest important resistance level. This morning yellow metal is trading along its yesterday’s daily closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.2% lower this morning, as it is trading within an intraday consolidation. What about the other precious metals? Silver is virtually flat, platinum is 1.3% higher and palladium is 2.1% higher. So the main precious metals’ prices are mixed this morning.

Yesterday’s Building Permits and Housing Starts releases have been better than expected. Today we will get the Unemployment Claims, Philly Fed Manufacturing Index and the Existing Home Sales announcements.

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

Thursday, January 20

  • 8:30 a.m. U.S. – Philly Fed Manufacturing Index, Unemployment Claims
  • 10:00 a.m. U.S. – Existing Home Sales

Friday, January 21

  • 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 Trading 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.

 

Inflation at a 40-year High, Risk-off Market Sentiment, and Geopolitical Uncertainty Create a Perfect Storm Scenario for the Precious Metals

Three primary concerns have elevated the bullish market sentiment that has already been in play in the precious metals markets, today however it seemed as though these concerns were magnified.

The primary concern is the current level of inflation in the United States which according to the most recent data provided by the government is at 7%. The last time inflationary pressures were this high was in 1982, 40 years ago. Also, market participants are focusing on inflationary concerns in regards to upcoming action by the Federal Reserve at the upcoming FOMC meeting which will begin on Tuesday, January 25, and conclude exactly a week from today. Lift-off, a term used to describe the initiation of interest rate hikes is almost a certainty.

Fedwatch tool

It is assumed that the Federal Reserve will announce the date they will begin lift-off at next week’s FOMC. According to the CME Group’s FedWatch tool, the probability that the first-rate hike will occur in March of this year is 94%.

Unquestionably, U.S. corporations have become addicted to borrowing money for free. The realization that this monetary policy that was enacted by the Federal Reserve to rebuild the economy in the United States is coming to an end is now sinking in. U.S. equities have been under pressure and trading to lower values for four out of the last five trading days.

In the case of the NASDAQ composite since January 12, the tech-heavy index has lost just over 6% in value. The Standard & Poor’s has lost approximately 4.2% of value, and the Dow Jones industrial average has declined by approximately 3.61%.

Lastly, although only a small component of the recent shift in market sentiment of both U.S. equities and the precious metals markets is the geopolitical tension that is building as Russian troops continue to mount on the border of Ukraine.

Any of these three factors could have a dramatic impact on market sentiment for both U.S. equities and the precious metals markets. However, the combination of all three factors existing simultaneously has created a perfect storm environment moving the precious metals dramatically higher today.

Palladium gained 5.09% in trading today the largest percentage gain of the four precious metals traded on the futures exchange. After factoring in a gain of $96.90 palladium futures are currently fixed at $2001.50. Platinum futures gained 4.58% and after factoring in today’s gain of $44.90 is currently fixed at $1024.40. Silver futures gained 2.99% taking the most active March futures contract to $24.195, after factoring in today’s gain of $0.70. Lastly, gold futures basis the most active February contract is currently fixed at $1840.70 after gaining $28.30 or 1.56%.

Gold daily chart 19.01.22

All of the precious metals had strong upside breakouts today with gold blowing past the current resistance level of $1833. Our technical studies currently indicate that the next level of resistance comes in at $1851.60. The studies also indicate that the former resistance level could become the new support level at $1830.

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

Wishing you as always good trading and good health,

Gary S. Wagner

 

Silver Prices Surge as Yields Pull Back

Silver prices surged higher on Wednesday after a strong first part of the week. US stocks remain flat as U.S. Treasury yields soar. Investors are pricing in the Fed rate hikes of over a 25-basis point increase in  March. The 10-year yield surged to 1.9% and hovers around 2-year pre-pandemic highs. The 2-year yield curve also held near 2-year highs but slightly retreated. Although gold edged higher to 1,840, surging yields will cause downward pressure on gold and cause it to stay in the range of 1,800.

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Technical Analysis

On Wednesday, silver prices continued to push higher. Resistance is seen near the 200-day  moving average at 24.65. Support is seen near the 100-day moving average at 23.28. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are now overbought. The fast stochastic is printing a reading of 97, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Housing Starts Data Rises

Private housing starts in December were at 1.702 million up 1.4% from November. The data exceeded expectations and indicates optimism in the residential housing market. Even though December is usually a slower month, elevated demand for housing has led to continued increasing market activity. The higher-than-expected reading is positive for the USD. A stronger dollar is negatively correlated to silver prices.

 

Silver Markets Reach 200 Day EMA

Silver markets have rallied significantly during the trading session on Wednesday to reach the 200 day EMA. That being said, the market looks as if it is trying to figure out where it can go next. Ultimately, this is a market that is getting a little bit stretched, but as interest rates fell a bit during the trading session, the US dollar got a little bit of a beating, and that of course helps silver which is so highly sensitive to the US dollar itself.

