Main Menu
Main Menu

Category: External

Hawkish Fed keeps pressure on gold as physical premiums soften​

(Kitco NewsWire) – Spot gold and silver prices are weaker in thin holiday trading Friday, with U.S. cash equity and bond markets closed for Juneteenth and rate-sensitive flows continuing to lean against precious metals following this week’s Federal Reserve meeting. At the time of writing, spot gold was trading near $4,154.70 an ounce, down 1.28%, while spot silver was trading at $64.71, down 1.33% on the session.The Federal Reserve left the federal funds target range at 3.50% to 3.75% on Wednesday but has shifted firmly toward a hawkish bias. The market has moved from debating rate cuts to pricing in the risk of 2026 hikes, with one current estimate putting the probability of a July hike at 38.5%, a September hike at 51.7%, and two hikes by year-end still on the table. That repricing is keeping the opportunity-cost argument against gold in focus, even as crude oil has retreated from war-premium levels.Positioning in gold now looks more like de-risking than liquidation. “Less about panic selling,” Laurence Booth, global head of markets at CMC Markets, said in comments provided to Kitco, adding that the decline has been orderly despite a move of more than $200 in a matter of days. Booth said the more important signal is physical demand: softer premiums in China and other major markets have removed a source of support, leaving gold without an obvious metal-specific catalyst unless the macroeconomic outlook shifts back toward lower rates or renewed stress.The Strait of Hormuz remains the primary geopolitical tail risk, but the latest market impact is less inflationary than it was earlier in the conflict. Commercial traffic has begun to resume following the U.S.-Iran memorandum, helping pull Brent crude back toward the $79.50 area and U.S. crude toward $75.85. However, shipping has not fully normalized. Mine-related disruptions, navigation risks, and a backlog of stranded vessels mean the route is open enough to reduce the immediate oil shock, but not clear enough to erase the geopolitical premium. For gold, that combination is awkward: lower oil prices reduce inflation-hedge demand, while unresolved U.S.-Iran tensions keep safe-haven buying from disappearing entirely.Global markets were mixed Friday, with Japan’s Nikkei 225 rising 0.3% to a record high, Germany’s DAX adding 0.2%, and U.S. futures easing during the holiday session. The U.S. dollar remains firmer following the Fed-driven repricing, while the benchmark 10-year Treasury yield is trading near the 4.4% area. Traders are watching June flash U.S. manufacturing and services PMIs at 9:45 a.m. ET on Tuesday, followed by May PCE inflation, weekly jobless claims, final first-quarter GDP, durable goods orders, and personal income and spending data at 8:30 a.m. ET on Thursday.The key outside markets see Nymex WTI crude oil prices trading around $75.85 a barrel, while Brent crude is near $79.50. The U.S. dollar index is firmer, and the yield on the benchmark 10-year U.S. Treasury note is trading near the 4.4% area.Technically, spot gold bulls’ next upside price objective is to push prices back above the $4,180 to $4,200 resistance zone, with a sustained move targeting the $4,370 to $4,390 zone. Bears’ next near-term downside price objective is a break below the $4,121.00 session low, with deeper downside targets at $4,040 and then $4,020. First resistance is seen at $4,180 and then at $4,200. First support is seen at $4,121.00 and then at $4,040.Spot silver bulls’ next upside price objective is to drive prices back above the $65.00 to $66.00 area, with a move above that zone targeting $66.57 and then $68.32. The bears’ next downside price objective is a break below $63.18, with deeper downside targets at $62.00 and then $61.00. First resistance is seen at $65.00 and then at $66.00. Next support is seen at $63.18 and then at $62.00.

Gold’s post-Fed selloff may be missing the bigger picture, says former Lehman analyst​

