TEST 2, 3, 4

12/30/2024

Gold remains defensive in its range heading into year-end. Silver remains weak.

OUTSIDE MARKET DEVELOPMENTS: Thin holiday trade persists into year-end with another holiday-shortened week. Japan and Europe are largely closed tomorrow. All markets are closed on New Year's Day.

Once the holidays are behind us, the market's attention will shift to inauguration day on January 20. Trump has vowed to take swift action on the trade front by initiating sweeping tariffs. Markets are worried that such measures will stoke global trade tensions and weigh on the global economy.

Trump has also pledged to end inflation in the U.S. although how he intends to accomplish that goal is unclear. Other major priorities include; sealing the southern border and negotiating a peace deal between Russia and Ukraine.

Trump's plans to cut taxes, slash burdensome regulations, and shrink the government should positively impact growth. However, many are worried that higher deficits will be the result.

Many of the promises are short on specifics, so there's a fair amount of uncertainty out there. The market will weigh in more decisively as the details come out and it becomes clear whether the new president has the support of the GOP majorities in Congress. 

Chicago PMI fell 3.3 points to a seven-month low of 36.9 in December, below expectations of 42.2, versus 40.2 in November. It was the third straight monthly decline and the 13th consecutive reading below 50.

Dallas Fed Manufacturing Index jumped 6.1 points to a 33-month high of 3.4 in December, well above expectations of -0.4, versus -2.7 in November. That's the first positive reading since April 2022.

Pending Home Sales Index rose 2.2% to 79.0 in November, above expectations of +0.7%, versus 77.3 in October. Despite a four-month climb, the index remains at depressed levels amid persistent housing market headwinds.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$5.18 (-0.20%)
5-Day Change: -$7.29 (-0.28%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +24.59

Gold has slipped to a five-session low weighed by a firmer dollar. Nonetheless, the yellow metal remains within the confines of the well-defined $2,789.68/$2,541.42 range.



With both Treasuries and the dollar rallying and stocks under pressure, today's price action smacks of year-end book squaring. The $2,585.51 low from 19-Dec provides a solid intervening barrier ahead of the range low at $2,541.42.

I do expect the latter to hold into the new year, although gold has been trading heavier than I might have expected. Recent tests below the 100-day moving average are particularly troubling, as is the comparative weakness in silver.

Global gold ETFs saw a net outflow of just 0.2 tonnes in the week ended 27-Dec. Moderate selling by North American investors was largely offset by Asian and European buying.

Regardless of President Trump's initial fiscal policy moves, the U.S. economy remains in a significantly better position than those of Europe, the UK, China, Canada, and others. Investment flows into the U.S. should continue to buoy the dollar and pose a headwind for gold.

While I can't rule out another serious test of the downside with the potential, I still view the consolidation since the $2,789.68 record high as a continuation pattern within the longer-term uptrend. The yellow metal is still up more than 25% YTD, which will be its best annual performance since 2010.

Since 2000, there have only been six losing years for gold.

Chart courtesy of Macrotrends.net

I envision ongoing geopolitical tensions and central bank buying to remain bullish influences on gold in 2025. The ever-growing global debt load continues to provide an incentive for diversification out of currency and into a hard asset.  

A rebound above the midpoint of the range at $2,665.55 would bode well for renewed tests above $2700 with potential back to the record high at $2,789.68. An eventual breach of the latter would boost confidence in the longer-term bullish scenario that favors a challenge of $3,000.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.104 (+0.35%)
5-Day Change: -$0.301 (-1.02%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +18.47

Silver remains defensive below the 200-day moving average as the trade weighs growth risks in China and Europe. The white metal is back within striking distance of the 19-Dec low at $28.783.



Fresh cycle lows would bode well for the anticipated test of the $28.306 Fibonacci level (78.6% retrace of the rally from $26.524 to $34.853). Below that, the September low at $27.732 would be in play.

While silver is still up more than 21% YTD, recent price action has done some damage to the longer-term bullish outlook.



Several more months of choppy consolidation may be in the offing as much of the world looks to revive growth. However, given the broadly positive supply/demand dynamics of the silver market, I continue to believe the uptrend will ultimately re-exert itself. Fresh record highs in gold in 2025 would certainly help the cause.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/26/2024

Gold and silver firm in thin holiday trade on heightened geopolitical risks

OUTSIDE MARKET DEVELOPMENTS: Geopolitical tensions have escalated amid speculation that Russia is responsible for the downing of the Azerbaijan Airlines passenger plane on Wednesday. Some reports suggest that Russian air defenses were engaging Ukrainian drones and the commercial flight was struck inadvertently.

Most European and Canadian markets remain closed for the holidays. Thin trading conditions.are expected to prevail until after the new year.

Once 2025 has begun, the market's focus will shift to the inauguration of President Trump, his initial raft of executive orders, and political priorities associated with trade, immigration, taxes, and fiscal policies.

Initial Jobless Claims fell 1k to 219k in the week ended 21-Dec, below expectations of 222k, versus 220k in the previous week. Continuing jobless claims surged 46k to a three-year high of 1,910k in the 14-Dec week, versus a revised 1,864k in the previous week.

M2 will be released this afternoon.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$11.82 (+0.45%)
5-Day Change: +$41.43 (+1.60%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +25.03

Gold jumped more than 1% in thin holiday trading to set new highs for the week. Reports that Russian air defenses may be responsible for the downing of the Azerbaijan Airlines passenger plane have increased geopolitical tensions. The Kremlin has warned against such speculation until they have conducted a full investigation.



The yellow metal remains confined to the lower half of the well-defined $2,789.68/$2,541.42 range. The midpoint of the range at $2,665.55 corresponds closely with the 50-day moving average and should remain protected for the remainder of this week. The 20-day MA at $2,642.71 provides an intervening barrier.

A move into the upper half of the range in the week ahead would bode well for tests back above $2700 with potential back to the record high at $2,789.68. An eventual resumption of the dominant uptrend is favored in 2025. The next significant upside objective beyond the all-time high is $3,000.

A minor chart point at $2,622.93 now protects the low for this week at $2,608.94. More important support is marked by last week's low at $2,585.51, which stands in front of the range low at $2,541.42.

Silver is engaged in a test of Monday's high at $29.868, bolstered by safe-haven flows into gold. While last week's range breakout and drop below the 200-day moving average leaves the short-term tone bearish, the downside is likely to be limited as long as gold's range is intact.

 
The white metal has been stymied by global growth concerns and yet silver is poised to end the year with a 25% gain, similar to that of gold. If gold's uptrend resumes in 2025, so too should silver's.

It would take improved global growth prospects to set silver up to outperform in the year ahead. While the U.S. economy remains resilient, concerns about China and Europe are likely to persist and provide headwinds for silver and other commodities.

It would take a sustained rebound above $30 to shift back to a more neutral tone. The $32 level must be exceeded to set a more favorable tone within the old range. That seems unlikely given another holiday week ahead of us.

A breach of last week's low at $28.783 would clear the way for a challenge of the $28.306 Fibonacci level (78.6% retrace of the rally from $26.524 to $34.853). Below that, the September low at $27.732 would be the likely attraction.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/19/2024

Gold remains defensive after the post-Fed plunge, but the range is intact

OUTSIDE MARKET DEVELOPMENTS: Yesterday's FOMC decision was widely anticipated to be a 25 bps  'hawkish cut," but the forward guidance was more hawkish than expected. Members halved their projections for additional easing in 2025 from 100 bps to just 50 bps.

"From here, it's a new phase and we're going to be cautious about further cuts," said Fed Chairman Powell. Fed funds futures are now suggesting the Fed is on hold until June.

The dollar surged, while Treasuries, stocks, and precious metals tumbled. While some markets retraced a portion of yesterday's moves, the greenback remains on the bid.

In other central bank news: The BoJ refrained from another rate hike. The BoE and Norges Bank held steady. Sweden's Riksbank cut by 25 bps. All of these moves were in line with expectations.

Markets will shift into holiday mode after tomorrow's economic releases but traders will continue to ruminate on the Fed's forward guidance and the implications for interest rate differentials through the upcoming holiday weeks. I think they will conclude that this week's events are generally favorable for the dollar.

Philly Fed Index tumbled 10.9 points to a 20-month low of -16.4 in December, well below expectations of 2.5, versus -5.5 in November. New orders and shipments indexes fell into negative territory but "indicators for future activity continue to suggest widespread expectations for growth over the next six months," according to the report.

Q3 GDP (3rd report) was revised to 3.1%, above expectations of 2.9%, versus 2.8% in initial reports and 3.0% in Q2. This bolsters the Fed's assessment that the economy remains resilient.

Initial Jobless Claims fell 22k to 220k in the week ended 14-Dec, below expectations of 231k, versus 242k in the previous week. Continuing claims fell 12k to 1874k in the week ended 7-Dec from 1886k in the previous week.

Leading Indicators rose 0.3% to 99.7 in November, above expectations of -0.1%, versus -0.4% in October. It was the first monthly rise since Feb'22.

Existing Home Sales jumped 4.8% to 4.150M in November, above expectations of 4.092M. versus 3.960M in October. The median sales price dipped $700 to $406,100 versus a revised $406,800 in October. Prices are down $20,800 from June's record high of $426,900.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$30.18 (+1.17%)
5-Day Change: -$79.16 (-2.95%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +24.08

Gold tumbled to a four-week low of $2,585.51 after the Fed's forward guidance for next year came in less dovish than expected. The yellow metal staged a pretty respectable rebound in overseas trading today, but sellers came back in above $2620. While gold is still up 25% YTD hopes for a 30%+ annual gain have been dented.



So far, the well-defined $2,789.68/$2,541.42 range remains intact. My favored scenario called for range trading to prevail into year-end. That's still a possibility but a more bearish tone has emerged, leaving the $2,541.42 low vulnerable to a test.

The violations of the 100-day and 20-week moving averages are troubling for the bull camp. Gold hasn't been below these indicators for more than a year. Dollar strength also poses a significant headwind.

If the $2,541.42 low is penetrated, focus would shift to the $2,482.74 Fibonacci level (38.2% retracement of the rally from $1,986.16 to the $2,789.68 record high). This support is bolstered by the rising 200-day moving average, which is at $2,470.34 today.

Despite recent price action, the long-term trend remains bullish. JPMorgan Chase recently projected that gold could reach $3,000 in 2025. Central bank gold demand has been a major driving force behind the rally and  Goldman Sach doesn't see that slowing down,

A rebound back above the midpoint of the range at $2,665.55 would ease pressure on the downside. That would put gold back above the 20-day moving and close to the 50-day MA ($2,670,07 today).

Silver plunged to three-month lows on Wednesday, weighed by a less dovish Fed and the resulting strength in yields and the dollar. With today's downside extension, the white metal has traded lower in six of the past seven sessions.



With the range violated and silver trading below the 200-day moving average for the first time since March. As noted in yesterday's commentary, the next level of significant support is the $28.306 Fibonacci level (78.6% retrace of the rally from $26.524 to $34.853). Below that, the September low at $27.732 would be the attraction.

Short-term upticks are likely to be viewed as selling opportunities. It would take a rebound above $30 to shift back to a more neutral tone, and a rise above $32 to set a more favorable tone within the old range. That seems unlikely heading into the holiday weeks.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/18/2024

Gold and silver remain range-bound with all eyes on the Fed

OUTSIDE MARKET DEVELOPMENTS: All eyes are on the Fed today in anticipation of a third consecutive easing to round out the year. A 25 bps cut is widely expected, resulting in 100 bps of cumulative easing since September.

The market is particularly interested in the Fed's forward guidance for 2025, given the generally resilient economy and the fact that inflation remains above the 2% target. There had been some tapering of easing expectations for next year recently, although a bid in Treasuries heading into the decision suggests some unwinding is happening. A pause is still favored for January.

I look for the forward guidance to emphasize data dependency, striking a cautious tone about sticky inflation. Call it neutral with a slight hawkish tilt. The dots are likely to edge toward 75 bps in additional cuts in the year ahead. 