SILVER Video 20.01.22

Obviously, the 200 day EMA is an area where a lot of people will pay attention to, but it is also worth noting that the overall attitude of the market has been one of consolidation for ages, and we could go as high as $25 and still not break out of it. In fact, that is probably where we are going over the longer term but right now it seems as if we are simply killing time trying to reach the top. Dips should continue to be buying opportunities, lease as long as we can stay above the $23 level at this point.

Silver is very volatile, and obviously we have gotten so stretched that perhaps we probably need to take a look at the market through the prism of “finding value”, and other words buying dips as they occur. The market of course is one that can move at the drop of hat, so your position size ultimately is a major factor in whether or not you can survive silver trading. Either way, it seems as if it is going to be almost impossible to short this market in this current environment.

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

Silver Rallies While Gold Moves Above $1830

Silver ETF Gains Ground As Gold/Silver Ratio Moves To New Lows

Silver is trying to settle above the $24 level while U.S. dollar is losing ground against a broad basket of currencies. Meanwhile, iShares Silver Trust is trying to get above $22.20.

The U.S. Dollar Index is currently testing the support level at the 50 EMA near 95.55. In case this test is successful, the U.S. Dollar Index will move towards the next support at 95.40 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.

Gold is currently testing the resistance level at $1830 while SPDR Gold Trust is trying to settle above $171.50. In case gold manages to settle above $1830, it will move towards the next resistance at $1845 which will be bullish for silver.

Gold/silver ratio continues to move lower at a fast pace. It has recently managed to settle below the 77 level and is testing the support at 76.50. In case this test is successful, gold/silver ratio will move towards the 76 level which will be bullish for silver.

Technical Analysis

silver january 19 2022

Silver is currently testing the resistance level at $24.00. In case silver manages to settle above this level, it will move towards the next resistance at $24.25. RSI remains in the moderate territory, so there is enough room to gain upside momentum in case the right catalysts emerge.

A successful test of the resistance at $24.25 will push silver towards the resistance at $24.50. If silver gets above $24.50, it will head towards the next resistance level at $24.80.

On the support side, the previous resistance level at $23.70 will serve as the first support level for silver. If silver declines below this level, it will move towards the next support at $23.50. A successful test of the support at $23.50 will push silver towards the support level which is located at $23.20.

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

Fake It Till You Make It: Will Silver’s Motto Work on Gold?

Bond yields soared once again, just as I’ve been expecting them to for many months now. The reaction in some markets was as expected (the USD Index soared), but in some, it was perplexing. Gold moved lower a little, miners declined a bit more, and silver… rallied. Who’s faking it?

Well, perhaps nobody is. Let’s look at the yields’ movement first.

The 10-year bond yields have just moved to new yearly highs and are also above their 2021 highs. This happened just after they moved back to their 50-week moving average (marked in blue). For a long time, I’ve been writing that the 2013 performance is likely to be repeated also in this market, and that’s exactly what is taking place right now. Bond yields are doing what they did back then.

If history continues to rhyme, we can expect bond yields to rally further, the USD Index to gain, and we can predict gold at lower prices.

Speaking of the USD Index, let’s take a look at what it did yesterday.

It soared over 0.5 index points, which was the largest daily increase so far this year. This happened after the USD Index moved to a combination of powerful support levels: the rising medium-term support line and the late-2020 high. The tiny attempts to move below those levels were quickly invalidated, and the USD Index was likely to rally back up; and so it did.

What’s next? The uptrend was not broken, so it’s likely to continue. In other words, the USD Index’s rally is likely to continue, and this, in turn, is likely to trigger declines across the precious metals sector.

Gold didn’t react with a significant decline yesterday – just a moderate/small one – which some might view as bullish. I’d say that it’s rather neutral.

The rally above the 2021 highs in bond yields might have come as a shock to many investors, and they might not have been sure how to react or what to make of it. It might also have been the “buy the rumor, sell the fact” type of reaction. Either way, it seems to me that we’ll have to wait a few days and see how it plays out once the dust settles.

The volume that we saw yesterday was huge. After a period of relatively average volume, we saw this huge volume spike. I marked the previous cases with red arrows. In those cases, such volume accompanied gold’s sizable declines. This time, the volume spike accompanied a $4.10 decline, which might appear perplexing.

Fortunately, gold is not the only market that we can analyze, and – as it’s often the case – context provides us with details that help to make sense of what really happened. Let’s check the key supplemental factor – silver’s price action.

While gold declined a bit, silver soared over $0.5! The volume that accompanied this sizable daily upswing was the biggest that we’ve seen so far this year too. The latter provides additional confirmation of the importance of yesterday’s session.

What was it that happened yesterday that was so important?

Silver outperformed gold on a very short-term basis!

This is profoundly important, because that’s what has been accompanying gold’s, silver’s, and mining stocks’ tops for many years. Knowing to pay attention to even small signs of silver’s outperformance is one of the useful gold trading tips, and the extent of the outperformance is what determines the importance of the signal (and its bearishness). The extent was huge yesterday, so the implications are very bearish.

