| Time Stamp
Prices as of 9.55 a.m. EDT Comex 30 June 2022 $1,818.80 (Basis the August 2022 Comex Contract).
Recommendation: Buy
Initial Target Price / Range: $1,810
Initial Timeframe: 1 July 2022 to 8 July 2022
Yesterday, on 30 June, CPM broke one of its basic tenets: We suggested a short-term buy signal on gold at $1,818.80, in essence suggesting investors stand in front of a runaway train.
Prices have fallen sharply today, on a combination of factors:
1. Financial markets reducing their inflation expectations. A lower than expected PCE Price Index for June released 30 June at 6.3%, suggesting to financial markets that the FOMC may reduce the ramp up in any interest rate hikes at thier future meetings.
2. Lower nominal interest rates, but higher real rates, with inflation expectations falling faster than nominal rates.
3. A stronger dollar
4. A breakout in prices to the downside of a price range ($1,808 and $1,850) that has held since the middle of May.
5. The U.S. government gaining some power in international politics
6. Financial markets realizing that a lot of the propaganda about a ‘non-western’ political and economic bloc is bluster
7. Silver and gold investors hearing mea culpae from promoters who have been predicting that Comex would run out of silver, that silver prices would rise to $50, $100, $700… and other things.
8. The end of the roll in July Comex silver futures contracts
9. The “4th of July Effect:” Investors not wanting to be long gold in the face of all of the above on a three day weekend when US markets are closed on Monday while London is open.
These factors combined to lead to heavy selling across metals markets Friday morning, from gold to silver, PGMs, and copper.
There has been safe haven buying – of the dollar and U.S. Treasuries. Investors have not turned to gold in this instance because of their lower inflation expectations, among other things.
CPM still expects gold prices to soften during July and August. We have been projecting that gold could fall to $1,780 and even $1,750, in the Gold Trade Recommendations we send to paying clients, our Precious Metals Advisory, and other venues, for months.
We continue to see the scope, and likelihood, of such weakness, for July and August. For the next week, however, we view today’s sell off as “Too Far Too Soon” (homage to the Waterboys). In this environment, CPM would not be surprised to see some rebound to around $1,810 or even $1,820 next week, even as we retain the view that prices will be weak for the next two months.
CPM has one-month, three-month ranges and eight-quarter quarterly price projections with greater discussion of the factors behind CPM’s analyses provided in CPM’s monthly subscription service, the Precious Metals Advisory.
While short-term trade recommendations provide high risk – high reward opportunities for investors, it is difficult to capture the complex web of factors affecting precious metals prices and the nuanced CPM analyses of these factors that goes into our firm’s price projections. In addition to these short-term outlooks, CPM Group provides clients enhanced trade recommendations that include one and three month price projections, as part of our Retail Investor Program. Contact CPM at info@cpmgroup.com for details.
Notes:
Initial Target Prices and Timeframes are just that: Initial. If CPM does not issue a new Recommendation during or after that time it indicates that CPM is maintain the posture in the most recent Trade Recommendation.
Discretion should be allowed at +/- 0.20% of the price at the time each TR is issued from the target. Recommendations are valid until the target date or a new Trade Recommendation or message is issued by CPM.
CPM’s preferred investment strategies use physical, futures, forwards, and options. |