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Gold bulls frustrated by disappointing price action and are taking a break

Neils Christensen 

Friday April 30, 2021 13:11

Frustration is creeping into the gold market as the price has been unable to break above $1,800 an ounce even in a market environment that is seeing rising inflation pressures, ultra-accommodative monetary policy, and a government that wants to spend more money.

According to the latest Kitco News Weekly Gold Survey, analysts are warning investors that if gold can't go up in this current environment, then look for lower prices. However, many analysts say that a retest of recent support could attract new buying momentum to the marketplace.

"Now is not the time to throw in the towel for gold," said Bob Haberkorn, senior commodities broker with RJO Futures. "Gold is struggling now, but at some point, it will have its day in the sun."

The gold market has seen a dramatic shift in sentiment as prices cannot push above critical resistance at $1,800 an ounce. Two weeks ago, the Kitco News gold survey saw, for the first time, no bearish votes among Wall Street analysts.

This week, for the first time in the survey's history, there were no bullish votes for gold.

"Gold is doing what it does best… frustrating gold investors," said Ole Hansen, head of commodity strategy at Saxo Bank.

This week, 15 analysts participated in Kitco News' gold survey. Of those, eight analysts, or 53%, said they were bearish on gold; at the same time, seven analysts, or 47%, said they were neutral on prices next week.

Meanwhile, a total of 954 votes were cast in online Main Street polls. Of these, 512 respondents, or 54%, looked for gold to rise next week. Another 249, or 26%, said lower, while 193 voters, or 20%, were neutral.

Gold Survey 

Wall Street

Bullish 53%

Bearish 0%

Neutral 47%


Main Street

Bullish 54%

Bearish 26%

Neutral 20%

Some analysts have noted that while gold has been unable to break above $1,800 an ounce. It has also managed to find strong initial support above $1,750 an ounce. June gold futures last traded at $1,765.90 an ounce, down 0.61% from last week.

While sentiment has soured in the gold market, looking beyond the headlines, many analysts said that they would look to buy gold at a lower price.

"Gold needs to test the $1,745 level, a ceiling for the past two months from which it broke out earlier in the month. The sooner gold tests this new floor, the better. The longer term is very positive for gold, with increasing inflation now quite evident, but a Federal Reserve refusing to do anything about it," said Adrian Day, president of Adrian Day Asset Management.

The question many analysts are asking now is how low gold prices could go in the near term. Marc Chandler, managing director at Bannockburn Global Forex, said that if $1,750 an ounce doesn't hold, the next level he is watching is $1,724.

"The momentum indicators like the MACD and Slow Stochastic appear poised to turn lower. It already approached the $1752 area that holds the 38.2% retracement of the April rally," he said.

Although he sees long-term potential for gold, Haberkorn said that the precious metal would struggle as it faces tough competition from copper, lumber, equities, and even bitcoin as these markets are seeing significant upside momentum.

"There is strong risk-on sentiment in the marketplace right now, and nobody wants to hold and sit on boring gold," he said. "Investors see other exciting places in the commodity markets to invest their money."


Gold price pushes to nearly 2-week high as economic data fails to support U.S. dollar

Neils Christensen

Tuesday April 06, 2021 11:03

(Kitco News) - The gold market is taking advantage of a weaker U.S. dollar and falling bond yields as prices rise to a nearly two-week high and look to challenge a critical resistance level around $1,750 an ounce.

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According to some analysts, sentiment in gold has been slowly improving after bouncing off a double bottom last week and pushing back above $1,700 an ounce. However, many analysts say that the gold market will remain stuck in neutral if it can't at least get past $1,750.

June gold futures last traded at $1,745 an ounce, up nearly 1% on the day.

"The market is pondering whether the double bottom has sowed the foundation for a recovery," Ole Hansen, head of commodity strategy at Saxo Bank, said in a report Tuesday. However, he added that the true test in gold comes in at $1,765 an ounce.