Yes, silver moved to new yearly highs as well, but silver is known for its fake breakouts (“fakeouts”), which usually happen without analogous moves in gold and mining stocks. Since neither gold nor miners moved to new yearly highs yesterday, it seems that silver “faked out” once again. Silver is up in today’s pre-market trading, and gold is up only slightly, but the latter is not even close to moving to new 2022 highs. The GDX ETF is actually down in today’s London trading (at the moment of writing these words).

Speaking of mining stocks, let’s take a look at what happened in them yesterday.

In short, they declined – by over 1%, which is about five times more than gold. Since silver outperformed gold, while gold miners underperformed it, the implications for the precious metals sector are bearish.

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.

 

Daily Gold News: Wednesday, Jan. 19 – Gold Price Remains Above $1,800

The gold futures contract lost 0.23% on Tuesday, as it continued to fluctuate within a consolidation following another breakout above the $1,800 price level. Gold price was gaining in a reaction to the weakening U.S. dollar, among other factors. The market got close to the previous highs again before backing off slightly. On Jan. 3 gold reached the local high of $1,833 before reversing lower, and on Jan. 7 it traded as low as $1,781.30. This morning the yellow metal is trading slightly higher again, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.2% higher this morning, as it is trading within its yesterday’s daily range. What about the other precious metals? Silver is 1.3% higher, platinum is 1.4% higher and palladium is 0.2% higher. So the main precious metals’ prices are higher this morning.

Yesterday’s Empire State Manufacturing Index release has been much worse than expected at -0.7. Today we will get the Building Permits, Housing Starts releases.

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

Wednesday, January 19

  • 8:30 a.m. U.S. – Building Permits, Housing Starts
  • 8:30 a.m. Canada – CPI m/m, Common CPI y/y, Median CPI y/y, Trimmed CPI y/y, Core CPI m/m
  • 7:30 p.m. Australia – Employment Change, Unemployment Rate

Thursday, January 20

  • 8:30 a.m. U.S. – Philly Fed Manufacturing Index, Unemployment Claims
  • 10:00 a.m. U.S. – Existing Home Sales

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

Paul Rejczak
Stock Trading 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.

 

Will Stagflation Lead To Higher Gold Prices In 2022?

That is starting to raise fears of “Stagflation” – a period of high inflation accompanied by a slowdown in economic growth.

Early signs of Stagflation are beginning to emerge.

On Tuesday, the New Yorker Federal Reserve reported a negative turn in its manufacturing activity for first time in 20 months.

The New York Empire State Manufacturing Index nosedived to -0.7 points in January from a reading of 31.9 in December. The data indicates that growth is beginning to stall after a period of significant expansion.

Stagflation presents a major problem for policymakers at the Fed and around the rest of the world. There are few tools to combat both inflation and a slowdown at the same time. The strongest fix for an economic slump is to lower interest rates, but those have been at near zero for almost two years.

The other option is to raise interest rates as the Fed and other central banks have signalled they may soon do. However, tightens too much too quickly makes the risk of a recession almost unavoidable.

For traders, all of this means one thing: Gold prices this year will be driven by inflation and the risk that policymakers will call the post-COVID recovery wrong.

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.

‘Queen of Basketball’ Lusia Harris dead at 66

(Reuters) – Lusia ‘Lucy’ Harris, the basketball pioneer who won a silver medal at the 1976 Olympic Games and was the first Black woman inducted into the Basketball Hall of Fame, has died at the age of 66, her family said on Tuesday.

No cause of death was given.

“We are deeply saddened to share the news that our angel, matriarch, sister, mother, grandmother, Olympic medalist, ‘The Queen of Basketball’, Lusia Harris has passed away unexpectedly today in Mississippi,” the family said in a statement.

“She will be remembered for her charity, for her achievements both on and off the court, and the light she brought to her community, the State of Mississippi, her country as the first woman ever to score a basket in the Olympics, and to women who play basketball around the world.”

Harris, the 10th of 11 children, was a standout high school player before attending Delta State, where she won three consecutive national championships and was a three-time MVP. She graduated with a college record of 109-6.

She led the U.S. national team to a gold medal at the Pan American Games in 1975 and a silver the next year at the Montreal Games, which was the first Olympics to have a women’s basketball tournament.

She was drafted by the NBA’s New Orleans Jazz in 1977 but never played in the league, instead choosing to focus on raising a family. She was inducted into the Naismith Basketball Hall of Fame in 1992 and the Women’s Basketball Hall of Fame in 1999.

Her life story was chronicled in a critically-acclaimed documentary last year entitled “The Queen of Basketball.”

“When I got the call and they said they wanted to do this documentary, I was really kind of surprised,” she told Good Morning America in June.

“That was just unreal.”

(Reporting by Rory Carroll in Los Angeles; Editing by Peter Rutherford)

Investors Focus on the Next FOMC Meeting, 10-year Treasuries and Dollar Strength

This month’s FOMC meeting is scheduled to begin one week from today, on January 25, and conclude on the following day.

