Gold Rises Ahead Of CPI Inflation Report

As of 4:44 PM EDT gold futures basis, the most active June 2022 contract is trading up $11.70, a gain of 0.60% at $1949.50. There were some alarming forecasts for the upcoming release of the latest inflationary data vis-à-vis the CPI (Consumer Price Index) on Tuesday, March 12. Just last week, estimates were released by the Federal Reserve Bank of Cleveland, which revealed a detailed estimate of the upcoming CPI report indicating that the level of inflation in March could run as high as 8.41%. Furthermore, estimates for the first quarter of 2022 predict inflationary pressures quarter over quarter could swell as high as 9.1%.


The chart above is a 240-minute candlestick chart of gold futures. We have included trendlines highlighting a series of lower highs as well as a series of higher lows. This has created a compression triangle and breakout above the current resistance level. This indicates that gold has concluded its consolidation period and moved back into a solid rally mode. This puts our next target for potential resistance at $1967.60. Above that price point, there is resistance at $2000 and major resistance at $2016. Continue reading "Gold Rises Ahead Of CPI Inflation Report"

Jobs Report Supports Aggressive Rate Hikes

The most recent jobs report supports aggressive Fed rate hikes, to reduce inflation, but other factors need to be resolved to solve the big global picture.

The Bureau of Labor Statistics released some welcome news today. 431,000 Americans became gainfully employed in March, and the jobless rate was within 0.1% of 3.5%, coming in at 3.6%. Economists polled had forecasted that over 500,000 jobs would be added. However, that has little relevance with today’s report indicating that the labor market in the United States is vibrant and strong. The strength of today’s report shows that America’s workforce is now only 1.6 million jobs, or 1% of the levels that existed before the pandemic. It must be noted that higher employment is a byproduct of a tight labor market that has had to offer higher wages to attract new workers.

This solid report will give the Federal Reserve the necessary data to continue to raise rates, most likely at a much more aggressive rate. However, the Federal Reserve will have a near-impossible mission to have a soft landing as they reduce the current inflation rate to an acceptable target rate which has been 2%. Continue reading "Jobs Report Supports Aggressive Rate Hikes"

The War In Ukraine Will Raise Global Inflation

Why would the war in Ukraine greatly raise the global inflation rate?

This question is extremely applicable to the current conflict because it will exponentially magnify the record high level of inflation, which began years ago as the Federal Reserve and central banks embarked on one of the most accommodative monetary policies ever. Continue reading "The War In Ukraine Will Raise Global Inflation"

Feds Hawkish Demeanor Puts Pressure On Gold

This week's market participants seemed complacent in regards to the Russian invasion of Ukraine and the current level of inflation. Four of the five trading days this week were characterized as having lower closes than its opening price and lower closes compared to the prior day's closing price.

On Wednesday, when the Federal Reserve concluded its FOMC meeting, gold hit its lowest value with the April futures contract trading to a low of $1895. Although gold recovered from its low, its closing price was the lowest value of closes this week. Thursday was the only day in which gold closed above its open and above the prior day's closing price. Continue reading "Feds Hawkish Demeanor Puts Pressure On Gold"

Gold Corrects After Challenging Record High

On Tuesday, March 8, gold futures traded to an intraday high of $2078, roughly $10 below the all-time high of $2088, which was achieved in August 2020. The current decline in gold is the first real price decline since January, when gold hit a low of approximately $1780. Until Tuesday of this week, what followed in February was a dynamic rally resulting in gold gaining approximately $300 when gold traded to $2078. On Wednesday, March 9, gold opened above Tuesday’s closing price of $2043 but closed dramatically lower, resulting in a price decline of $72. Tuesday’s strong decline resulted in gold losing 3.49% in value, the largest single-day loss in 2022.

As of 4:45 PM EST on Friday, March 11 gold futures basis, the most active April Comex contract is currently fixed at $1990.20, a net decline of $10.30 or 0.51%. However, this decline can be largely attributed to dollar strength. Currently, the dollar is up by 0.63% and with the dollar index fixed at 99.12. While gold pricing is lower today, it is completely the result of dollar strength and fractional buying of gold.

Kitco Gold Index (KGX)

Currently, spot gold is fixed at $1988.60, a net decline of $8.60 on the day. The Kitco Gold Index shows that dollar strength resulted in gold declining $12.40, and fractional buying resulted in a gain of $3.80, resulting in the net change today of -$8.60. Continue reading "Gold Corrects After Challenging Record High"