(Kitco News) – Gold prices have tumbled after Federal Reserve Chairman Kevin Warsh delivered what many investors interpreted as a hawkish debut, but at least one market strategist argues the precious metal’s longer-term outlook remains intact.In commentary following Warsh’s first press conference as Fed chair, Rebecca Ivaldi, Market Strategist at FCT Capital Partners and former Lehman Brothers analyst, said markets may be overestimating the central bank’s willingness to keep monetary policy restrictive and underestimating the structural forces supporting gold demand.The precious metal came under pressure after Warsh repeatedly emphasized the Fed’s commitment to restoring price stability. During the press conference, Warsh described inflation as a burden on American households and declared that the Federal Open Market Committee was “unambiguous and unanimous” in its determination to restore price stability.However, Ivaldi argues that beneath the hawkish rhetoric were several signals suggesting a less restrictive policy path than markets initially assumed.”The knee-jerk algorithmic reaction to the press conference was exactly what we saw in January right after the news broke that Warsh had been picked — Hawk in the Fed equals Gold Down,” she wrote. “But this short-term speculative reaction is almost entirely irrelevant in my view.”One of the key points highlighted by Ivaldi was Warsh’s discussion of housing markets. During the press conference, the Fed chair acknowledged that monetary policy appeared “somewhat restrictive” in housing, while describing the broader impact of policy across the economy as “uneven.”Ivaldi interpreted those comments as evidence that Warsh may be more concerned about overly restrictive borrowing costs than his public messaging suggests.She also pointed to Warsh’s skepticism toward traditional inflation measures and his decision to launch a review of the Fed’s data-gathering framework. During the press conference, Warsh announced a task force to examine new data sources and improve the quality and timeliness of economic information available to policymakers. He argued that many official statistics rely on outdated survey methods and that policymakers need more real-time information about economic conditions.According to Ivaldi, that effort suggests the Fed may ultimately conclude that underlying inflation pressures are less severe than headline data currently indicate. She contends that once temporary energy-related distortions are removed, inflation is already much closer to the Fed’s target than widely believed.Another point attracting attention was Warsh’s treatment of the Fed’s so-called “dot plot.” Although the latest projections showed a significant number of policymakers expecting higher rates by year-end, Warsh downplayed the importance of those forecasts, noting that participants effectively submitted their projections in pencil and could easily revise them as conditions change.Ivaldi argues that the chairman’s remarks undermine the market’s assumption that the Fed is preparing for additional tightening. She noted that Warsh confirmed there was no active discussion of raising rates at the current meeting and emphasized the uncertainty surrounding future policy decisions.For gold investors, however, Ivaldi believes the more important story lies beyond Fed policy.She argues that geopolitical developments in the Middle East and the gradual evolution of non-dollar trade arrangements continue to support long-term demand for physical gold.Ivaldi explained that the reopening of energy trade routes could restore flows in which Middle Eastern trade surpluses are converted into physical gold through Chinese markets, creating a structural source of demand largely independent of short-term interest-rate expectations.Ivaldi also maintains that rising sovereign debt burdens and pressure on government financing costs ultimately limit how restrictive monetary policy can become. In her view, policymakers face increasing incentives to keep Treasury yields contained, a backdrop that historically has been supportive for hard assets such as gold.Warsh himself offered little guidance on the future path of rates, repeatedly stressing that the Fed had abandoned formal forward guidance and would remain focused on incoming data. He also emphasized that the central bank’s credibility would ultimately be measured by its ability to deliver price stability rather than by its rhetoric.For now, gold traders appear focused on the chairman’s inflation-fighting language. But Ivaldi argues that investors should pay closer attention to what she sees as the deeper forces reshaping global capital flows.”The jawboning works for a few days, but the underlying plumbing tells the real story,” she said. “The dollar is left less fungible for international trade, not more, the sovereign debt burden remains massive, and the long-term structural case for gold has only grown stronger.

Gold prices are down but SocGen is buying the dip​

(Kitco News) – The Federal Reserve’s new tightening bias continues to take its toll on the gold market, with a growing number of analysts expecting prices to retest support near $4,000 an ounce. However, one bank has a simple suggestion for investors: “buy the dip.”Heading into the third quarter, market strategists at Société Générale updated their Multi-Asset Portfolio and recommended that investors remain long equities and commodities, as they expect central banks to remain behind the inflation curve. They said that, in this environment, investors need inflation protection.“We return to a full weighting in gold, taking advantage of the recent drawdown. Looking ahead, gold volatility may decline if retail participation—particularly through ETFs—eases off, while central banks are likely to remain active buyers, particularly as part of their ongoing de-dollarisation drive and as institutions diversify further away from equities and bonds,” the analysts said.For the third quarter, the French bank has a 10% allocation to gold, up from 7% in the second quarter. At the same time, SocGen is increasing its broader commodity exposure to 10% from 8%.“Electrification, AI, and sovereignty trends support the BCOM Index, with a bias toward industrial metals and energy,” the analysts said.The bank said its total 20% commodity exposure is the largest on record.Looking at the gold market, despite the current selling pressure, SocGen sees gold prices recovering in the fourth quarter of this year and climbing back to $5,000 an ounce by the second quarter of 2027, with the potential to reach new record highs in the third quarter of next year.The gold market has seen renewed selling pressure this week after the Federal Reserve left interest rates unchanged in a range between 3.50% and 3.75%. However, in its updated economic projections, the central bank signaled support for a potential rate hike by the end of the year. Federal Reserve Chair Kevin Warsh confirmed the central bank’s hawkish bias, emphasizing its focus on price stability.However, the analysts at SocGen are not convinced that the Fed will actually pull the trigger on a rate hike.“Policymakers have effectively adjusted to a new equilibrium featuring higher growth alongside a higher inflation risk. This shift is reinforced by the likelihood that the Federal Reserve will move behind the curve, refraining from raising rates by year-end and even cutting next year. This implies inflation protection is more important than ever,” the analysts said.Despite potential downside risks to gold, SocGen said that the core pillars of its bull case—persistent currency erosion, worsening fiscal policy, and fracturing geopolitics—remain unchanged.Along with their increased commodity exposure, the analysts are also increasing their equity holdings to 55% of the portfolio, up from 50% in the second quarter. The bank is also increasing its exposure to inflation-protected securities, with a focus on U.S. and eurozone bonds. SocGen is also increasing its exposure to high-yield corporate debt.The bank said it will hold no cash in the third quarter.