U.S. equities vis-à-vis the Dow Jones industrial average had its strongest decline this year. The Dow lost 542.42 points, a decline of 1.51%, and is currently fixed at 35,369.39 points. Yields on the U.S. 10-year Treasury Note gained 10.5 basis points taking the current yield to 1.877%, the highest level since January 2020. The 30-year Treasury bond gained 7.7 basis points taking the yield to 2.192%. The short-term two-year Treasury Note yield broke above 1%, the first occurrence of short-term treasury yields at this level in two years. Lastly, the U.S. dollar rose sharply in trading today, gaining 0.66% or 0.629 points taking the dollar index to 95.78.

U.S. equities, Treasury yields, and the dollar all reacted to the assumption that market participants are anticipating that the Federal Reserve will begin an aggressive series of rate hikes tightening their current accommodative monetary policy to curtail the spiraling level of inflation, which is currently fixed at 7% based upon government data released last week vis-à-vis the CPI (consumer price index).

On Tuesday, January 11, Chairman Jerome Powell speaking before the Senate banking, housing and urban affairs committee in regards to his re-nomination, said, “As we move through this year … if things develop as expected, we’ll be normalizing policy, meaning we’re going to end our asset purchases in March, meaning we’ll be raising rates over the course of the year. At some point perhaps later this year, we will start to allow the balance sheet to run off, and that’s just the road to normalizing policy.”

The Fed Chairman acknowledged that the Federal Reserve had greatly underestimated the speed at which inflationary pressures have risen and indicated that the monetary policy of the Federal Reserve needed to pivot in regards to their dual mandate, which had been focusing on maximum employment in lieu of their acceptable inflationary target of 2%.

The chairman said that it is appropriate to focus upon inflationary pressures at this point. As such, the expectations of rate hikes this year have dramatically changed, with market participants now factoring in three or four interest rate hikes this year.

Although multiple asset classes had strong reactions to the possible actions of the Federal Reserve next week, it was dollar strength that most affected gold prices today. As of 4:25 PM EST, gold futures basis, the most active February 2022 Comex contract, had a modest to fractional decline resulting in a loss of $3.10 or 0.17% and is currently fixed at $1813.30.

Gold daily chart

However, the three other precious metals which trade on the futures exchange all had moderate to strong price gains. Silver led the way with the most active March contract gaining 2.63%, fixing current pricing to $23.52. Platinum gained 1.58%, a net gain of $15.20 with the most active March 2022 futures contract fixed at $979.80, and lastly, palladium gained 1.11%, taking the most active March contract to $1899.

Kitco Gold Index

Gold pricing actually had fractional gains before factoring in dollar strength. This can be clearly illustrated by the KGX (Kitco gold index). As of 4:28 PM, EST spot gold is currently fixed at $1813.60, based upon normal trading adding $4.00 worth of value and dollar strength taking away $9.60.

Our technical studies indicate that the low achieved today in February gold futures which occurred at $1804.70, is just above a key and critical support level, which is based upon the 61.8% Fibonacci retracement level fixed at $1804.60. Our studies also indicate that current resistance is at $1833.30, ,mkbased on a 38.2% Fibonacci retracement level. The data set used for our retracements begins at $1758, the low of November 3, and concludes at $1879.50, the highs achieved on November 16.

Wishing you as always good trading and good health,

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

Gary S. Wagner

Silver Prices Buck the Trend and Rally Above Key Resistance

Silver prices moved higher on Tuesday despite weakness in gold prices. Silver seemed to buck the trend despite a stronger dollar. U.S. Treasury yields surged. The U.S. interest rate markets are now pricing in 4-basis point hikes in 2022, with a 70% chance of a 4th hike. The 10-year yield hit the highest level in more than 2-years above pre-pandemic highs. The 2-year yield curve also made a pre-pandemic high. The higher yields are putting downward pressure on some commodities, but those focused on growth seemed to benefit.

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Technical Analysis

On Tuesday, silver prices moved higher and pushed above short-term resistance. The former resistance support is seen near the 50-day moving average at $23.15. Resistance is seen near the 200-day  moving average at 24.65. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are now overbought. The fast stochastic is printing a reading of 88, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Silver Markets Looking to Break Out

Silver markets have rallied during the trading session on Tuesday to reach towards the $23.50 level. This is an area that of course is a major resistance barrier, and we need to break above there and perhaps even close above there in order to go higher. All things being equal, the 200 day EMA is sitting at roughly $24 level, and that of course makes quite a bit of sense as a target and an area of trouble. If we can break above there, then obviously silver really starts to pick up momentum, and it is likely we would go looking towards the $25 level.

SILVER Video 19.01.22

That being said, if we pull back from here it is likely that the bottom of the candlestick for the trading session on Tuesday should offer support. All things been equal, this is a market that I think will be very noisy but pay special attention to the US dollar as a falling US dollar could turbocharge silver and send it much higher. I would also bring to your attention to the $22 level underneath as it has been major support.

The $22 level offer support all the way down to the $21.50 level, and therefore if we were to somehow turn around a break down below there it would be catastrophic for silver. That being said, this looks like a market that is trying to bounce from extreme lows, and perhaps get towards the top of the larger consolidation area, meaning that we could very well get to that $25 level given enough time.

