GOLD Analysis | Mines & World Events | OfficialKieranTrewick |
Gold In Depth Weekly Analysis
Gold Mine Productions:
XAUUSD Surged last week reaching 2 new all time highs of $2,500 and $2,530 amidst ongoing tensions in the middle east, BTC reaching over 90% mined whilst Gold mine productions are struggling to reach the last few years production ratio as they declare it is getting harder to find the precious metal, although the first quarter of 2024 we saw production increase by 4% essentially we have not seen any growth since 2016/2018 with the annual production rate staying around 3,000 tons.
New deposits are becoming increasingly harder to find although we have seen some over the recent years such as the current most productive mine based in Uzbekistan and China still leading the race with Australia following closely behind but one thing they have in common is reports of increasingly difficult new metal deposits found.
Aside from the discovery process, government permits getting harder to secure and requiring more time to come through have made mining more difficult. Securing licenses and permits needed before mining companies can start operations can take several years.
USD News Correlations:
Moving onto recent USD events where we saw that the asian markets have remained cautious this Friday as investors closely watch for US Federal Reserve Chair Jerome Powell's speech at Jackson Hole, seeking new insights into the future direction of interest rates. Traders are anticipating significant rate cuts from the Fed due to indications of a weakening labor market.
This risk-averse sentiment has driven increased demand for safe-haven assets like US government bonds, leading to lower Treasury yields and a decline in the US Dollar. The Dollar's weakness is also compounded by a fresh round of selling against the Japanese Yen, following hawkish comments from Bank of Japan Governor Kazuo Ueda, who spoke to the parliament on Friday.
Governor Ueda reiterated his readiness to hike interest rates if inflation appears set to consistently reach the 2.0% target, though he expressed caution about potential instability in financial markets.
Gold, despite a recent recovery, seems poised for its second consecutive weekly decline, with a Fed rate cut in September widely expected. However, Powell's upcoming remarks will be key in determining the extent of future easing measures.
On Thursday, gold prices fell by about 1% as the US Dollar bounced back strongly from over a one-year low against other major currencies, amid deteriorating risk sentiment spurred by disappointing US S&P Global business PMI and Jobless Claims data. Additionally, traders have been adjusting their positions ahead of Powell's anticipated speech at Jackson Hole on Friday.
Gold prices rebounded on Friday after two days of losses, rising as the dollar and Treasury yields fell sharply. This came after Federal Reserve Chair Jerome Powell confirmed expectations for upcoming interest rate cuts.
At the Jackson Hole conference, Powell stated that the Fed is prepared to lower interest rates from their current peak as the labor market shows signs of slowing. He emphasized that future rate cuts would depend on economic data and risks.
Following Powell's remarks, the dollar index dropped 0.83 points to 100.67, and Treasury yields also declined, with the two-year note at 3.926% and the ten-year note at 3.817%.
JPY News Correlation:
According to Market Analyst Konstantin Oldenburger from CMC Markets, the relationship between the Japanese Yen and gold prices has strengthened once again, and a stronger Yen could be a positive sign for gold.
Oldenburger noted that the Bank of Japan might have stepped in to stabilize the weakened Yen last Thursday. He suggested that such interventions could become more feasible if the Federal Reserve shifts its monetary policy stance.
He further explained that U.S. stocks generally perform well when interest rates are high because liquidity flows back into the USD. However, when rates decrease, this liquidity tends to exit the dollar and seek alternative investments globally. "The Yen could gain from this reallocation," he remarked.
After the U.S. released its June CPI data last Thursday, the USD/JPY pair dropped over 2%, sparking speculation that Japan’s Ministry of Finance had intervened.
It is noted that hedge funds currently have limited long positions in the Yen and mainly hold short positions, which could need to be covered if a short squeeze occurs. If the Yen continues to strengthen, hedge funds may be under more pressure to reduce these short positions. Historically, a stronger Yen has been positively correlated with gold prices, suggesting that gold could also see gains.
Gold prices continued to climb on Tuesday due to increased safe-haven demand from China. The People’s Bank of China (PBoC) issued new import quotas for gold to banks, sparking speculation about a surge in demand, according to broker SP Angel. The demand for gold as a safe haven in China rose after Chinese 10-year government bond yields hit record lows last week, leading Chinese investors to look for alternative safe-haven assets, with gold being a prime choice and as we know the chinese yuan is heavily correlated with the japanese yen.
Conclusion
With gold currently priced at $2,511.36, the outlook remains bullish in the short to medium term, especially if current economic uncertainties persist or worsen. Monitoring central bank policies, inflation data, and geopolitical events will be crucial for assessing how high gold prices could go from here. The potential for reaching $2,600 or even higher is present, particularly if market conditions align favorably for gold.
