gold price report

gold report

Fundamental Gold Report

Stay notified

Gold report that enables you to quickly respond to the latest fundamental changes on the gold market. Posted bi-weekly, the Fundamental Gold Reports by Arkadiusz Sieroń, PhD will make sure that you stay up-to-date with the latest fundamental buzz. For all gold investors, who want to know the “why” behind gold’s price swings, our gold reports are a must-have.

  • Will Weak November Payrolls Support Gold?

    December 8, 2020, 9:39 AM

    US nonfarm payrolls disappointed in November. What does it mean for gold?

    First, let’s examine the facts. As the chart below shows, total nonfarm payrolls in November 2020, rose by just 245,000, following much larger gains of 711,000 in October. What is important here is that the US economy added significantly fewer jobs than expected – economists surveyed by Bloomberg forecasted 466,000 additions. Moreover, the civilian labor force participation rate decreased from 61.7 in October to 61.5 in November.

    On the positive side, the unemployment rate edged down from 6.9 to 6.7 percent, as the chart above shows. Although the rate is down by 8.0 percentage points from April’s high of 14.7 percent, it’s still 3.2 percentage points higher than it was before the pandemic started. And the nonfarm employment in November was below its February level by 9.8 million, or 6.5 percent, so there is still a long way ahead to a full recovery in the labor market. Actually, the weakening rate of improvement is a signal that the labor market will struggle during the winter wave of the epidemic. As the chart below shows, the daily new cases of COVID-19 in the U.S. are still above 200,000.

    You see, at such high levels of infection, the labor market’s rebound will slow down further in December. Many people are not looking for a job because of the coronavirus, and strengthened lockdown measures have limited the ability to find a job for those who don’t fear the pathogen.

    Although there might not be a double-dip recession, a lot of time will pass before the economy will fully recover. As the chart below shows, the initial claims have stayed at an elevated level of 700,000-800,000 (more than three times higher than just before the pandemic) since October.

    Implications for Gold

    What does it all mean for the yellow metal? Well, gold’s initial reaction to a weak employment situation report was rather modest. As the chart below shows, the price of the shiny metal increased from $1,832 to $1,843 on Friday (December 4). However, the weak economy should support gold prices.

    Moreover, the slowdown in the labor market increases the odds for the fiscal stimulus deal. Indeed, Congress should feel more pressure to act in providing the new package, especially considering that at the end of the year, a few unemployment benefit programs will expire, thereby aggravating the income situation of many Americans. The fresh fiscal aid can be agreed upon by the current White House and Congress, but even if not – don’t worry, dovish Janet Yellen, nominated as Treasury Secretary, is ready to act generously and to promote a strong fiscal response.

    The disappointing nonfarm payrolls can also prompt the Fed to further strengthen its accommodative stance in the coming months to sail the US economy through the pandemic storm until the vaccines will come to the rescue.

    The increased chances of more cheap money from the US central bank and Treasury should support the price of the yellow metal. They boosted the equities on Friday, that’s for sure. It seems that we are observing the return of “the worse, the better” in the financial markets. According to this logic, bad news is positive for Wall Street, as it increases the odds of more liquidity coming into the markets. Therefore, there is a risk that the improved risk sentiment will create downward pressure on the price of gold.

    However, gold could also benefit from additional aid in the long run, as monetary and fiscal stimuli would add to both the Fed’s balance sheet and the fiscal deficits. Increased money supply and the public debt should benefit the shiny metal, as a more dovish central bank and Treasury imply lower real interest rates for longer, with a higher risk of inflation and debt crisis.

    If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports, and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. To enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet, and you are not on our gold mailing list yet, we urge you to sign up there as well for daily yellow metal updates. Sign up now!

    Arkadiusz Sieron, PhD
    Sunshine Profits: Analysis. Care. Profits.

    -----

    Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our Gold & Silver Trading Alerts.

  • Gold Returns Above $1,800. Has It Bottomed Out?

    December 3, 2020, 10:33 AM

    The price of gold returned to above $1,800. Is the correction over?

    As the chart below shows, the price of gold rebounded, jumping from $1,763 to $1,811 on Tuesday (December 1) and increased further on Wednesday. As a reminder, the price of gold corrected more than 6 percent in November and almost 15 percent from its peak in August. Now, the key question is whether the worst is behind the gold bulls.