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

Silver Tests Resistance At $23.50

Silver ETF Rallies As Gold/Silver Ratio Declines

Silver is currently trying to settle above the resistance at $23.50 while U.S. dollar is gaining ground against a broad basket of currencies. Meanwhile, iShares Silver Trust is trying to settle above $21.60.

The U.S. Dollar Index is testing the resistance at the 50 EMA at 95.55. In case the U.S. Dollar Index manages to settle above this level, it will move towards the next resistance at the 20 EMA at 95.70 which may be bearish for silver and gold price today.

Gold is currently trying to settle below the support at $1815 while SPDR Gold Trust is trying to get below $169.50. If gold settles below $1815, it will head towards the next support at $1800 which will be bearish for silver.

Gold/silver ratio gained strong downside momentum after it managed to settle below the 50 EMA at 78.35. Currently, gold/silver ratio is trying to settle below 77.50. In case this attempt is successful, gold/silver ratio will move towards the 77 level which will be bullish for silver.

Technical Analysis

silver january 18 2022

Silver managed to settle above the resistance at $23.20 and is testing the next resistance level at $23.50. In case this test is successful, silver will move towards the resistance at $23.70. RSI remains in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

A move above the resistance at $23.70 will open the way to the test of the resistance at $24.00. If silver gets above this level, it will head towards the next resistance at $24.20.

On the support side, the previous resistance at $23.20 will serve as the first support level for silver. If silver settles below this level, it will move towards the next support which is located near the 50 EMA at $23.00.

A successful test of the support at $23.00 will lead to a test of the next support level near the 20 EMA at $22.90. If silver declines below this level, it will head towards the next support level at $22.75.

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

Daily Gold News: Tuesday, Jan. 18 – Gold’s Further Consolidation

The gold futures contract gained 0.13% on Monday, as it extended its short-term consolidation following the recent advance and another breakout above the $1,800 level. Gold price was gaining in a reaction to the weakening U.S. dollar, among other factors, and the market got close to the previous highs again. On Jan. 3 gold reached the local high of $1,833 before reversing lower, and on Jan. 7 it traded as low as $1,781.30. This morning the yellow metal is trading slightly lower, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.3% lower this morning, as it is retracing some of its recent advance. What about the other precious metals? Silver is 0.4% lower, platinum is 0.2% lower and palladium is 1.5% higher. So the main precious metals’ prices are lower this morning.

Today we will get the Empire State Manufacturing Index release at 8:30 a.m. and the NAHB Housing Market Index release at 10:00 a.m.

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

Tuesday, January 18

  • 5:00 a.m. Eurozone – German ZEW Economic Sentiment
  • 8:30 a.m. U.S. – Empire State Manufacturing Index
  • 10:00 a.m. U.S. – NAHB Housing Market Index
  • 4:00 p.m. U.S. – TIC Long-Term Purchases
  • Tentative, Japan – BOJ Press Conference
  • All Day, Eurozone – Eurogroup Meetings

Wednesday, January 19

  • 8:30 a.m. U.S. – Building Permits, Housing Starts
  • 8:30 a.m. Canada – CPI m/m, Common CPI y/y, Median CPI y/y, Trimmed CPI y/y, Core CPI m/m
  • 7:30 p.m. Australia – Employment Change, Unemployment Rate

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

Paul Rejczak
Stock Trading 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 Markets Stabilize and 50 Day EMA in Quiet Trading

Silver markets had electronic trading going, but a bulk of the bigger traders were probably on the sidelines as it was a holiday in the United States, being Martin Luther King Jr.’s birthday. That being said, the market seems to be hovering around the 50 day EMA as we have seen previously, which is an area that attracts a lot of technical traders. The question now is whether or not the 50 day EMA will hold as support or resistance? It is kind of an open question at this point, so one should probably pay quite a bit of attention to the idea of a bigger move coming.

SILVER Video 18.01.22

If we break down below the lows of the last couple of days, then it is very possible that we could go looking towards the $22 level, an area that of course has been important multiple times as major support. In fact, this area extends all the way down to the $21.50 level, making it more or less a “support zone.” To the upside, if we were to break above the highs of both Thursday and Friday, and basically the $23.50 level, silver could start to take off to the upside and make a bigger move.

Until we make some type of decision, I would stay away from this market, but it certainly looks as if we are about to make that decision relatively soon. With this being the case, I think it is only a matter of time before this market takes off and starts to pick up momentum again. Tuesday should be rather important.

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

Silver Is Mostly Flat At The Start Of The Week

Silver Remains Stuck Near The $23 Level

Silver is currently trying to settle back above $23.00 while U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 95.20. In case this test is successful, the U.S. Dollar Index will move towards the resistance at 95.40 which will be bearish for silver and gold price today. Stronger dollar is bearish for precious metals as it makes them more expensive for buyers who have other currencies.

