Gold News

Gold Trapped In Sideways Drift Between Bearish and Bullish Pillars of Rate Hikes and War

Gold continues to drift sideways around $1,930 an ounce as it is trapped between two equally strong bearish and bullish drivers. The continuation of the war in Ukraine with Russian troops being primed for a fresh offensive in the east of the country is keeping gold supported due to its time-honoured safe-haven appeal. However, gold’s potential for fresh gains is being capped by the hawkish monetary policies of central banks in Europe and the US. Gold ($/g) chart - from Kinesis Exchange - Gold trapped between bearish and bullish drivers Minutes from the March meeting of the Federal Open Market Committee released earlier this week showed that a number of officials would have favoured raising interest rates by 50 basis points, double the increase actually agreed. The minutes also suggested that there will be a further six rate hikes over the course of the year with each one likely to knock a little of the lustre off gold’s appeal to investors with its lack of yield a stumbling block in an environment of rising interest rates. While the European Central Bank still remains some way off interest rates entering into positive territory, with the first hike not forecast until December, it has signalled that the war in Ukraine hasn’t deterred its intention to end net-bond buying in July as the pressure from rising inflation ensure that the time for accommodative monetary policy is over. With no end in sight for the war in Ukraine and central banks set on their medium-term economic policies, gold looks set to continue to drift for a while longer yet, awaiting either a further escalation in the conflict in Ukraine or a breakthrough in peace talks to shake the price into action. Monitor the Gold Price with Kinesis' Live Charts Click Here Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis

Rupert Rowling
Rupert Rowling

08/04/2022

Gold Holding its Ground Despite Fed’s Hawkish Turn

Hawkish comments by Fed Vice Chairwoman Lael Brainard triggered a rally in Treasuries yields and an appreciation in the greenback. Almost 80% of investors are now betting that the Fed will announce an interest rate hike of 50 basis points in its May meeting, as the US central bank seems under pressure to act in order to curb inflation. Over 80% of investors are now also forecasting that rates will be at 2.75% or above, by the end of the year while around 45% of them are predicting rates to be at 3.00% by then, according to the CME FedWatchTool. On the forex market, the U.S. currency has jumped and the EUR/USD is now traded below the 1.09 level. At the same time, the Dollar Index has reached a fresh 23-month-high and is now above 99 points. Gold ($/g) Chart - 24-hour view - from Kinesis Exchange Overall, this macroeconomic scenario has impacted gold only modestly. After soaring to $1,940, bullion fell slightly before finding a solid support in the area of $1,920. Considering the hawkish mode of the Fed, gold is showing significant resilience, while volatility remains low. From a technical point of view, gold remains stuck in a lateral trading range between $1,900 and $1,950. Only a clear break of these levels could be seen as a first directional signal, while investors remain in a ‘wait and see mode’ as they watch out for any significant development in the Ukraine-Russia crisis. Monitor the Gold Price with Kinesis' Live Charts Click Here Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis

Carlo Alberto De Casa
Carlo Alberto De Casa

06/04/2022

Will there be a new ‘gold standard’ for the ruble?

Peace talks between Russia and Ukraine remain extremely difficult and the conflict sadly continues. We have not seen any significant breakthrough in the negotiations in the last 48 hours and investors are looking for more clarity. On the currency market, the Euro is trading just above 1.10 against the U.S. Dollar and investors are keeping a close eye on the Russian Ruble, after its remarkable move last week. Following the sharp collapse seen in February and in the first few weeks of March, when the USD/RUB trading pair jumped to 130. The Russian currency changed direction, gaining 12.5% against the USD last week and returning to levels seen before the beginning of the war. This was due to various factors, including Putin’s decision to demand rubles as a form of payment for Russia’s gas. Further support for the ruble came from Putin’s attempt to stabilize the currency by imposing a temporary ‘gold standard’. Indeed, Russia has fixed the exchange rate between its currency and gold at 5,000 rubles for 1 gram of gold, at least until the end of June 2022. Historically fixed rates have not proven to be a sustainable solution as they end up generating various other issues. In this case, however, this new gold standard is helping Russia to stabilize the ruble, at least in the short term. But this is unlikely to be a long-term fix. Gold ($/g) chart - from Kinesis Exchange In the last few days, gold has traded in a lateral range between $1,900 and $1,950.Bullion has failed to surpass the resistance zone of $1,950 but has managed to remain above the support zone of $1,890-1,900 and the precious metal has started the new week moving laterally between $1,920 and $1,930. From a technical point of view, a break above or below these levels would offer a first directional signal to investors. On the macro front, the war in Ukraine is still one of the main market drivers, of course, but investors are also paying a lot of attention to inflation after the CPI jumped to 7.9% in the US and to 7.5% in Europe. There is now a good chance that the Federal Reserve might hike rates by 50 basis points (from 0.50% to 1%) in May. Find out more about what Kinesis has to offer Learn More Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