    Well, it’s too early to declare it with certainty, but it’s possible. Or we are very close to the bottom – at least, if history is any guide. After all, in the past few years, gold used to reach the local bottom either in November or December. So, recently, there has been seasonal weakness between September and December in the gold market, with November being a tough period for the yellow metal.

    Hence, the hopes about revival in the gold market could be justified. After all, the price of gold has been in a correction for about four months now. And the recent news about the vaccines – I refer here to the fact that yesterday (December 2), the UK approved the Pfizer-BioNTech vaccine for use as the first country in the world and said that it will be rolled beginning next week – have not sent gold prices down. So, it could be the case that the endgame for the pandemic has already been priced into the price of gold.

    Of course, gold can decline even further in the short-term. Wild fluctuations are possible on a daily basis. However, the fundamental outlook remains positive for the precious metal, no matter what the case is with gold’s technical performance. You see, regardless of when the vaccines against the coronavirus are distributed around the world and when the pandemic comes to an ultimate end, the global economy will not recover anytime soon. Actually, we are likely to stay under the “new normal”.

    Implications for Gold Under a New Normal

    What do I mean by the “new normal”? First of all, interest rates will stay low for longer. We will fall into the debt trap, so the Fed’s ultra-easy monetary policy is not likely to be normalized anytime soon. Indeed, as Powell has recently said in his testimony to Congress,

    The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months. A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. Recent news on the vaccine front is very positive for the medium term. For now, significant challenges and uncertainties remain, including timing, production and distribution, and efficacy across different groups. It remains difficult to assess the timing and scope of the economic implications of these developments with any degree of confidence.

    In consequence, the real interest rates should stay near zero for years. Actually, if inflation accelerates – and this risk has increased after the pandemic – the real rates can decline even further. The ultra-low bond yields will decrease the opportunity costs of holding the precious metals, thus increasing the demand for gold.

    Oh, by the way, the public debt is going to expand. The fiscal packages should be finally delivered by US policymakers, which will add to the ballooning indebtedness, exerting downward pressure both on the interest rates and the US dollar. You see, the greenback may still be the prettiest amongt the ugly fiat currency sisters, but its charm has recently been diminished because of the Fed’s interest rate cuts and spikes in America’s fiscal deficits. It seems to be positive news for gold, the ultimate safe haven asset, in the long-run.

    If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports, and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. To enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet, and you are not on our gold mailing list yet, we urge you to sign up there as well for daily yellow metal updates. Sign up now!

    Arkadiusz Sieron, PhD
    Sunshine Profits: Analysis. Care. Profits.

    -----

    Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our Gold & Silver Trading Alerts.

  • Stronger Risk Appetite Sends Gold below $1,800

    December 1, 2020, 12:26 PM

    Gold plunged below $1,800. Will these declines finally end?

    November doesn’t look like a good month for gold. The declines in the precious metals market continued last week. As the chart below shows, the price of the yellow metal dropped to $1,779 on Friday (November 27).

    Chart, line chartDescription automatically generated

    What is going on? Well, it seems that investors have switched into a risk-on state of mind, which sent the safe-haven assets such as gold substantially lower. You see, a lot of important things happened or are happening: a few vaccines are coming to the market, the formal transition of power from the current administration to President-elect Joe Biden has begun, and Biden picked Janet Yellen as his Treasury Secretary. All of this news reduced a substantial part of the uncertainty and has been welcomed by investors. They are convinced that the economy will find itself on the road to normality. The market participants have breathed a sigh of relief, reassured that the worst scenarios – of unconstrained pandemic, contested election, or an inexperienced, radical progressive responsible for U.S. financial matters – will not materialize.

    Indeed, Wall Street can be happy. Yellen, the monetary dove, will work closely with the Fed (after all, Powell was on the Board of Governors under Yellen) to design whatever response necessary to sustain the asset price bubb… sorry, to stimulate the economy!

    As a consequence of a stronger risk appetite and more optimistic economic outlook, investors started to price an interest rate hike in 2023. The more hawkish expectations have exerted downward pressure on gold prices.

    Implications for Gold

    But what about the more distant future of gold? Well, neither the vaccines, nor a Biden-Yellen duo will cure all of the U.S. economy’s problems over the long run. Actually, America will have to face a big health crisis in the very short term. The second wave of infections is already affecting the economy negatively. For example, personal income decreased 0.7 percent in October, followed by a 0.7 percent gain in September. And the number of initial claims have been rising again in November (albeit rather mildly so far).

