Gold Market Report – March 4, 2024

To keep Hard Assets Alliance customers up to date on everything influencing the precious metals markets, we're sharing this daily report by Jim Pogoda that details price movements and technical and macro trends. We use it internally to keep our teams up to date.

Gold was a little choppy overnight, but traded in a narrow range of $2080-88. It consolidated its strong gains from Fri on the back of weaker US Economic Data (ISM, U. of Michigan, Construction Spending), that turned mkt expectations for more aggressive rates cuts (to 4.25% by Dec) and ignited some technical buying over $2047-50 (2/29 high, options, down trendline from 12/28 $2089 high), $2056-66 (1/3, 1/5, 1/12, 1/15, 1/16, 1/31, 2/1, 2/2 highs,), $2070-78 (12/1, 12/22, 12/29, 1/1 and 1/2 highs, options).

Gold rose to $2086 during early Asian time against some initial US dollar weakness (DX from 103.86 - 103.78)

• The greenback was pressed by early strength in the yen (150.16 149.84) off of a stronger reading on Japans Capital Spending (16.4% vs 3.4% last)

The yellow metal slipped back to its $2080 low during later Asian as the DX rebounded (103.90) and against firming US bond yields (US 2yr from 4.533% - 4.585%, US 10yr from 4.179% - 4.236%). The DX was helped by a retreat in the yen, on some dovish comments from the BOJs Ueda:

• expressing concerns over exiting their dovish monetary policy stance
• I dont think we are there yet
• too early to conclude inflation close to sustainably meeting the 2% target

Gold clawed back to reach its $2088 high (matching Fris high) during European time, fading a return lower by the dollar (DX to 103.79). The DX was weighed by a slightly stronger euro ($1.0840 - $1.0858), which was helped by a better than expected reading on the Eurozone Sentix Investor Confidence (-10.5 vs exp -10.8, -12.9 last). Gold was also aided by a modest pullback in equities (after surging to record highs Fri), with S&P futures off 11 to 5135. Stocks were weighed by losses at Apple (EU antitrust fine of $1.95B), and Ferrari (downgraded to neutral by Citi).

Ongoing geopolitical tensions continued to keep gold well bid:

• Russians making advances around Avdivka in the Donetsk region
• Russia claiming German military officials discussing strikes on Russian territory
• Russia claims the West is looking to take control of Moldova
• Israel Hamas ceasefire remains elusive
• Mediators in Cairo deadlocked
• Israel didnt send a delegation to Cairo
  
  
• Opposition leader but war cabinet minister Benny Gantz in US, in apparent end run by Biden Admin around Netanyahu
• VP Harris repeats US call for cease fire
• Three undersea telecommunications cables have been cut in the Red Sea
• Italian warship shot down Houthi missile in the Red Sea

The lack of any US economic reports / FedSpeak today left markets rudderless. The S&P traded narrowly and either side of unchanged between 5128 5140. Gains in Utilities, Industrials and Materials were overshadowed by losses in Consumer Discretionary, Communication Services, and Energy. Energy was weighed by a pullback in oil as WTI off $1.41 to $78.56. Oil had rallied $5 last week on anticipation of OPEC extending its 2.2M bpd output cut through the first half of 24. Bond yields continued to climb, with the US 2yr to 4.612% and the US 10yr to 4.236% (inversion widening to 38bp). The DX softened slightly (103.73) but found support at its 200-day MA at 103.71.

While stocks, bonds and currencies were relatively sleepy, alternative assets continued to surge. Bitcoin was up another $4k to $67k, within shouting distance from its all time high of $68.5k in Nov 21. It has nearly doubled since the bitcoin ETFs were approved in Jan. Gold extended its rally, taking out resistance at $2089 (12/28, 3/1 highs) to reach $2120, within $16 of its all time high $2136 (disputed from 12/4). However, many market participants consider that illiquid Sun eves px action to be a fluke, so for all intents and purposes, were at record highs now for gold. A fair amount of momentum buying was seen.