Meanwhile, gold made an attempt to settle below the support at $1815 but failed to develop sufficient downside momentum and remained in the $1815 – $1830 range. In case gold declines below $1815, it will gain additional downside momentum and move towards the next support level which is located near the 50 EMA at $1800.

Gold/silver ratio is currently trying to settle above the 20 EMA at 79.25. A move above the 20 EMA will push gold/silver ratio towards the resistance at 79.50 which will be bearish for silver.

It should be noted that U.S. stock markets are closed today, so ETFs like iShares Silver Trust and SPDR Gold Trust are not trading.

Technical Analysis

silver january 17 2022

Silver is testing the resistance level at the 50 EMA at $23.00. In case silver manages to settle above the 50 EMA, it will move towards the next resistance level which is located at $23.20.

RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge. If silver settles above $23.20, it will move towards the next resistance level at $23.50.

On the support side, the nearest support level for silver is located at the 20 EMA near $22.85. If silver moves below the 20 EMA, it will get to the test of the support at $22.75. A move below this level will push silver towards the support level which is located at $22.60.

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

Speculators Rotate Towards Crude Oil and Natgas

A week that saw continued stock market weakness and rising bond, albeit at a much reduced pace after Jerome Powell pledged to do what’s necessary to reduced inflation while at the same time prolonging the economic expansion. The dollar traded weaker ahead of last Wednesday’s, thereby supporting a strong rally in commodities led by energy and industrial metals.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Commodities

The Bloomberg Commodity Index jumped 2.2% during the reporting week to January 11 with a 6.3% gain in energy and 1.2% in industrial metals offsetting weakness across the agriculture sector which with the exception of coffee and cocoa saw broad losses led by sugar and hogs. Responding to these developments, money managers accumulated fresh longs across the energy sector, not least in crude oil, while cutting back on exposure across all other sectors.

In crude oil, the combined net long in Brent and WTI jumped by the most since November 2020 to reach 538k lots or 538 million barrels, still well below the most recent peak at 737k lots from last June. A US cold blast helped send natural gas up by 14% and the net long up by 30% to 163k lots.

In the other sectors of metals and agriculture, speculators opted to reduce their exposure with the few exceptions being soybeans, cocoa and coffee. Rangebound HG copper as an example saw its net long reduced by 15% to 22.2k lots, primarily due to increased short selling, some of which were probably stopped out during the failed breakout attempt above $4.47 towards the end of last week. Gold and silver both saw net selling , while the platinum short jumped 86%.

In agriculture, speculators increased their long positions in all three soybeans contract, the corn long was cut by 6% while the CBOT wheat short jumped by 40% to an 18-month high. In softs, the sugar long continued to be cut, this time by 61.6k lots to 76.5k lots, and since hitting a cycle peak last August the net long has now been reduced by 72% to a near 18 month low. Cocoa flipped back to a small net long, the coffee long rose 4% while the cotton long was cut by a similar percentage.

Market comments from today’s Market Quick Take:

Crude oil (OILUSFEB22 & OILUKMAR22) trades mixed with Brent crude oil briefly challenging the double-top at $86.75, a seven-year high, before having a rethink as China GDP and retail sales slowed amid ongoing measures to curb the spreading of the omicron variant.

The prompt spreads in WTI and Brent remain elevated at 63 and 74 cents per barrel, thereby signaling rising tightness. Later this week monthly Oil Market Reports from OPEC on Tuesday and IEA on Wednesday will shed some further light on the current situation. Speculators, a little late to the recent rally, boosted bullish oil bets in WTI and Brent bets by the most in 14 months last week.

Copper (COPPERMAR22) slid the most in seven weeks on Friday as weaker-than-expected U.S. economic data (see below) together with weakness in China added to concerns that global growth may slowing amid rising inflation and the spreading virus. High Grade’s drop back below $4.50 triggered some stop loss selling from recently established longs before stabilizing overnight after China, the world’s top consumer, cut rates to support its economy. The worry over tight supplies, however, has not gone away and should cushion any short-term weakness.

Gold (XAUUSD) remains resilient despite Friday’s renewed surge in bond yields as the market continues to price in the prospect of rising US interest rates, potentially at a more aggressive pace than previously expected. Support continues to build in the $1800-area while a break above $1830 could see it target $1850 ahead of the November peak at $1877.

Forex

In forex, the major flow was selling of JPY, where the net short increased by 25.3k lot or the equivalent of $2.7bn. Additional selling of AUD (-2.1k lots) took the net short to a fresh record short at 91.5k lots. The EUR position flipped back to a net long after speculators bought 7.6k lots while the GBP short was reduced by 26%. Overall, the dollar long against ten IMM currency futures and the Doller Index rose by a small 1% to $23.5 billion.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Daily Gold News: Monday, Jan. 17 – Gold Price Goes Sideways

The gold futures contract lost 0.27% on Friday, Jan. 14, as it continued to fluctuate within a short-term consolidation. Recently gold price was gaining in a reaction to the weakening U.S. dollar, among other factors, and the market got close to the previous highs again. On Jan. 3 gold reached the local high of $1,833 before reversing lower, and on Friday, Jan. 7 it traded as low as $1,781.30. This morning the yellow metal is trading slightly above its last Friday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.1% higher this morning, as it is trading within a short-term consolidation. What about the other precious metals? Silver is 0.1% higher, platinum is 0.2% lower and palladium is 0.2% higher. So the main precious metals’ prices are virtually flat this morning.

