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Back to futures, gold and silver futures!


Precious metals traders returned to gold and silver futures today as the metals showed a great response to changes in the aggressiveness of the Fed’s monetary policy. Market participants continue to react to Chairman Jerome Powell’s speech at the Brookings Institution in Washington. Traders continue to focus on his remarks to slow the pace of upcoming rate hikes.

“Thus, it makes sense to ease the pace of rate hikes as we approach the cap level that will be sufficient to reduce inflation… The time to ease the pace of interest rate hikes may come as soon as the meeting in December.’

As of 5:01 PM EST, gold futures for February 2023, the most active Comex contract, settled at $1,817.40, after posting today’s biggest one-day gain in two years of $57.50, or 3. 27%. Although gains in gold futures today were a combination of dollar weakness and buyers actively opening long positions, traders bidding higher for the precious yellow metal were the overwhelming and overwhelming reason for today’s 3.27% gain.

The dollar is currently trading down 1.23 points or 1.17%. Given that gold gained 3.27% – dollar weakness accounted for roughly a third of the gains in the February gold futures contract, quite different from spot markets.

Spot or physical gold gained $34.30, roughly 60% of the move seen in gold futures. The notable difference in spot gold’s gains versus futures is that traders buying physical gold accounted for only $12.70 of today’s $34-plus gain, with the remaining $21.60 attributable directly to the dollar’s weakness. This is according to KGX (Kitco Gold Index).

Given that gold futures gained 3.27%, this percentage gain was dwarfed by silver’s remarkable gain of 5.46%. Currently, the most active March 2023 silver contract is up $1.19 to settle at $22.97.

As I talked about yesterday, the reaction of investors in general, their prayers were answered, hearing that the Fed is going to start slowing the pace of rate hikes. However, they seem to be overlooking the fact that the Federal Reserve plans to continue raising interest rates in 2023 and possibly into 2024. Chairman Powell made this abundantly clear in his speech yesterday, saying, “Restoring price stability is likely to require a policy of holding a restrictive level for some time… History strongly cautions against premature policy relaxation. We will stay the course until the job is done.”

Clearly, the rally in gold futures from $1,621 to $1,817, a 10.78% gain since November 3 (less than a month) is a reflection of a major shift in market sentiment by investors. The assumption that sparked the rally that started on November 3 was confirmed yesterday; The Fed will slow the pace of upcoming rate hikes.

For those who want more information, just use this relationship.

I wish you good trading as always,



Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and/or damage arising from the use of this publication.


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