04/04/2022

Gold & Silver April Outlook - Monthly Review - 2022

April 2022 – A Look Ahead Developments in Ukraine will remain a key driver of markets in April after a month as dramatic and disconcerting as March. While the fact both sides are engaging in peace talks has to be a good sign, there remains a general uneasiness about Russia’s willingness to stay true to any agreement that may be brokered. At the time of writing, Russia was set to move its troops away from the Ukrainian capital of Kyiv, where they have struggled to make much headway in the face of fierce Ukrainian resistance, and redeploy them in the Donbas region. Russian units are “not withdrawing but repositioning,” as NATO Secretary-General Jens Stoltenberg described it. While the conflict continues to rage, both gold and silver are set to be supported by safe-haven demand. However, with the bulk of the fear trading now priced in, it will take a severe escalation in the violence or the scope of the conflict, perhaps with more countries dragged in, to increase this existing source of demand. On the flip side, any sign of progress in peace talks will see gold and silver come under pressure. Central Banks Take Action The other main driver in April will be the actions of central banks. Any additional increases in interest rates will reduce the appeal of gold and silver for those investors preferring a dividend or yield-bearing asset instead. Inflation figures will also be closely watched to see if there is any sign of the rising costs of living easing. Prior to the conflict in Ukraine, the expectation was that inflation would peak in April but that now seems overly optimistic. Of course, inflation isn’t necessarily all doom and gloom for gold and silver as while central banks hiking rates in reaction is typically a drag for the precious metals, gold and silver are both considered good hedges against inflation as assets that have retained their buying power over centuries. Will Gold & Silver Break Close Correlation? A key development to look out for in April is signs of gold and silver breaking out of their close correlation. While gold looks to have more headwinds than tailwinds to push its price, silver’s more industrial appeal provides it with strong fundamental support, outside of purely geopolitical and macroeconomic factors. Indeed the Silver Institute is forecasting demand for the metal to reach a new record high this year at 1.112 billion ounces. A major source of this burgeoning demand comes from the solar sector, something that is only likely to gain pace as European countries seek to reduce their exposure to Russian fossil fuels. “The outlook for silver’s use in the photovoltaic (PV) industry remains bright,” the Silver Institute said. “Government commitments to carbon neutrality have resulted in a rapid expansion of green energy projects. As a result, even with ongoing efforts to reduce silver loadings, record PV installations are expected to lift silver demand in this segment to an all-time high in 2022.” Silver Supply & Demand Source: The Silver Institute, Metals Focus So while gold can be expected to trade either side of $1,900 an ounce in April, silver has the scope to break out higher. Already the strength of investor support has been shown by how quickly the price has recovered back above $25 an ounce on the five recent occasions it has dipped below that threshold. With $25 as strong support, silver can look upward with the potential to once again test levels not seen since the short-squeeze of 2021. Silver price in March 2022 - 1 hour interval - $/oz chart from Kinesis Exchange Macros & Markets March has been dominated by the dreadful events in Ukraine following Russia’s invasion at the end of February. For the first time since the end of World War II, there is an armed conflict in Europe, resulting in the death of thousands of civilians and soldiers with millions of Ukrainians forced to flee their country and seek refuge elsewhere. Our thoughts and sympathies are with all those people caught up in this war. While our primary concern is with the human suffering caused by the conflict, there is inevitably an economic impact too. In the days and weeks immediately following Russian troops crossing the Ukrainian border, equity markets tumbled with the S&P 500 Index falling to its lowest since June 2021 while the FTSE-100 Index slumped to a five-month low as traders and investors sold out of risk assets in favour of safe havens, including gold and silver. This rush to gold saw its price top $2,000 an ounce for the first time since August 2020 and went close to challenging its all-time record high before topping out just above $2,050 an ounce. Silver also surged close to $27 an ounce, its highest since last year’s well-documented short squeeze. The war in Ukraine has also exacerbated an already highly inflationary environment with Russia and Ukraine's vast supplies of a host of grains, metals and energy likely to be highly constrained for a number of months. In particular, European countries are now rushing to wean themselves off Russian oil and gas as soon as possible with this sudden reduction in available supply from the world’s second-largest oil producer pushing the price of Brent crude close to $130 a barrel. Gold price in March 2022 - 1 hour interval - $/g chart from Kinesis Exchange Rate Hikes In response to inflation levels at multi-decade highs, central banks across the world are now expected to implement a series of interest rate hikes over the course of this year. Already the Bank of England and the Federal Reserve have raised rates with the European Central Bank expected to follow shortly. This might be a headwind for gold and silver, as these non-yield-bearing assets are less attractive in an environment of rising interest rates. However, another implication of Russia’s invasion of Ukraine has been the collapse of the value of the rouble in the face of a series of ever-broader economic sanctions being imposed on Russia and its leading figures. The appeal of gold as an inflation hedge is growing, especially for investors holding roubles and other more volatile currencies, who want to protect themselves from their devaluation and volatility. Russia’s Gold Reserves Russia has long since viewed the hegemony over the US Dollar as the currency of the world with disdain and has been building up its gold reserves considerably in recent years. The country now has the fifth largest gold holdings in the world with just under 2,300 tons, according to the latest figures from the World Gold Council. However, this strategy of bolstering its gold reserves to reduce Russia’s dependency on the US Dollar in the event of a crisis such as the self-inflicted one the country now finds itself in has floundered after the US Treasury banned its citizens and institutions from engaging with any gold-related activity with Russia, with the UK swiftly following suit. Russia’s gold and silver refiners had already found themselves banned from the LBMA’s Good Delivery list meaning any new bars they produce cannot be sold on London’s bullion market nor in the US after a similar suspension by the CME Group. Inside Russia, the collapse of the rouble saw citizens rush to buy gold in such volume that the country’s central bank was forced to halt its purchases from local banks. Although the central bank resumed activities before the end of the month, it will now pay a fixed price of 5,000 roubles per gram between March 28 and June 30, considerably below where the market is currently pricing. Find out more about what Kinesis has to offer Learn More Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.  As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