Friday’s Retail Sales release has been much worse than expected at -1.9%. Today we will likely see low volatility market because of a bank holiday in the U.S.

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

Monday, January 17

  • Tentative, Japan – BOJ Outlook Report, Monetary Policy Statement, BOJ Policy Rate
  • All Day, U.S. – Bank Holiday
  • All Day, Eurozone – Eurogroup Meetings

Tuesday, January 18

  • 5:00 a.m. Eurozone – German ZEW Economic Sentiment
  • 8:30 a.m. U.S. – Empire State Manufacturing Index
  • 10:00 a.m. U.S. – NAHB Housing Market Index
  • 4:00 p.m. U.S. – TIC Long-Term Purchases
  • Tentative, Japan – BOJ Press Conference
  • All Day, Eurozone – Eurogroup Meetings

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

Paul Rejczak
Stock Trading 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.

 

Here’s Why The Current Commodity Supercycle Will Be Much Bigger Than Ever Before

That’s the common view, amongst a long list of Wall Street banks from Goldman Sachs to JPMorgan. Last week, the world’s largest asset manager – Blackrock also joined the list with their prediction that Commodities will be the best performing asset class in 2022.

There are plenty of reasons why the world’s most powerful financial institutions are “extremely bullish” on commodities. These include rapidly surging global inflation, tightening supply vs soaring demand, logistical bottlenecks to ever growing supply chain issues – all combined with a very disruptive economic recovery from the pandemic that shows no signs of fading anytime soon.

And let’s not forget the switch toward a greener world, which is fuelling fierce demand for Commodities such as Aluminium, Copper, Cobalt, Nickel, Lithium and Uranium as economies race to decarbonize the world by 2030.

In fact, the early signs already look promising.

Last week, Aluminium prices hit an all-time record high. Whilst Nickel prices surged to a decade high. Elsewhere, Oil prices skyrocketed above $84 a barrel to hit an eight-year high.

The previous two supercycles took place in the 1970s and the 2000s. In both cases, the commodities sector resembled the identical tell-tale signs, as it’s displaying again right now.

All in all, the evidence is mounting that a new commodity supercycle is underway. It goes without saying, that commodities are definitely one of the hottest and most exciting asset classes to watch in 2022.

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.

Here Comes the Stagflation; (Got Gold?)

Specific to the three-year run from 1973 (and its intolerable lines for gasoline) through 1975, the annual Consumer Price Index came in respectively at 6%, 11%, and 9%, (kinda akin to this past year). The price of Gold settled 1972 at 58; come 1975, it settled at 141: that’s a three-year net increase of +143%. Got Gold?

150122_gold_scoreboard

Then came President Peanut, (with a resurgence of petrol queues), and by 1980 Gold in a hyper-spike traded up to 873, (before unraveling to 300 by 1982 as President Gipper and the Economic Recovery Tax Act stimulatively kicked into gear).

Fast forward to today and we ask what’s next? In this time of investors and sovereigns being disinterestedly impervious to any and all Gold stimuli, who knows? To the hardened analyst, everything that used to work no longer does, as algorithms — bereft of all that is fundamental and even at times technical — are running the show. But common sense — as is its historical wont — shall return along with positive interest rates (savings accounts), acknowledgment of non-supportive earnings (S&P “dip”), and recognition of real value (Gold and Silver).

Indeed, the FinMedia Word of the Week was : “7% inflation for 2021!” they shrieked. “Fastest pace since 1982!” they screeched. “It is far different this time!”, they preached.

Sheesh. ‘Course, statistical selectivity set up the staggering story. Obviously the “7%” came from simply summing 2021’s 12 individual monthly top-line CPI increases. What if, instead, we summed 36 months: that gives us “10.5%”, a total less than the “11.3%” into the summer of 2008. Takes some of the edge off that four-decade drama, doesn’t it? After which what happened? The S&P “dipped” -48.8% over the ensuing six months, (or if measured from October 2007’s high, -57.7%), as the shearing of Lehman et alia came to pass, (following which the price of Gold rose +108% into 2011).

But let’s get to the point of the present, for ’tis the unmentionable that wrecks the whole story:

  • This past October’s CPI pace was +0.9%;
  • It then slowed a pip to November’s pace of +0.8%;
  • And now in turn for December it cooled to +0.5%.

In other words, the pace of CPI inflation growth is actually slowing!

“But you can’t make a trend out of just three months, mmb…”

Watch us, Squire. Linearly trendline those three months and come March 2022’s CPI pace ‘twould actually be DEflationary! But to your point, we are not predicting that. Inflation is all around us.

Still, did you notice that December’s wholesale Producer Price Index (PPI) pace — which logically leads the CPI — was just +0.2%?

