Waiting for gold at the crossroads

[View this email in your browser]( [Youtube]( [Kitco Metals]( Editor's Picks [@neils_C]( After a dismal summer, sentiment in the [gold market]( does not appear to be improving as prices are hovering above an important crossroads. Although the gold market has ended the week off its lows below $1,700, it still saw its third straight weekly loss. Unfortunately, [despite a bounce Friday, prices are only modestly above the critical initial support level.]( Gold's lackluster performance and growing competition from the U.S. dollar are weighing on sentiment, which could push gold prices lower. While $1,700 is the first line of defense in the market, many investors are keeping an eye on $1,685. This is the level that marks gold's breakout parabolic move to $2,000 an ounce two years ago. Many analysts have said that if this level breaks, it could signal an end to gold's three-year bull market. Technical analysts have noted that below $1,675, there is very little in the way to $1,600. [TD Securities,]( which has been very vocal in its bearish outlook for gold and silver, had this to say about the pessimistic price action: "With every tick lower in gold prices, odds of a major capitulation event are growing, which could coincide with a break below a multi-decade uptrend." Surging bullish momentum in the U.S. dollar and resilient strength in bond yields remain the critical headwinds for gold. 10-year yields are back above 3% and the U.S. dollar is ending the week at a fresh 20-year high as markets expect the Federal Reserve to maintain its aggressive monetary policy action. However, while the gold market may be under pressure, the bullish sentiment hasn't completely evaporated. The Federal Reserve continues to talk hawkish, but as [Charlie Morris, chief investment officer at Bytetree Asset Management, told Kitco News]( it's easy to talk tough when the economy is still relatively healthy. This week, Kitco's [Jim Wyckoff pointed out]( that September is traditionally the worst month for equity markets. He noted that weak equity markets could provide some safe-haven demand for gold and silver this month. [Suki Cooper, precious metals analyst at Standard Chartered,]( said in a recent report that she expects $1,700 to hold as support. "Although the yellow metal faces significant downside risks, it also benefits from tailwinds including recession risk, a price-responsive physical market, already scaled-back positioning and elevated inflation," Cooper wrote. Finally, one last word about the U.S. dollar. Although the U.S. dollar is dominating FX markets now, the global dedollarization trend is growing with [BRIC nations saying this week they have no need for the U.S. dollar.]( The current price action either represent a long-term buying opportunity, or the start of a new bear market. With this outlook, it's not surprising that many investors are waiting on the sidelines. 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Brace for $16k Bitcoin next - Alfonso Peccatiello]( [Kitco News]( [BRICS president: Russia and India have no need for the U.S. dollar]( [The risk of gold price plunging below $1,700 is limited, says Standard Chartered]( [Bitcoin price falls below $20k as trader pile into BTC and ETH shorts]( [At $1,700 the gold market is on the cusp of ending its bull-market run – TD Securities]( [Gold price still on track to hit $7,000 at the end of the decade – Bytetree's Charlie Morris]( [It's time to buy commodities, not equities – Goldman Sachs]( [This is the scenario in which gold price jumps $300 this fall – RBC Capital Markets]( [ABN AMRO downgrades gold price but sees solid support around $1,700]( [Billionaire Jeff Gundlach's yield curve inversion warning: 'these are reliable signals of economic trouble']( [Silver looks to be heading to an important support area]( [Gareth]( [Gold price sees little bullish conviction, retail investors bearish as market struggles around $1,700]( [Gold Live App]( [Kitco Mining]( ['As cheap as I've ever seen them' - Rick Rule on beaten up resource stocks]( cheap as I've ever seen them' - Rick Rule on beaten up resource stocks]( ['Barrick to sell royalty portfolio to Maverix Metals for up to $60 million]( [Marathon makes construction decision for Valentine gold project, increases capex estimate]( [Osisko Mining increases resources and gold grade at Windfall deposit]( [Kitco Gold Chart]( [Kitco Gold Chart]( Technically Speaking Jim Wyckoff Market Analyst and Columnist jwyckoff@kitco.com [Dark clouds for equities in Sept. may be silver lining for gold, silver bulls]( Promotion [Silver]( This message was intended for {EMAIL} , as a subscriber and/or customer of Kitco. 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