What are your thoughts on Gold and its future outlook, let me know in the comments below!
Gold Mine Productions:
XAUUSD Surged last week reaching 2 new all time highs of $2,500 and $2,530 amidst ongoing tensions in the middle east, BTC reaching over 90% mined whilst Gold mine productions are struggling to reach the last few years production ratio as they declare it is getting harder to find the precious metal, although the first quarter of 2024 we saw production increase by 4% essentially we have not seen any growth since 2016/2018 with the annual production rate staying around 3,000 tons.
New deposits are becoming increasingly harder to find although we have seen some over the recent years such as the current most productive mine based in Uzbekistan and China still leading the race with Australia following closely behind but one thing they have in common is reports of increasingly difficult new metal deposits found.
Aside from the discovery process, government permits getting harder to secure and requiring more time to come through have made mining more difficult. Securing licenses and permits needed before mining companies can start operations can take several years.
USD News Correlations:
Moving onto recent USD events where we saw that the asian markets have remained cautious this Friday as investors closely watch for US Federal Reserve Chair Jerome Powell's speech at Jackson Hole, seeking new insights into the future direction of interest rates. Traders are anticipating significant rate cuts from the Fed due to indications of a weakening labor market.
This risk-averse sentiment has driven increased demand for safe-haven assets like US government bonds, leading to lower Treasury yields and a decline in the US Dollar. The Dollar's weakness is also compounded by a fresh round of selling against the Japanese Yen, following hawkish comments from Bank of Japan Governor Kazuo Ueda, who spoke to the parliament on Friday.
Governor Ueda reiterated his readiness to hike interest rates if inflation appears set to consistently reach the 2.0% target, though he expressed caution about potential instability in financial markets.
Gold, despite a recent recovery, seems poised for its second consecutive weekly decline, with a Fed rate cut in September widely expected. However, Powell's upcoming remarks will be key in determining the extent of future easing measures.
On Thursday, gold prices fell by about 1% as the US Dollar bounced back strongly from over a one-year low against other major currencies, amid deteriorating risk sentiment spurred by disappointing US S&P Global business PMI and Jobless Claims data. Additionally, traders have been adjusting their positions ahead of Powell's anticipated speech at Jackson Hole on Friday.
Gold prices rebounded on Friday after two days of losses, rising as the dollar and Treasury yields fell sharply. This came after Federal Reserve Chair Jerome Powell confirmed expectations for upcoming interest rate cuts.
At the Jackson Hole conference, Powell stated that the Fed is prepared to lower interest rates from their current peak as the labor market shows signs of slowing. He emphasized that future rate cuts would depend on economic data and risks.
Following Powell's remarks, the dollar index dropped 0.83 points to 100.67, and Treasury yields also declined, with the two-year note at 3.926% and the ten-year note at 3.817%.
JPY News Correlation:
According to Market Analyst Konstantin Oldenburger from CMC Markets, the relationship between the Japanese Yen and gold prices has strengthened once again, and a stronger Yen could be a positive sign for gold.
Oldenburger noted that the Bank of Japan might have stepped in to stabilize the weakened Yen last Thursday. He suggested that such interventions could become more feasible if the Federal Reserve shifts its monetary policy stance.
He further explained that U.S. stocks generally perform well when interest rates are high because liquidity flows back into the USD. However, when rates decrease, this liquidity tends to exit the dollar and seek alternative investments globally. "The Yen could gain from this reallocation," he remarked.
After the U.S. released its June CPI data last Thursday, the USD/JPY pair dropped over 2%, sparking speculation that Japan’s Ministry of Finance had intervened.
It is noted that hedge funds currently have limited long positions in the Yen and mainly hold short positions, which could need to be covered if a short squeeze occurs. If the Yen continues to strengthen, hedge funds may be under more pressure to reduce these short positions. Historically, a stronger Yen has been positively correlated with gold prices, suggesting that gold could also see gains.
Gold prices continued to climb on Tuesday due to increased safe-haven demand from China. The People’s Bank of China (PBoC) issued new import quotas for gold to banks, sparking speculation about a surge in demand, according to broker SP Angel. The demand for gold as a safe haven in China rose after Chinese 10-year government bond yields hit record lows last week, leading Chinese investors to look for alternative safe-haven assets, with gold being a prime choice and as we know the chinese yuan is heavily correlated with the japanese yen.
Conclusion
With gold currently priced at $2,511.36, the outlook remains bullish in the short to medium term, especially if current economic uncertainties persist or worsen. Monitoring central bank policies, inflation data, and geopolitical events will be crucial for assessing how high gold prices could go from here. The potential for reaching $2,600 or even higher is present, particularly if market conditions align favorably for gold.
What are your thoughts on Gold and its future outlook, let me know in the comments below!
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