The Weekly Silver and Gold Rush (Week Ending 7.21.23)

Anthony Anderson

Updated: July 28, 2023

Gold coins

Greetings to this week's installment of The Weekly Silver and Gold Rush. The past week was filled with a few noteworthy advancements in the markets, and our mission is to present you with the most vital highlights encompassing all the key events. As part of our weekly tradition, we'll unveil the latest trends and expert insights crucial for all market participants and enthusiasts alike. Moreover, we'll take a glimpse into the upcoming week to anticipate the economic catalysts and challenges lying ahead. Don't miss out. Click on the link to stay informed and ahead of the curve!

The Gold Trail: A Daily Journey Through the Week's Market

Monday - 7.17.23: Gold was off to a calm start following last week's robust performance, trading at $1960.50, while silver dipped to $24.91. MarketWatch's Brett Arends highlights that including 10% gold in a portfolio consistently outperformed the traditional 60/40 allocation, providing higher average returns, reduced volatility, and resilience during challenging market periods since the gold standard's end in 1971 by President Richard Nixon.

Tuesday - 7.18.23: Gold prices rose, gaining $9 to reach $1966, amid the belief that the Federal Reserve's tightening measures are approaching an end and a weakening US dollar. Silver also saw a modest increase of 7¢, trading at $24.95. Zoltan Poszar, a respected ex-Credit Suisse analyst, emphasized that a "monetary divorce" from the US dollar is taking place globally, with countries not aligned with the US turning to gold as an alternative asset, leading to an increased interest in gold as a theme in the financial system.

Wednesday - 7.19.23: Gold experienced a marginal decline in early trading, falling $3 to $1978.50, as traders remained cautious due to uncertainties surrounding future Federal Reserve policies. Conversely, silver saw a slight increase of 3¢, reaching $25.16. Brien Lundin from Gold Newsletter notes that gold may be defying its typical seasonal trend by rallying ahead of schedule, potentially influenced by factors beyond seasonality, including the impact of Federal Reserve monetary policy and market considerations amidst falling inflation rates. Despite historical sluggishness in summertime trading, gold's performance has been evenly split over the past decade, with five down years and five up years.

Thursday - 7.20.23: Gold edged higher this morning as traders exercised caution ahead of the Federal Reserve's upcoming decision on interest rates, with the price up $6 at $1984.50. Similarly, silver saw an increase of 7¢, reaching $25.27. Wisdom Tree, a Dublin-based investment firm, predicts a potential record-high for gold, forecasting $2500 per ounce within the next twelve months.

Friday - 7.21.23: Gold is moderately lower in summer trading as traders await the next week's Fed policy meeting, with the metal currently priced at $1967.50, down $4. Citibank remains bullish on gold, anticipating "fresh" all-time highs due to its response to easing monetary policies, record ETF inflows, and increased asset allocation. Meanwhile, silver is up 4¢ at $24.87.

Gold and Silver Market Sentiment: Analysts Are Bullish, But There Are Risks

Gold and silver prices have been on an upward trend due to global economic uncertainties, with investors favoring these safe-haven assets. Analysts remain optimistic about gold's potential,
evidenced by Goldman Sachs and Bank of America raising their price targets to $2,100 and higher, respectively. Although sentiment for silver is positive, it's perceived as more volatile due
to its industrial usage. Factors influencing these metals include the Ukraine conflict, inflation, US dollar strength, and central bank policies. However, risks like a global economic slowdown,
rising interest rates, and a strong US dollar could exert downward pressure. As prices could remain volatile, market participants are advised to closely track global economic developments.

Physical Silver Shortage: Demand Surpassing Supply Amid Global Uncertainty

The physical silver market is experiencing a supply shortage due to factors including strong investor demand, increased industrial use, declining mine production, and historically low inventory levels. People are turning to silver as a safe haven asset amidst global economic uncertainty, and its application in electronics, solar panels, and medical devices has led to increased industrial demand. Concurrently, silver mine production has been dropping, and inventory levels are at an all-time low. The Silver Institute reported record-high global silver investment demand at 1.24 billion ounces and industrial demand at 539 million ounces in 2022, while mine production only reached 820 million ounces. Inventory levels stood at 2.8 billion ounces at year-end. These dynamics, with persistent strong demand and limited supply, indicate a likely continuation of the physical silver shortage and potential price increases in the near term.

Gold and Silver Price Predictions: A Spectrum of Prospects Amid Global Instability

A range of predictions have been made for the value of gold by the close of 2023, with estimates as conservative as $2,100 per ounce from Goldman Sachs to as optimistic as $4,000 per ounce, a forecast shared by both Jefferies and Juerg Kiener. Likewise, projections for silver extend from a modest $25 per ounce, as suggested by Goldman Sachs, to a strikingly ambitious $100 per ounce prediction from Jefferies. These figures, however, are targets and the actual prices may fluctuate due to a variety of influences. These include, but are not limited to, the ongoing conflict in Ukraine, inflation trends, the US dollar's strength, and changes in central bank policies. In light of potential volatility, careful observation of these variables is vital for all market participants as significant adjustments in the market may lie ahead.

