Market Update | 15/09/2023

Indications only | Closing prices are bids | Prices & Charts  : Trading View | Market Research Refinitiv | See disclaimer below

Today's Observations

The initial move in Asia on Thursday was to the upside as physical buying lifted Gold to an early high for the day of $1912, however the early strength quickly dissipated as the price slipped to $1905 in Europe before recovering to $1910 ahead of the New York opening, and the release of the latest US producer prices data. A strong report showing the fastest growth in 14-months sparked fresh weakness in the gold price to a 3-week low of $1902, however there were willing buyers into this latest dip (Central bank’s again?) and the yellow metal recovered into the close to end with a modest but encouraging 0.16% gain at $1911 amid good trading volume. The rally has extended to $1916 this morning, despite a strong USD and rising US Treasury yields, as rising crude oil prices increase the inflation outlook, a scenario that should be ‘good for gold’.

We expect an active end to the week, and it would be no surprise to see a rally towards the 50-day MA pegged at $1930, while on the downside $1900 has been reinforced as a major point of technical and psychological support. Silver extended this week’s steep decline by another 0.83% to end at $22.65 but has tracked gold higher this morning and looks set to reclaim a foothold above $23; Platinum survived another test of the pivotal $900 level and closed up 0.78% at $909, while Palladium eased 0.89% to $1250.

Market Commentary

(Reuters): September 15, 2023

• Gold prices were on track for their second straight weekly decline on Friday as U.S. inflation readings for August reinforced market bets for further rate hikes by the Federal Reserve after a likely rate pause next week.

• Spot gold was steady at $1,910.85 per ounce by 0100 GMT. Bullion was on track for a weekly decline of 0.4% after having touched its lowest level since Aug. 23 on Thursday. U.S. gold futures were down 0.1% at $1,932.60.

• U.S. producer prices increased by the most in more than a year in August while retail sales also beat expectations, boosted by a surge in gasoline prices. This comes after U.S. consumer prices increased by the most in 14 months last month.

• The European Central Bank raised its key interest rate to a record high of 4% on Thursday but signalled that the hike was likely to be its last.

• SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.3% on Thursday.

• The London Bullion Market Association called for proposals from service firms to create a secure global database that would improve trust in the gold market's value chain.

• Global demand for silver will decline by 9.4% this year largely due to a drop in investment, but the market will maintain a deficit, according to a report from Chilean state agency Cochilco.

• Spot silver rose 0.2% to $22.67 per ounce. Platinum gained 0.1% at $907.19 and palladium fell 0.6% to $1,244.12, both looking poised for weekly gains.

Economic Analysis

• Producer prices in the US increased by 0.7% in August 2023, the highest level since June 2022, and exceeded market expectations of a 0.4% rise. Prices for goods advanced by 2%, driven by a 10.5% surge in energy costs. Meanwhile, prices for services increased by 0.2%, primarily due to rising transportation and warehousing costs (1.4%). Excluding volatile items such as food and energy, the producer price index increased by 0.2%, following a gain of 0.4% in the previous month. On an annual basis, producer price inflation reached a four-month high of 1.6%, while the core rate eased to 2.2%, marking its lowest level since January 2021. source: U.S. Bureau of Labor Statistics

• Retail sales in the US advanced 0.6% mom in August 2023, higher than a downwardly revised 0.5% rise in July and beating forecasts of a 0.2% advance. The data continues to point to robust consumer spending despite high prices and borrowing costs. source: U.S. Census Bureau

Gold Chart ($/oz)

Silver Chart ($/oz)

Platinum Chart ($/oz)

Palladium Chart ($/oz)

This document is issued by Value Trading BV. While all reasonable care has been taken in preparing this document; no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only and for private circulation. It does not constitute any offer, recommendation or solicitation to any person to enter into transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration.