Gianni Kovacevic: Gold Forecast, Triple-Digit Silver, My Top Conviction Now

The gold price is maintaining its gains after last week’s price breakout, even briefly passing the US$4,400 per ounce level midway through the period.

Silver saw strength as well, pushing past US$66 per ounce for a short time.

Both precious metals are responding to a variety of factors, but at the forefront this week were the latest consumer (CPI) and producer price index (PPI) numbers out of the US.

July CPI was up 3.4 percent year-on-year and 0.1 percent from the previous month, in line with analysts’ expectations. Core CPI, which excludes the food and energy categories, rose 2.5 percent from this time last year and 0.2 percent from June.

Meanwhile, PPI for July was unchanged month-on-month and up 4.7 percent from a year ago. The core PPI numbers came in at 0.2 percent and 4.2 percent, respectively.

Taken together, the CPI and PPI data have eased concerns about future interest rate hikes from the US Federal Reserve. So has last week’s lackluster July nonfarm payrolls report, which outlines an unexpected loss of 23,000 jobs for the month.

Although new Fed Chair Kevin Warsh has been tight-lipped about the central bank’s path forward, commentary out of the upcoming Jackson Hole meeting is expected to provide clues.

For now, a key question for investors is whether the summer doldrums are really over for gold and silver. I heard from John Feneck of Feneck Consulting, who said he thinks the bottom is in.

In his view, the current situation is “all predicated by the war and the Fed,” and developments related to both are moving in a positive direction. Here’s how he explained it:

“The war is shaping up better in terms of the rhetoric, and the Fed is shaping up better because we’ve gotten Kevin Warsh’s first meeting out of the way in June. He just did a second one July 29, so that’s positive, right? We’re getting to know the the rhythm of the new Fed, and that is something that investors are are needing to see.

“But last week was a great price action week, and (August 10) was another follow-through day. So I think the bottom is in, and the only thing that could really derail that is a heavy situation on the war, right? Where Trump doubles down and really lights up Iran. I just don’t see that happening before the November elections here in the US.”

Of course, as usual, opinions in the precious metals sector are split.

I also spoke to David Morgan of the Morgan Report, who said that when it comes to silver, there’s still room for the white metal to go lower from here:

“I think one of the main questions is silver — has the bottom been reached? And the market appears to have established an important floor near the US$50 level. But I wouldn’t declare the correction completely done yet. My working range remains between the low US$50s all the way up to US$90, and until the market demonstrates that it can hold above the upper end, which would be above US$90, we haven’t really re-established the bull market per se.

“The recent recovery in the mid-US$60s is very…