Category: Market News

Silver Price Analysis: XAG/USD’s rebound stalls at critical resistance near $26.50

Sirhc
  • Silver’s comeback from weekly lows loses steam.
  • Is it a dead cat bounce amid dollar retreat?
  • $26.50 barrier is a tough nut to crack for the XAG bulls.

Silver (XAU/USD) witnessed good two-way businesses so far this Wednesday, as volatility continues to play out amid fast-moving markets and dollar dynamics.

The white metal, initially, extended Tuesday’s tumble from near 7.5-year highs above $29 and dropped as low as $23.43 before staging a V-shaped reversal towards late Asia.

However, the rebound faltered, as the bears continue to guard the $26.50 level, which is the powerful confluence of the horizontal 200-hourly Simple Moving Average (HMA) and Fibonacci 50% Retracement (Fib) level of the recent correction.

Acceptance above that level, the buyers will aim for the next barrier aligned around $27.25, where the 61.8% Fib level of the same fall coincides with the bearish 50-HMA.

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Gold & Silver Prices Bounce Off Key Support Following Bond Fuelled Crash

Sirhc

US REAL YIELDS A KEY DRIVER FOR GOLD

Yesterday saw the precious metals complex come under significant selling pressure with the gold price dropping 5.7%, the largest fall since April 2013, while silver crashed 14.95%, marking its biggest plunge since October 2008. While arguably precious metals were in need of a correction given their sizeable rise, the fall coincided with a surge higher in bond yields, in particular US real yields, which have been the largest driver behind the move in the precious metals complex.

TOP IN US REAL YIELD MARKS SHORT-TERM TOP IN GOLD
WHY THE SURGE IN BOND YIELDS?

Among the key catalysts behind the push higher in US yields was the anticipation of a large supply of US Treasuries. Last week’s quarterly refunding announcement saw a record USD 112bln in borrowing for this week’s auctions. This is USD 16bln larger than the package announced last quarter and also marked an interim bottom in US 10yr yields (now 17bps higher since the record low). Alongside this, the surge in corporate issuance is another contributing factor behind the push higher in US bond yields as well as better than expected US data, most notably Friday’s US NFP report that signaled that the recovery remains intact.

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Gold, silver ETFs and miners on track for worst daily decline since March

Sirhc

Courtesy of Market Watch By Andrea Riquier

Exchange-traded funds that track precious metals and miners slumped Tuesday in premarket trade, on track for their biggest daily decline since March, suggesting that a long run-up might be on track to reverse course. The SPDR Gold Shares ETF GLD, 0.94% was down 3.2%, while the VanEck Vectors Gold Miners ETF GDX, 2.11% lost 4.5%. The iShares Silver Trust SLV, 3.13% slid about 6%, and the Global X Silver Miners ETF SIL, 3.98% was down about 5.5%. Both precious metals GC00, 0.13%SI00, -0.17% have surged to record highs over the past several weeks, boosted by declining interest rates and geopolitical concerns.

Opinion: Gold is a foolish place to put your money right now if you check the facts

Sirhc

Gold slumps when its inflation-adjusted price is as high as it is now

Gold today is nearly as overvalued as it’s ever been over the past five decades. That’s the conclusion reached by just-released research from Campbell Harvey, a finance professor at Duke University; Claude Erb, a former commodities portfolio manager at TCW Group, and Tadas Viskanta, founder and editor of the investment blog AbnormalReturns.com.

Their research couldn’t be more timely. In the wake of gold GC00, 0.01% breaking above the $2,000 level, enthusiasm for the yellow metal has reached a fever pitch. Earlier this week, for example, MarketWatch reported that a fund manager forecasted that gold could double to to $4,000 an ounce.

Before I discuss this new research, let me emphasize that its conclusion has nothing to do with the extreme bullishness that has prevailed for several weeks now among short-term gold timers. That’s a bearish omen, as I noted three weeks ago, and gold’s price nevertheless has continued to jump ever higher into all-time high territory.

This new research focuses instead on gold’s fundamental value, in much the same way that Wall Street analysts calculate a stock’s fair value. The fundamental justification for a higher gold price that is most often mentioned is inflation. This rationale is repeated so frequently, in fact, that few of us stop to subject it to historical scrutiny. If we did, we would find that it enjoys little statistical support.

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Gold Will Beat U.S. Stocks in Turbulent Market, Strategists Say

Sirhc

Gregor Stuart Hunter, Bloomberg News

A worker lifts a gold ingot from a cooling bath at the Uralelectromed Copper Refinery, operated by Ural Mining and Metallurgical Co. (UMMC), in Verkhnyaya Pyshma, Russia, on Thursday, July 30, 2020. Gold surged to a fresh record Friday fueled by a weaker dollar and low interest rates. Silver headed for its best month since 1979. Photographer: Andrey Rudakov/Bloomberg

(Bloomberg) — Gold and U.S. stocks could part ways during a fresh round of market turbulence, ending a three-month period in which their returns were almost yoked.

Renewed deterioration of the global economy and more lockdowns to prevent Covid-19 from spreading should hit equities but leave gold standing, according to Societe Generale.

“While the correlation between gold and equities has turned unambiguously positive since the March lows in risk assets, another serious bout of risk aversion could cause the performances of equities and gold to diverge,” SocGen strategists including Jitesh Kumar wrote in a note dated Aug. 4, echoing comments from other strategists.

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How China & Russia’s De-Dollarization Could Boost Record Gold Rally

Sirhc

China and Russia are ditching the U.S. dollar at a faster pace. In the process, they are fueling the record rally in gold.

  • In U.S. dollar terms, the price of gold has hit a new record high at $2,055.
  • Strategists and politicians fear that the U.S. dollar is at risk due to various macro factors.
  • Russia and China’s acceleration of the “de-dollarization” process puts more pressure on the dollar.

China and Russia are ditching the U.S. dollar at a faster rate. In the process, they are indirectly fueling the record gold rally.

Since July 1, the price of gold has increased from $1,454 to $2,055 at the most recent peak–a gain of 41.3%.

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Gold Price Surges Over $2,000/oz For The First Time In History

Sirhc

Gold Breaks $2,000/oz and Surges to $2,042/oz – New All Time Record Nominal Highs

◆ Gold surged past the important $2,000/oz level to a new record high today due to concerns about the outlook for stocks, bonds and other assets in an increasingly vulnerable U.S. and global economy.

◆ Gold has surged to new record highs in all major currencies today including new record highs in British pounds at £1,554/oz and in euros at €1,720/oz due to concerns about the outlook both for assets and currencies such as the euro, pound and all fiat currencies.

◆ The price of gold surged over $2,042/oz, supported by the mounting virus and economic lockdown fallout and record deficit spending by governments and central bank currency creation to buy bonds and others assets in the debt laden financial system.

◆ The explosion and destruction in Beirut highlighted the risk of war in a very unstable Middle East and a scramble for safe haven assets as some 2,700 tonnes of ammonium nitrate exploded in Beirut, reducing parts of the Lebanese capital to rubble.

◆ Gold has reached new record nominal highs due to a combination of financial, economic, monetary and geopolitical risks and many analysts are forecasting further gains in the coming months with the $3,000 per ounce level being call for by many analysts including GoldCore.

◆ There are increasing concerns about the value of the dollar and other currencies due to currency creation on a scale not seen since Weimar Germany. This comes at a time when savers are not getting any yield on their bank deposits and are increasingly facing negative rates on depreciating currencies.

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PRECIOUS-Gold bursts through $2,000/oz barrier to new record

Sirhc

* Gold needs a period of consolidation -technical analysts

* Silver rises to more than 7-year high

By Eileen Soreng

Aug 5 (Reuters) – Gold soared to a record high on Wednesday as a weakening dollar, falling returns on U.S. bonds and a break above historic resistance at $2,000 an ounce added momentum to buying by investors seeking a safe store of value.

As the COVID-19 pandemic has roiled markets, gold has gained nearly 35% this year and is one of 2020’s best performing assets.

Investors fear economic stimulus unleashed in response to the pandemic will trigger inflation, devaluing other assets, and keeping bond yields historically low, which enhances the appeal of non-yielding gold.

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Silver Just Had Its Best Month In 40 Years: Here Are July’s Best And Worst Performing Assets

Sirhc

by Tyler DurdenMon, 08/03/2020 – 13:22

When looking at the torrid market performance in July, Deutsche Bank’s Jim Reid notes that silver (+35%) had its best month since December 1979 while the dollar the worst for a decade. US equities had a good month in spite of rising virus caseloads due to a strong earnings season relative to expectations, especially in tech towards the end of the month. YTD Silver, Gold and the NASDAQ have been the three best performers while at the bottom of the leaderboard Brent, WTI and European Banks are all down at least 30%.

Below we present some of the key highlights from Deutsche Bank’s July 2020 performance review

While July proved to be another decent month for risk assets, it was the performance of two other assets in particular which caught the eye. The first was Silver, which had its strongest month since December 1979. The second was the weakness in the USD, which ended with the USD spot index dropping by the most in a single month since September 2010.

Indeed the impact of the latter was fully felt when looking at returns in USD terms, with 36 of the 38 assets in DB’s sample finishing with a positive total return. In local currency terms, that number dropped to a still-impressive 30 assets. As markets move into August, typically a more subdued month for volumes but perceived to be a weaker month for risk, the focus remains on the reopening of economies on the one hand and signs of rising cases in certain countries on the other.

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