    The vaccines may take us into a new normality, but not to a unicorn fantasy land. Perhaps you don’t remember, but the pre-pandemic normality wasn’t wonderful, the pace of economic growth was not impressive, and indebtedness levels were already high. At present, economic growth is not going to accelerate substantially. The debt – both corporate and public debt – is considerably more substantial than before the pandemic. The real interest rates are lower, while the risk of inflation runs higher.

    The return of normality could actually be positive for gold prices in the long run. Why? Because once the epidemic is over, a lot of people will want to travel, buy larger houses, and spend, spend, and spend some more! The pent-up demand, combined with some cracks in the supply chains, and increased broad money supply, could lead to the acceleration in inflation and thus, stronger demand for gold as an inflation hedge.

    All these factors suggest that the price of gold should not return to a lower pre-epidemic level. After all, the world will come out of the pandemic with much higher debt levels and some lasting scars. Actually, the price of the yellow metal can continue its upward march in the medium or long run, however, it seems that gold requires a trigger to overcome its current weakness and move further north. That trigger can come in the form of the next U.S. stimulus package, some turmoil in the corporate debt markets, or the next dovish change in the Fed’s stance that could be announced in December. The reason might also be technical – gold could decline so much that the decline burns itself out as everyone who wants to sell will do so and the price – given the extremely bad sentiment - will be able to go in only one direction – up.

    We will see – stay tuned!

    If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports, and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. To enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet, and you are not on our gold mailing list yet, we urge you to sign up there as well for daily yellow metal updates. Sign up now!

    Arkadiusz Sieron, PhD
    Sunshine Profits: Analysis. Care. Profits.

    -----

    Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our Gold & Silver Trading Alerts.

  • Biden and Yellen Pushed Gold to $1,800

    November 26, 2020, 5:13 AM

    Gold plunged to $1,800. What does this imply for the gold market?

    Whoa! Tuesday, November 24 wasn’t too good for gold. The price of the yellow metal plunged then from $1,840 to $1,800. Actually, November was an awful month for gold prices, which dropped from a local peak of $1,941, or more than 7 percent.

    So, what happened? Well, it seems that the positive news of the vaccines eliminated the negative tail-risk related to the pandemic. In consequence, the safe-haven demand for gold declined. On the other hand, the price of Bitcoin has jumped recently as investors increased their risk appetites. Moreover, the elections results also reduced the uncertainty in the marketplace. In other words, the economic outlook is improving as the uncertainty clouds begin to part.

    Indeed, this week President-elect Joe Biden announced the beginning of a formal transition of power from Trump’s administration to his. Biden also started to announce nominations for top positions, which served to reduce the risk that a contested election had for uncertainty among investors.

    In particular, there are rumors that Biden is likely to tap former Fed Chief Janet Yellen to become the next Treasury secretary. Investors know her and trust her, so they welcomed the possibility of her nomination for a key position in the new administration. Indeed, Yellen is well-known and well-respected, while having the knowledge and skills necessary for the position (although she has more experience in monetary policy than fiscal policy).

    Moreover, Yellen, who is seen as a dovish person, is believed to be supportive of bigger government economic aid in order to stimulate the economy and recover quickly from the coronavirus crisis. Actually, she has for some time been calling for increased government spending to help combat the recession and has always been concerned about the labor markets, low participation rates and high unemployment. As well, as the former Fed Chief, Yellen will closely cooperate with the US central bank and will listen to the Fed’s calls for a fiscal package. She will, therefore, help sustain high government expenditure to assure that the labor market is recovering.

    Implications for Gold

    What does it all mean for the gold market? Well, the recent plunge in the gold market is disturbing. Some declines are perfectly understandable as the uncertainty related both to the pandemic and elections diminished. However, the divergence between equities and gold in their reaction to higher odds of more economic stimulus is bad news for the precious metals market. The return of normalcy in the marketplace and resulting strengthened risk appetite could make gold struggle for a while, especially if the real interest rates increase.

    You see, the coronavirus crisis was very deep but short-lived and the return to normalcy has to arrive earlier than it did after the Great Recession. However, I don’t think that we will experience a replay of 2013 yet. The risk appetite increased, but the monetary and fiscal policies are still far from normalization. There is, of course, the risk of an increase in the interest rates, but the Fed will actively try to suppress the interest rates as long as it will not see inflation above two percent.