Any over-emphasis on inflation or dots below 75 bps for next year would be positive for the dollar. On the other hand,  a more dovish tilt (unlikely) would weigh on the dollar.

The BoE will announce policy tomorrow and is likely to hold the bank rate at 4.75%, amid heightened inflation worries. Governor Bailey signaled last month that the UK budget is likely to stoke inflation.

The BoJ will announce policy tomorrow (our tonight). While the BoJ is the odd man out with a tightening bias, global and regional uncertainty is likely to result in a hold. The BoJ took rates above the zero-bound for the first time in 14 years in March. It was the first rate hike in 17 years. A follow-on hike in July brought the policy rate to 0.25%, a level not seen since February 1999.

MBA Mortgage Applications fell 0.7% in the week ended 13-Dec, correcting gains seen in the previous two weeks. The 30-year mortgage rate rebounded to 6.75%, versus 6.67% in the previous week.

Housing Starts fell 1.8% to 1.289M in November, below expectations 1.344M, versus a revised 1.312M in October (was 1.311M). That's the weakest pace since July. Multifamily starts plunged 23.2%. High mortgage rates remain a headwind.

Current Account Balance widened to a record deficit of -$310.9 bln in Q3, outside expectations of -$284.0 bln, versus a revised -$275.0 bln in Q2 (was -$266.8 bln). 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.35 (+0.01%)
5-Day Change: -$74.81 (-2.75%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +26.84

Gold slipped to a new low for the week, but remains broadly consolidative awaiting this afternoon's Fed decision. The market is not expecting any big surprises, perhaps just a slightly more hawkish tilt in the forward guidance.

 

While I expect the well-defined $2,789.68/$2,541.42 range to hold, we are in the lower half of that range and recent probes into the upper half have proven to be unsustainable. The lows from the past three weeks at $2,628.79/$2,617.65/$2,609.76 provide a solid intervening barrier ahead of the $2,541.42 cycle low.

On the upside, Monday's high at $2,63.89 needs to be negated to clear the way for renewed tests above $2,700. The $2,719.75/$2.723.70 highs are the key to unlocking a challenge of the $2,789.68 record high.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.169 (-0.55%)
5-Day Change: -$1.578 (-4.95%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +21.79

Silver remains defensive in advance of the Fed decision. The low from early December at $30.08 is intact thus far, keeping the more important $29.736/703 lows at bay, but the downside is seen as vulnerable.



A dip below $30.080/00 would clear the way for a challenge of those lows, with the potential to extend to the 200-day moving average at $29.601. Below the latter, the next level of significant support is the $28.512 Fibonacci level.

Fresh highs for the week above $30.724 would set a more favorable short-term tone, suggesting initial potential to Friday's high at $31.088. Penetration of the latter would bode well for tests back above $32.00.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

2/17/2024

Gold and silver remain under pressure within their ranges

OUTSIDE MARKET DEVELOPMENTS: Ukraine's security service is taking credit for placing a remotely detonated bomb in Moscow that killed Lt. General Igor Kirillov, the head of Russia’s Nuclear, Biological, and Chemical Defence Forces. Ukraine had charged Kirillov with using banned chemical weapons, a charge that the U.S. State Department has corroborated.

A targeted killing of a key Russian official in Moscow appears to be a new level of escalation in the nearly three-year-old conflict. Russia has vowed retribution.

German Chancellor Olaf Scholz lost a vote of confidence on Monday, paving the way for snap elections in February. The collapse of the German government is just one in a string of spectacular, political crises, ruling party ousters and outright government collapses this year.

Along with Germany, the UK, France, Japan, and South Korea make the list. Arguably, the Trump win and GOP political gains should also be part of the discussion.

Now there are mounting concerns that the Canadian government of Justin Trudeau is on shaky ground following the resignations of key cabinet members. Trudeau's favorability rating is below 30% and he is unlikely to survive next year's election, resulting in rising pressure to resign.

Today's U.S. economic data were a mixed bag. Better-than-expected retail sales bolster the notion of U.S. economic resilience, although industrial production missed expectations.