Rupert Rowling
Rupert Rowling

01/04/2022

Gold Declines as Continuation of Peace Talks Over Ukraine Reduce Fear Trading

Optimism surrounding the continuation of talks between Russia and Ukraine has provided a boost to equity markets and is mirrored by a similar decline on gold. It will be interesting to see which direction gold ends up taking in April as some of the bullish factors that saw it break above $2,000 an ounce in March start to unwind and the focus may start to switch away from the war in Ukraine and more on the macroeconomic outlook. Gold ($/g) chart - 15 minutes - from Kinesis Exchange The ongoing conflict has provided solid support to gold and other haven assets so any signs of progress on peace talks are likely to see some of that support fade. Furthermore, the inflation headache that is troubling governments and central banks is not going to ease any time soon, with more interest rate hikes expected in April to try and curb rising prices. These dual headwinds of an unwinding of fear trading and the prospect of rising interest rates making the non-yield bearing asset of gold less attractive make $1,900 an ounce a key indicator for the level of underlying support there is for gold. It looks likely that gold will soon be pushed down to this threshold and the fragile nature of the current optimism in markets may see a bullish price reaction if and when gold reaches $1,900. On a much shorter-term outlook, today’s release of the US’ latest jobs and unemployment data will give an indicator of the strength of the world’s largest economy. With improving numbers expected, any surprises to the downside that show the economic recovery remains jittery could benefit gold while any figure better than forecast will add to the current pressures on the gold price. Find out more about what Kinesis has to offer Learn More Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably.

Rupert Rowling
Rupert Rowling

01/04/2022

Gold Benefits From Dip in Equities But Further Out Bearish Headwinds Are Circling

A slight dip on equities markets has been met with a small corresponding gain for gold. Signs that the peace talks between Russia and Ukraine are making progress has been a driver for the recent partial recovery for equities but the situation remains very fragile with today’s small pullback a sign that investors remain unwilling to expose themselves fully to risk assets and continue to seek the succour of haven assets such as gold. Gold ($/g) chart - 15 minutes - from Kinesis Exchange While the war in Ukraine is undoubtedly the key short-term market driver, a point will soon be reached when investors may feel the bearish impact of the conflict has been fully priced in, particularly as long as talks over a peaceful resolution continue. As a result, the focus will switch back to the macroeconomic scenario in which the cost of living is rising at the fastest level in decades for many countries. Already the US and UK central banks have made their first moves in hiking interest rates to try and bring inflation under control and it is surely only a matter of time until the European Central Bank follows suit. So while gold has benefited from the rush to haven assets at the start of Russia’s invasion of Ukraine, any unwinding of those fear trades coupled with central banks hiking rates is likely to see gold fall out of favour. So while for now, gold looks well set to trade in a range well above $1,900 an ounce, further out the support at this key threshold of $1,900 may disappear. Find out more about what Kinesis has to offer Learn More Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably.

Rupert Rowling
Rupert Rowling

30/03/2022