"After losing 10% during the first quarter to come bottom of the performance table, the technical level it needs to break as a minimum remains at $1765," he said. "Most of the recovery has been a result of a weaker dollar and yields that have stopped rising. Stronger than expected inflation remains gold, and with that, silver's best chance of recovery."

Carsten Fritsch, precious metals analyst at Commerzbank, noted that some tailwinds are starting to pick up for the gold market, even as the precious metal continues its bottoming process.

Fritsch noted that gold is finding some technical momentum as solid economic data fails to provide support for the U.S. dollar and bond yields. Although still holding at their highest levels in more than a year, the yield on 10-year notes is currently trading at 1.69%.

The drop in yields comes as the International Monetary Fund raised its growth forecast for the U.S. The IMF expects the U.S. economy to grow 6.4% this year, up compared to its January forecast for 5.1% growth.


For the global economy, the IMF expects to see growth of 6%, which would be the strongest year since 1976.

Last week U.S. economic data showed continued improvement in the labor market as more than 900,000 workers found jobs last month. Data also showed record sentiment growth in both the manufacturing and service sectors.

"With U.S. yields refraining from pushing higher in recent sessions, this has provided gold with some reprieve, but given that U.S. economic data has been printing strong readings, upside risks do remain for U.S. yields," said Justin McQueen, market analyst at

Fritsch said that the U.S. dollar and bond yields aren't rising because investors continue to expect the Federal Reserve to maintain its ultra-accommodate monetary policies. Inflation has now become the threat to watch for, he said.

"Concerns could emerge instead that the U.S. economy might also overheat as a result of the massive fiscal stimulus, that inflation risks could rise considerably and that the Fed could fall 'behind the curve.' In such a scenario, gold would be the big winner," he said.

However, Fritsch said that for gold to overcome its current malaise, prices need to push above $1,760 an ounce.

Not all analysts are convinced that gold prices can push higher in the near term. Commodity analysts at TD Securities noted that the Federal Reserve's relaxed attitude to the bond market selloff, which is driving yields higher, remains a significant risk to the gold price.

"With the Fed's put far out of the money, flows into gold are likely to remain subdued," the bank said in a report Tuesday.

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Gold, silver hit by chart-based futures sellers

Monday March 29, 2021 12:39

(Kitco News) - Gold and silver prices are are solidly lower in midday U.S. trading Monday, on technically related selling pressure from the shorter-term futures traders amid still-bearish near-term charts. The safe-haven metals bulls were disappointed as a mild "risk-off" marketplace mentality to start the trading week did not give gold or silver a decent bid. A stronger U.S. dollar index recently and rising bond yields today are also negative elements for the metals markets. April gold futures were last down $20.70 at $1,711.60 and May Comex silver was last down $0.374 at $24.74 an ounce.


The marketplace Monday is buzzing and still a bit nervous over news that a large investment fund, Archegos Capital Management, late last week quickly dumped $30 billion in holdings, including big positions in Viacom CBS and Discovery, possibly because the firm was over-leveraged and got margin calls. There was some concern about a contagion effect roiling the marketplace this week and some investment banks' stocks shares dropped sharply overnight, but so far the stock and financial markets, in general, are not reacting significantly to the matter. If the markets to see a contagion effect, gold and silver markets could quickly see bids coming in.

Global stock markets were near steady to firmer overnight. U.S. stock indexes are weaker at midday. Today is a holiday-shortened week for many countries that will see their markets closed on Friday to observe the Good Friday holiday ahead of Easter Sunday, including the U.S.

President Biden is set to unveil on Wednesday the first of two expected portions of the next phase of his U.S. economic agenda: a series of infrastructure proposals. The package would cost $3 trillion to $4 trillion and will likely include billions in new tax revenue.

The massive container ship that had been wedged in the Suez Canal, forcing its closure, has been floated and the canal is now operating, according to reports. Oil prices were pressured a bit on this news.

The key outside markets today see the U.S. dollar index near steady after hitting a 4.5-month high late last week. Nymex crude oil prices are slightly lower and trading around $61.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 1.687%.