The two-day FOMC meeting began today and the Fed is widely anticipated to announce a 25 bps rate cut tomorrow. Market focus has shifted to expectations for a "hawkish cut" with forward guidance indicating a slower pace of easing in 2025.

This is helping to underpin the dollar near three-week highs. Further tests in the dollar index above 107 would bode well for an eventual retest of the two-year high from 22-Nov at 108.07.

Retail Sales rose 0.7% in November, above expectations of +0.5%, versus a positive revised +0.5% in October (was +0.4%). Ex-auto +0.2%, below expectations of +0.4%, versus an upward revised +0.2% in October.

Industrial Production fell 0.1% in November, below expectations of +0.3%, versus a revised -0.4% in October (was -0.3%). Capacity Utilization fell to 76.8%, below expectations of 77.3%, versus a revised 77.0% in October.

Business Inventories rose 0.1% in October, below expectations of +0.2, versus a revised unch in September.

NAHB Housing Market Index was steady at 46 in December. The future sales index rose to 66, its highest level since Apr'22.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$10.75 (-0.41%)
5-Day Change: -$51.54 (-1.91%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +26.77

Gold slipped to a new low for the week, leaving support marked by the lows from the past three weeks at $2,628.79/$2,617.65/$2,609.76 vulnerable to tests. However, the yellow metal remains broadly consolidative near the midpoint of the $2,789.68/$2,541.42 range.



I believe the consolidative tone will prevail as the market shifts to holiday mode at the end of this week. Nonetheless, gold is likely to notch its best annual gain since 2010.

The rise in political uncertainty has tempered risk appetite, but gold isn't garnering much benefit. Bitcoin may be stealing the risk aversion thunder amid hopes that the Trump administration will deem the cryptocurrency a reserve asset. Bitcoin set another record high today at $108,226.65.

Gold may see revived haven interest as political and geopolitical risks extend into the new year. Central bank interest should continue to provide a tailwind as well.

A rebound above this week's highs at $2,658.40/$2,663.89 would clear the way for renewed tests above $2700. Penetration of the more formidable $2,719.75/$2.723.70 level would return focus to the $2736.55 Fibonacci level and the all-time high at $2,789.68.

A breach of support at $2,609.76 would favor tests below $2,600 with potential back to the $2,541.42 range low. 

Silver is under pressure for a fourth straight session, reaching a two-week low of $30.198. The white metal is having additional weight applied from trade tensions and persistent uncertainty stemming from a lack of specifics from Beijing regarding planned stimulus.



The breach of Friday's low at $30.347 favors tests below $30, although the $29.736/703 lows should prove difficult to penetrate as the market shifts to holiday trading. The rising 200-day moving average is at $29.575 today but will correspond with the cycle low by the Christmas week.

A rebound above $32 is needed to set a more favorable tone within the range. The recent highs at $32.255/306 reinforced the range midpoint at $32.278.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/16/2024

Gold and silver remain consolidative, awaiting Fed decision

OUTSIDE MARKET DEVELOPMENTS: This week's focus is squarely on the two-day FOMC meeting that begins tomorrow. Fed funds futures are fully pricing a 25 bps cut for Wednesday's announcement.

It's the forward guidance and the central tendencies for 2025 that the market is most interested in. Easing expectations for the year ahead have ebbed in recent weeks amid signs of a resilient economy and some warmer inflation readings.

I suspect the policy statement and Powell's comments will lean toward a more cautious rate path in 2025 that will likely begin with a January hold. At this point, the market continues to reflect a bias for slightly less than 100 bps in cuts next year.

A less-dovish Fed and more-dovish tilts from some other major central banks are underpinning the dollar. The dollar index reached a two-week of 107.19 last week and remains well-bid to start the new week.

Before the market shifts into holiday mode, we'll also get U.S. retail sales for November (Tuesday) and the Fed's favored measure of inflation (Friday). Median expectations for retail sales are +0.5%. The PCE chain price index is expected to rise 0.2% m/m.

ECB President Christine Lagarde signaled further interest rate cuts are in the offing. While inflation remains elevated, she's seeing some encouraging signs. "If the incoming data continue to confirm our baseline, the direction of travel is clear, and we expect to lower interest rates further," said Lagarde.