Either way, be it inflation — or more likely stagflation — with a doubling of the Federal Reserve’s overnight lending rate in the balance, we recall: “Double double toil and trouble. Fire burn and cauldron bubble.” –[W.S., 1623]. Move Macbeth to modern-day and with the muted real increase in earnings we’ve Acte I of “Has the S&P Crashed Yet?”

“Muted, mmb?”

Clearly so, Squire. The “live” price/earnings ratio of the S&P 500 is now 47.7x. Its lifetime median is 20.4x, (and the average is 22.1x). To align with that as has always historically happened, if the ever-stubborn “P” refuses to go down, then the lackluster “E” needs to go up: indeed more than double!

Is it happening? No. With Q4 Earnings Season underway, five major Banks reported yesterday (Friday). Their average earnings increase over a year ago? +11%. That’s it. Zip, Zero, Nada. Even as the FinTimes reported on Wednesday that “US companies tipped for strong earnings season…” (Do call their editor and inform them of what “strong” need be, i.e. over well over +100%).

But wait, there’s more (or better stagflatingly-stated, less). We’ll get to Gold’s perpetually sleepy analytics in a sec, but first if perchance you haven’t already looked at the website, here is the Economic Barometer. Not so great for President Ohno:

150122_econbaro

That rightmost drop is the vastest five-day oscillative plunge in the Econ Baro since March of last year, and moreover (should you be scoring at home) it ties for second worst in the past six years. Amongst the low-lights of the week’s incoming metrics, Retail Sales actually shrank via their second-worst December in the 24-year history of the Baro. “What happened to Christmas?” The month’s Industrial Production shrank as well. “I can’t get the proper equipment!” –[Algernon, “Help!”, ’65].

Then from the Fed came nothing but calls for an urgent end to stimulus, with rate rises in the balance. (Still nursing that variably-priced debt? Get ready). From Chair Powell himself to Fed officials Barkin, Bostic, Mester, Brainard and Evans (after whom we stopped counting): flocking together are those birds of a feather. And again we opine: why are they waiting for 16 March when they “ought” just pull the trigger a week Wednesday, 26 January?

‘Course the Fed could fool us and raise rates inter-meeting, à la Paul Volcker’s 06 October 1979 “Saturday Night Massacre”, following which the S&P fell a full -10% in just 15 trading days; (if you’re still scoring, that in today’s “Dow” terms would be a 3,600-point drop).

Further for the record, Gold settled that prior day (05 October 1979) at 393, from which it lurched +122% to the aforementioned 873 come 21 January 1980, (i.e. in less than four months). Again we query: “Got Gold?”. Repeat same today and from 1817 we’d see 4034, practically smack-on today’s opening Gold Scoreboard “valuation” level of 4087! Not so far-fetched after all, is it? No ’tisn’t.

However, then there’s “The Now”, indeed the “Sleepy Now”. A week ago we made a fairly iron-clad technical case for Gold to fall near-term some “62 points, suggestive of 1735”. ‘Twas based on Gold’s daily MACD (“moving average convergence divergence”) having approximated such drop on the prior 12 like negative crossings. But as stated above: “…everything that used to work no longer does…” So rather than drop, Gold netted a sleepy up week as we next see per the rightmost weekly bar:

150122_gold_weekly

Puts us in mind of George Kennedy’s observation of the north face climbers in “The Eiger Sanction” (1975): “…they won’t be able to come down… they won’t be able to go up… they’ll be stuck…” That’s Gold these days.

Next, we break it down into the last three months of daily bars for Gold on the left and Silver on the right. Whilst both precious metals are for the moment in linear regression uptrends, the declining “Baby Blues” depict such respective trends as weakening:

150122_gold_silver_dots

Then we’ve the 10-day Market Profiles for Gold (at left) and Silver (at right). If you get out your Funkin’ Wagnalls and look up the definition of “hodgepodge”, you’ll see these two charts:

150122_gold_silver_profiles

And for what ’tis worth in a stagnant market — albeit with stagflation lurking in the balance — here’s The Gold Stack:

The Gold Stack

Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4087
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Gateway to 2000: 1900+
2022’s High: 1833 (06 January)
Trading Resistance: 1821
Gold Currently: 1817, (expected daily trading range [“EDTR”]: 19 points)
Trading Support: 1815 / 1809 / 1800 / 1791
The 300-Day Moving Average: 1807 and falling
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
10-Session “volume-weighted” average price magnet: 1783
10-Session directional range: down to 1781 (from 1833) = -52 points or -2.8%
2021’s Low: 1781 (08 March)
The Weekly Parabolic Price to flip Short: 1768
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

Finally: we bid a fond farewell to LIBOR. During our three-year stint with Barclays back in the 80s, ’twas really cool to talk LIBOR. It was like being “in the know”, a real cocktail party attention-getting dazzler versus boring old “Prime”: “We’re international, baby. The Big Time!” And now ’tis gone. But today with stagflation in the offing, we primed to see Gold become The Big Time!

Cheers!

www.deMeadville.com