Support:

$2046-50 (former resistance: 2/29 high, options, down trendline from 12/28 $2089 high), $2035-38 (50day MA, 3/1 low), $2025-29 (2/26, 2/27, 2/28, 2/29 lows, options), $2011-16 (2/19, 2/20, 2/23 lows,100 day MA), $2000 (options), $1988-93 (2/13, 2/15 lows, up trendline from 11/13 $1932 low ), $1984 (2/14 low), $1973-80 (options, 11/21, 12/11, 12/12, 12/13 lows, 50% retracement of the up move from the 10/6 $1810 low to 12/4 all-time high at $2136), $1965-69 (11/20 low, 200-day MA), $1955-58 (11/15, 11/16, options), $1950 (options), $1940-43 (11/14 low, 61.8% Fib retracement level $1810 - $2149 move)

Resistance:

$2136 (12/4 all time high - but disputed), $2150 options

Overbought: after rallying $136 (6.9%) since 2/14, and $93 in the last 3 sessions, golds 14-day RSI is reading a red hot 77, a level it hasnt seen since March 2022 (Russian invasion)

FedWatch:

Misses Friday on the US ISM, U.Michigan, and Construction Spending combined to give markets more hope of quicker and deeper FF cuts this year. After mkt expectations were out to 7 25bp cuts in mid-Jan, stronger eco data and more hawkish FedSpeak reigned in mkt expectations to 3 cuts to 4.5% as of last week. Now theyre back out to 4 cuts to 4.25%.

FF Probabilities:

Mch: 97.5% chance of hold, 3% prob of cut to 5%

May: 26% chance of a cut to 5% or below, 74% chance of hold at 5.25%

June: 74% prob of cut to 5% or below

July: 55.9% chance of cut to 4.75% or below

Sep: 45.3% prob of cut to 4.5% or lower

Nov: 67.4% prob of cut to 4.5% or lower

Dec 24: 56.3% chance of cut to 4.25% or under, reflecting increased expectations of four 25bp cuts by yr end.

Last Fridays CFTCs COT Report as of Feb 27 showed the large funds adding 3.9k contracts of longs and adding 2.5k contracts of shorts to increase the Net Fund Long Position by 1.4k contracts to 141.6k contracts. This was done on golds rally from $2023 - $2030 from 2/13-2/20, and reflected a small net of new longs on golds modest advance during that period. This position increased by over 136k contracts from 10/10 12/26 (71.4k 207.7k contracts, +423 ton equivalent), but since then, it has backed off by 66k contracts to current levels. Now back under 150k contracts, this position is just moderately large, and a moderate bearish factor going forward.

GLD holdings:

GLD holdings jumped on 11/17 by 13 tonnes to 883 tonnes to its highest level since 9/12. From there, holdings have become surprisingly steady / lower, sliding to just 823 tonnes its lowest level since July 2019. This is despite golds $100+ move since then - including Fridays $40 advance - reflecting a fair amount of profit taking from GLD longs into the rally, along with some diversification of AI assets into bitcoin ETFs. This level remains toward the lower end of the 730 tonne low in mid-2018, and 1350 tonne high from 12/2012, and can be viewed as a modest bullish factor going fwd.

Q4 Earnings Season Continues, but winding down

Tues: Japans Tokyo CPI, Jibun Bank PMI, Chinas National Peoples Congress, Caixin Services PMI, German Services PMI, Eurozone Services PMI, PPI, UK Services PMI, US Redbook Sales, Services PMI, ISM Services, Factory Orders, RCM/TIPP Eco Optimism, Vehicle Sales, API Oil Inv

Wed: German Bal of Trade, Construction PMI, Eurozone Construction PMI, US ADP Employment, Feds Powell Testimony, JOLTS Job Openings, EIA Oil Inv, Feds Beige Book

Thurs: Chinas Bal of Trade, German Factory Orders, ECB Rate Decision, Lagarde Presser, US Challenger Job Cuts, Bal of Trade, Jobless Claims, Nonfarm Productivity, Until Labor Costs, Feds Powell Testimony, Consumer Credit

Fri: Japans Household Spending, Bank Lending, Leading Index, Coincident Index, Eco Watchers Survey, German Ind Prod, PPI, Eurozone GDP, US Payroll Report

Sat: Chinas Inflation Rate, PPI

We hope you found this report informative and useful in understanding current market conditions. To check your holdings, activate auto-investment via MetalStream, or to start a new investment in physical gold or silver, log in to your account today.

Featured Products

Gold 10 oz Bar

Gold 1 oz Canadian Maple Leaf

Gold 1 oz American Eagle

Gold 1 oz Bar

Would you like to continue to receive these Gold Market Reports?

Download our Mobile App