Gold’s bull market remains intact even with a hawkish Fed, says Axel Merk​

(Kitco News) – Gold investors shouldn’t assume that a more inflation-focused Federal Reserve will derail the precious metal’s long-term bull market, according to Axel Merk, founder and CEO of Merk Investments.While newly appointed Federal Reserve Chair Kevin Warsh has signaled a more hawkish approach to monetary policy, Merk said that any near-term headwinds for gold could ultimately strengthen the market’s longer-term foundations by reducing policy-driven uncertainty and shifting investor attention back to America’s deteriorating fiscal position.In his first Federal Reserve press conference on Wednesday, Warsh made fighting inflation a central pillar of his leadership, emphasizing the importance of price stability. The market interpreted his comments as hawkish, with traders pushing expectations for future rate increases higher.Yet Merk said that investors should not automatically view a hawkish Fed as bearish for gold.”Everything else equal, Kevin Warsh is a headwind to the price of gold,” Merk said. “But I actually think it’s going to reduce volatility, which should be seen as a positive.”According to Merk, one of Warsh’s most important reforms is his effort to reduce the Fed’s reliance on forward guidance and allow financial markets to play a greater role in signaling economic conditions. He said years of excessive communication and policy signaling have distorted markets and amplified volatility.”The Fed has always done what they had to do, but often with huge delays and much more damage,” he said. “Just avoiding the big mistakes reduces volatility.”Along with creating unnecessary market volatility, Merk also pointed out that the Federal Reserve’s economic projections and dot plot have never been accurate forecasting tools.He added that, for gold investors, less monetary policy uncertainty could have an unexpected benefit.Instead of obsessing over every Fed statement, dot plot projection, or interest-rate forecast, investors may begin focusing on structural issues that remain firmly supportive of gold, particularly the United States’ growing debt burden.”For the gold bugs, for better or worse, we’ve got unsustainable deficits,” Merk said. “The market should be focused more on the fiscal side.”The comments come as many analysts continue to debate whether higher interest rates and elevated bond yields represent a significant obstacle for gold prices. Conventional wisdom suggests that rising yields increase the opportunity cost of holding a non-yielding asset such as gold.However, Merk challenged the idea that opportunity costs should dictate an investor’s decision to own precious metals.He noted that gold serves multiple functions within a portfolio, including preserving purchasing power during periods of monetary instability and fiscal deterioration.”I own gold for a variety of reasons,” he said. “It’s about preservation of purchasing power.”Merk added that even if Warsh succeeds in restoring credibility to monetary policy and making progress against inflation, the process will take years. He pointed out that former Federal Reserve Chair Paul Volcker, widely credited with breaking the back of inflation in the early 1980s, did not immediately return inflation to desired levels.”Keep in mind, Paul Volcker didn’t get inflation down to two percent,” Merk said, noting that meaningful progress only emerged late in Volcker’s tenure and into the early Greenspan years.Beyond Fed policy, Merk noted that some of the recent pressure on gold has stemmed from geopolitical developments, particularly the market’s reaction to tensions involving Iran and their impact on oil prices, inflation expectations, and real interest rates.However, he expects those relationships to normalize over time.”My guess is that correlation is going to break down,” he said, referring to the recent link between gold and oil prices. “I think that’s going to be a big positive for gold.”Ultimately, Merk said investors should avoid reducing the case for investing in gold to a simple debate over interest rates.He explained that a more disciplined and inflation-focused Federal Reserve may remove one source of uncertainty from the market, but it does little to address the longer-term challenges posed by persistent budget deficits, rising government debt, and ongoing geopolitical risks.Those factors, he argued, remain powerful reasons for investors to maintain exposure to gold regardless of the Fed’s policy path.

Pirate Gold harpoons copper-gold hit at Moby Dick

Pirate Gold (TSXV: YARR; US-OTC: YARRF) has uncovered broad zones of copper-gold mineralization in its first holes at the Moby Dick target in central Newfoundland, pointing to a regional system,…

Star Copper - OTC: STCUF

STCUF stock chart by TradingView

Star Copper - CSE: STCU

STCU stock chart by TradingView

STAR COPPER - OTCQX: STCUF

Track all markets on TradingView