Gold Price Targets (per ounce by end of 2023):

● Goldman Sachs: $2,100
● Bank of America: $2,200
● Barclays: $2,300
● Kitco: $2,500
● Sprott: $3,000
● TD Securities: $3,500
● Jefferies: $4,000
● Juerg Kiener (Swiss Asia Capital): $4,000

Silver Price Targets (per ounce by end of 2023):

● Goldman Sachs: $25
● Bank of America: $27
● Barclays: $29
● Kitco: $30
● Sprott: $50
● Jefferies: $100

Gold Surges to Over Two-Month High Amidst Global Interest Rate Speculation

Gold prices rose to an over two-month high in Asian trade, reaching $1,984.68 an ounce, driven by weak UK inflation data and speculations that global interest rates were peaking. The possibility of the Bank of England and the Federal Reserve ending their rate hike cycles bolstered gold's appeal as a safe haven investment, pushing it closer to the coveted $2,000 an ounce level. The upcoming Fed meeting held traders' attention, with hopes of a pause in rate hikes, benefiting gold markets. Copper prices also rose amidst a weaker dollar, countering four days of losses, while markets looked to potential stimulus measures in China to spur growth after weak economic readings.

Precious Metals Retreat as Treasury Yields Rise: Gold, Silver, and Platinum Experience Pullback

In the wake of higher Treasury yields and a strengthening U.S. dollar, precious metals experienced a decline in value. Gold failed to surpass the resistance level at $1975 - $1985 and pulled back, with its nearest support located in the $1935 - $1940 range. Similarly, silver settled below the $25.00 level, prompted by profit-taking in the precious metals market, and may find further support at $24.00 - $24.20. Platinum faced challenges as it attempted to settle below the support at $965 - $975 due to the focus on a stronger dollar and rising Treasury yields, potentially heading towards the next support at $925 - $935.

Next Week’s Key Events

Monday, July 24

● 9:45 am - S&P "flash" U.S. Manufacturing PMI for July

Impact on Precious Metals Markets: The release of the S&P Manufacturing PMI can have a significant impact on the precious metals markets. A higher-than-expected PMI reading, indicating a robust manufacturing sector, may boost investor confidence in the economy and potentially lead to a stronger U.S. dollar. A stronger dollar can put downward pressure on gold and silver prices, as they are priced in dollars and become more expensive for holders of other currencies. On the other hand, a lower-than-expected PMI reading may signal economic uncertainty and weaken the dollar, potentially supporting higher gold and silver prices as safe-haven assets.

Tuesday, July 25

● 9:00 am - S&P Case-Shiller Home Price Index (20 cities) for May
● 10:00 am - Consumer Confidence for July

Impact on Precious Metals Markets: The S&P Case-Shiller Home Price Index reflects the health of the housing market, and a strong reading may imply a resilient economy, which can contribute to a stronger dollar and potentially weigh on gold and silver prices. Conversely, a weaker reading might indicate economic challenges and a potential boost to precious metals as safe-haven assets. The Consumer Confidence report provides insights into consumers' economic outlook and spending intentions. High consumer confidence can be positive for the economy and lead to a
stronger dollar, potentially putting downward pressure on gold and silver prices. Conversely, low consumer confidence may signal economic concerns and increase demand for safe-haven assets like gold and silver, supporting higher prices.

Wednesday, July 26

● 2:00 am - FOMC decision on interest-rate policy
● 2:30 pm - Fed Chairman Powell press conference

Impact on Precious Metals Markets: The Federal Open Market Committee (FOMC) decision on interest rates is a critical event for precious metals markets. Any indication of potential rate hikes may strengthen the U.S. dollar and negatively affect gold and silver prices. Investors often turn to precious metals as a hedge against inflation, and higher interest rates may diminish the appeal of non-yielding assets like gold. Fed Chairman Powell's press conference following the decision may provide additional insights into the central bank's future monetary policy, further
influencing precious metals markets.

Thursday, July 27

● 8:30 am - Initial jobless claims for the week of July 22
● 8:30 am - Durable-goods orders for June
● 8:30 am - GDP (advanced report) for Q2
● 8:30 am - Advanced retail inventories for June
● 10:00 am - Pending home sales for June

Impact on Precious Metals Markets: Economic indicators released on Thursday can significantly impact precious metals prices. Positive economic data, such as low jobless claims, strong durable-goods orders, and robust GDP growth, may lead to a stronger U.S. dollar and potentially weigh on gold and silver prices. Conversely, weaker economic data may boost the demand for precious metals as safe-haven assets, supporting higher prices.

Friday, July 28

● 8:30 am - PCE index for June
● 10:00 am - Consumer Sentiment (final) for July

Impact on Precious Metals Markets: The Personal Consumption Expenditures (PCE) index is a key indicator of inflation. Higher-than-expected inflation data may raise concerns about the
purchasing power of the U.S. dollar and increase demand for inflation hedges like gold and silver. On the other hand, lower inflation data may lead to a stronger dollar and potentially weigh
on precious metals prices. The final reading of Consumer Sentiment can provide insights into consumer confidence in the economy. Strong consumer sentiment may boost the dollar and potentially put downward pressure on precious metals, while weak sentiment may increase demand for safe-haven assets like gold and silver, supporting higher prices.

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