Moody's cut France's credit rating to Aa3 from Aa2 based on a view that "the country's public finances will be substantially weakened over the coming years." Fitch and S&P had already made similar downgrades.

Members of South Korea's General Assembly voted on Saturday to impeach President Yoon Suk Yeol after he angered policymakers by declaring martial law earlier in the month. Yoon's presidential powers have been suspended while the Constitutional Court decides if he will be removed or reinstated.

U.S. Empire State Index plunged 31 points to 0.2 in December, below expectations of 9.8, versus 31.2 in November. “On the heels of a strong November, manufacturing activity held steady in New York State in December. The pace of price increases moderated, and employment declined modestly. Firms were fairly optimistic about future conditions,” said Richard Deitz, Economic Research Advisor at the New York Fed.

U.S. Flash Manufacturing PMI fell 1.4 points to 48.3 in December, versus 49.7 in November. "...output is falling sharply and at an increased rate, in part due to weak export demand," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

U.S. Flash Services PMI rose 2.54 points to 58.5, versus 56.1 in November. “The service sector expansion is helping drive overall growth in the economy to its fastest for nearly three years..." said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$14.65 (+0.55%)
5-Day Change: +$0.33 (+0.01%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +27.99

Gold remains range-bound near the 20-day moving average. The yellow metal managed to close 0.6% higher last week, despite the failure to sustain gains above $2,700. Consolidative trading is likely to prevail into year-end. 



Ongoing geopolitical tensions, expectations for a 25 bps Fed rate cut on Wednesday, and ongoing dovishness from other major central banks are providing support for gold. On the other hand, an anticipated tilt by the Fed to a less-dovish bias and the resulting firmness in the dollar pose a headwind.

A sustained move above $2,700 is needed to set a more favorable tone within the broader range. The $2,719.75/$2.723.70 area now provides a formidable barrier ahead of the $2,789.68 record high.

A short-term trendline off the $2,541.42 cycle low has contained the downside thus far today, but the retreat seen late last week leaves the lows from the past three weeks at $2,628.79/$2,617.65/$2,609.76 vulnerable to a challenge.

Gold ETFs saw net outflows of 1.7 tonnes in the week ended 13-Dec. It was the second consecutive net weekly outflow. Selling by North American investors eclipsed small inflows from Europe and Asia.

CFTC Gold speculative net positions

The COT report for last week saw net speculative long positions increase by 15.9k to 275.6k contracts, versus 259.7k contracts in the previous week. It was the third straight weekly increase in spec longs.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.123 (+0.40%)
5-Day Change: -$1.127 (-3.54%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +23.91

Silver is consolidating at the low end of Friday's range after failing once again to sustain gains above $32 last week. While the white metal was encouraged by the most recent Chinese stimulus pledges, the lack of specifics has disappointed once again.



With silver confined to the lower half of the broad $34.853/$29.703 range, I see a modest downside bias. A breach of Friday's low at $30.347 would suggest potential for tests below $30, although the cycle low at $29.703 is likely to remain protected as the market shifts to holiday trading at the end of this week.

A sustained push above $32 is needed to set a more favorable tone within the range. The recent highs at $32.255/306 reinforced the range midpoint at $32.278.

CFTC Silver speculative net positions

Net speculative long positions in silver futures declined 2.1k to 41.2k contracts, versus 43.3k in the previous week. It was the sixth weekly decline out of the last seven.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/12/2024

Gold and silver retreat despite SNB and ECB rate cuts

OUTSIDE MARKET DEVELOPMENTS: While the geopolitical focus shifted to Syria over the past week, Israel continues to prosecute its war against Hamas. Tensions remain high in other regions as well.

Ukrainian missiles and drones struck an oil depot and an "industrial facility" within Russia on Wednesday. Ukraine also fired six U.S.-made ATACMS missiles at a Russian military airfield.

Russia claims that all the ATCMS were shot down or defeated with electronic warfare measures. "This attack by Western long-range weapons will not go unanswered and appropriate measures will be taken," said the Russian Defense Ministry.