U.S. economic data due for release Monday is light and includes the Texas manufacturing outlook survey.

Technically, April gold futures bears have the overall near-term technical advantage and have regained downside momentum. Bulls' next upside price objective is to produce a close above solid resistance at the March high of $1,757.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the March low of $1,673.30. First resistance is seen at today's high of $1,732.60 and then at $1,740.00. First support is seen at today's low of $1,703.30 and then at $1,700.00. Wyckoff's Market Rating: 3.0

May silver futures bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the January low of $24.095. First resistance is seen at today's high of $25.15 and then at $25.50. Next support is seen at last week's low of $24.435 and then at $24.095. Wyckoff's Market Rating: 3.5.

May N.Y. copper closed down 425 points at 402.55 cents today. Prices closed nearer the session low today. The copper bulls have the overall near-term technical advantage. However, a 12-month-old uptrend on the daily bar chart has stalled out and prices are starting to trend down. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 420.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 384.90 cents. First resistance is seen at today's high of 408.25 cents and then at 410.50 cents. First support is seen at 400.00 cents and then at last week's low of 394.20 cents. Wyckoff's Market Rating: 6.5.

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Posted March 28th, 2021

After a rapid rise in 2020, the price of gold has plunged in recent months due to a weakening demand by central banks, a lackluster gold  jewelry market and weak investor interest. 

Since countries started their mass vaccination campaigns against the coronavirus, the price of gold has plummeted. Record low levels were reached last August at $2,070 per ounce, when economic and social uncertainty wreaked havoc around the world due to the pandemic.

According to the Bank of America (BofA), there are three main reasons for the decreasing value of gold: the weakening of physical demand, a lackluster jewelry market, and a lack of investor interest.

However, the bank forecast prices could still reach an average of $2,063 an ounce this year.

By February 19, it was around $ 1,770 per ounce, about a six percent drop since the start of this year.

In 2020, the price of gold steadily climbed nearly 22 percent as many countries tried to stem economic bleeding from pandemic lockdowns through stimulus packages and bailouts for businesses.

Bank of America analysts suggest three key headwinds facing the gold market should be monitored:

Weakening physical demand

While central banks’ purchase of gold otherwise traditionally pushed market prices up, BofA underlined that there have been signs of fading demand.

First is the pandemic, which caused a fall in world central banks’ demand for gold. It decreased by nearly 60 percent in 2020, according to the World Gold Council(WGC).

In the fourth quarter of 2020 alone, central banks bought a net of 44.8 tonnes of gold, while it was about 140.7 tonnes a year before that.

Gold’s underperformance over the year led to an increase in reserve portfolios, which led some central banks to spot “an opportune time to obtain liquidity to support their struggling economies,” during the pandemic.

For example, seven central banks around the world decreased their gold reserves over the course of 2020, according to the World Gold Council.

Lackluster jewelry market

The pandemic has been hitting jewelry sales around the world, especially in China, one of the world’s largest markets.

"While activity has since expanded [year over year], it remains below longer-term ranges," the bank’s analysts said.

At the first half of the last year, global demand for jewelry fell 46 percent year-on-year to 572 tons.

Last year, the total annual demand for gold pieces was 34 percent less than it was in 2019, which marks a new annual minimum in history according to observations by the WGC.

Investor pull back

Lack of interest in traditional physical markets from investors was another cause of decreasing gold prices in recent months.

After persistent inflows in the first half of 2020, assets under management at physically backed metals Exchange Traded Funds (ETFs) declined.

Due to discouraged investors, the gold market "has struggled to price in reflation," the bank said.

On the other hand, the increasing rollout of Covid-19 vaccinations has promoted positive economic expectations.

US lawmakers considering a $1.9 trillion fiscal stimulus package has increased inflation expectations.

"Yet, an increase in breakevens has fed straight through into nominal rates. As a result, real rates, usually the key driver of the yellow metal, have remained in a tight range since autumn," BofA added.