    However, the long-term fundamentals haven’t significantly changed. The real interest rates actually remain deep below zero while the U.S. dollar remains weak. These factors should support gold prices and the expanding public debt should also help the yellow metal. Investors also shouldn’t forget about the possibility of a debt crisis or the risk of accelerating inflation when the epidemic ends and people increase their spending.

    In other words, the ongoing fiscal and monetary stimulus should support or even push gold prices higher in the medium to long-run. It’s possible that, when confronted with the lack of a fiscal package, the Fed will introduce some changes at its upcoming meeting in December to keep the real interest rates at ultra low levels and to stimulate the economy.

    If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports, and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. To enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet, and you are not on our gold mailing list yet, we urge you to sign up there as well for daily yellow metal updates. Sign up now!

    Arkadiusz Sieron, PhD
    Sunshine Profits: Analysis. Care. Profits.

    -----

    Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our Gold & Silver Trading Alerts.

  • Herd Immunity or Herd Insolvency: Which Will Affect Gold More?

    November 24, 2020, 6:05 AM

    Vaccines are coming. But so is the debt crisis. What does it imply for gold?

    COVID-19 cases are still rising at an alarming rate in the United States. As the chart below shows, the rolling 7-day average of new daily infections stays above 160,000.

    It means that the immediate economic outlook is rather dark. The short-term economic slowdown is good information for the gold market.

    But there is also bad news for the yellow metal, and by that I mean the recent positive news on vaccine efficacy. It’s become clear that we will probably have the first doses of a vaccine – or even a few vaccines – by December 2020 or in early 2021, the tail-risk of no vaccines in the near future has been practically eliminated. This is why the stock market has increased despite rising Covid-19 cases. Simply put, some companies – like airlines – become investable again thanks to the breakthroughs in vaccine developments.

    Does this mean that gold is doomed in the medium-term, or that the vaccines’ arrival will sink gold? Well, not necessarily. Although it’s true that the elimination of the tail risk weakens the safe-haven demand for gold, one mustn’t forget that gold was actually in a bullish trend before the pandemic started thanks to the accommodative Fed’s monetary policy.

    So the question is: do you think that herd immunity will force the Fed to drop its dovish stance? Or will the eradication of the coronavirus make the whole new debt disappear? I don’t think so. In other words, the vaccines will solve the health crisis, but they will not solve all our economic woes. And the debt problem is poised to be one of the greatest global threats right now.

    Indeed, just last week, the Institute of International Finance said that global debt is expected to surge from $257 trillion in 2019 to a record $277 trillion by the end of 2020. On a relative basis, the global debt is expected to soar from 320 percent to 365 percent of global GDP. This means that the global economy will struggle to get out from indebtedness without triggering an economic crisis.

    And if you have any doubts that the wave of debt insolvencies is coming; in the previous week, Chinese state-owned company Yongcheng Coal & Electricity Holding Group defaulted. What is important is that it wasn’t an isolated event but a part of a series of defaults by top-rated state-owned enterprises. This bankruptcy highlights the risk of defaults in the corporate bond market. Importantly, the pile of corporate debt is massive not only in China, but also in the U.S., as the chart below shows. As well, the Fed will not help if the debt crisis occurs. The central banks can deal with the liquidity crisis, but not the solvency crisis. Oh boy, 2021 is setting itself up to be an interesting year!

    Implications for Gold

    What does it all mean for the gold market? With or without the coronavirus, the U.S. economy is becoming increasingly debt-dependent. The only problem being is that debt-driven economic growth is not sustainable in the long-run. Even a small increase in interest rates could lead not only to higher borrowing costs, but also to a wave of debt defaults. What does this imply? One possible outcome is that the interest rates will have to be kept at ultra low levels for years. It goes without saying that gold thrives in an environment of low real interest rates.

    Moreover, some economists point out that the end of the pandemic could accelerate inflation, and that the Fed and the state governments would not oppose too much. Actually, the U.S. central bank has already announced its new monetary regime in which it wouldn’t react to an increase in inflation rates above its target. After all, higher inflation would help Uncle Sam to reduce the real value of debt and gold should benefit in such a macroeconomic environment.

    If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports, and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. To enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet, and you are not on our gold mailing list yet, we urge you to sign up there as well for daily yellow metal updates. Sign up now!

    Arkadiusz Sieron, PhD
    Sunshine Profits: Analysis. Care. Profits.

    -----

    Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our Gold & Silver Trading Alerts.

1 2 3 4 5 6 7 ... 201

Gold Alerts

More
menu subelement hover background