There are worries that the promised retaliation will come in the form of another hypersonic Oreshnik missile. Putin also warned previously that the use of NATO-provided weapons like the ATACMS could prompt a Russian response against the providers of those systems.

Earlier this week, China launched one of its largest-ever maritime training exercises in the East and South China Seas. Nikkei Asia reported that China "wants to 'pressure test' Taiwan and see how far it can go." However, Chinese forces are also operating in waters around Okinawa and the Philippines.

The Swiss National Bank (SNB) surprised with a jumbo 50 bps rate cut, halving its policy rate from 1.0% to 0.5%. It was the biggest cut in nearly a decade, bringing the policy rate to its lowest since November 2022.

The SNB noted in the policy assessment that "underlying inflationary pressure has decreased." However, growth risks have become more pronounced.

“Uncertainty about the economic outlook has increased in recent months. In particular, the future course of economic policy in the US is still uncertain, and political uncertainty has also risen in Europe. In addition, geopolitical tensions could result in weaker development of global economic activity. Equally, it cannot be ruled out that inflation could remain higher than expected in some countries.” – SNB Monetary policy assessment

The ECB followed with a 25 bps cut, as was widely expected. The central bank noted that inflation continued to edge down, but remains elevated. They also acknowledged the economy is weakening.

Today's easings come on the heels of yesterday's jumbo rate cut by the BoC and in advance of next week's anticipated 25 bps cut by the Fed. With the policy emphasis shifting from price risks to growth risks, further easing is likely in 2025.

Outgoing Treasury Secretary Yellen expressed regret about not making "more progress" on the deficit during her tenure.

“I am concerned about fiscal sustainability, and I am sorry that we haven’t made more progress. I believe that the deficit needs to be brought down, especially now that we’re in an environment of higher interest rates.” – Treasury Secretary Janet Yellen

Alluding to having made any progress at all has to be a joke. During Yellen's tenure at Treasury, the national debt has increased by $8.4 trillion to exceed $36 trillion. Not to mention the $6.8 trillion increase that occurred when she served as vice-chair and chair of the Fed.

In just the last two months alone, the federal budget deficit reached $622 bln, a $242 bln increase over the same period last year. Government outlays are up 18%, while revenue has dropped 7%.

U.S. PPI rose 0.4% in November, above expectations of +0.3%, versus an upward revised +0.3% in October (was +0.2%); 3.0% y/y, up from a revised 2.6% pace in October (was 2.4%). Core was in line with expectations at +0.2%, versus +0.3% in October. The annualized rate of producer inflation was steady at 3.4%, but October was revised up to 3.4% from 3.1%.

U.S. Initial Jobless Claims surged 17k to 242k in the week ended 7-Dec, above expectations of 220k, versus a revised 225k in the previous week. Continuing jobless claims rose to 1,886k in the 30-Nov week, up from 1,871k in the previous week.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$6.34 (-0.23%)
5-Day Change: +$49.63 (+1.89%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +31.33

Gold eked out a new five-week high in Asian trading at $2,723.70 but was unable to find the stops that I thought were likely above resistance at $2,714.94/$2,719.75. The yellow metal is presently trading more than 1% lower, reinforcing expectations for consolidative trading into year-end.



Nonetheless, the underlying trend remains bullish with help from the dovish stances of key central banks which are likely to extend into 2025. Heightened geopolitical tensions are seen as broadly supportive as well.

The BoC, SNB, ECB, and PBoC have all indicated rising concerns about growth, suggesting they may be more aggressive in cutting rates moving forward. Meanwhile, the resilient U.S. economy may prompt the Fed to be less aggressive in early-2025. The resulting shift in interest rate differential expectations is buoying the dollar, which is limiting the upside in gold.

The World Gold Council released its Gold Outlook 2025 today. "Gold is poised for its best annual performance in more than a decade – up 28% through November," trumpets the WGC. It has indeed been a great year with record highs established through late October.

The WGC remains bullish on gold for 2025, but their outlook is nuanced: 

“The market consensus of key macro variables such as GDP, yields and inflation – if taken at face value – suggests positive but much more modest growth for gold in 2025. Upside could come from stronger than expected central bank demand, or from a rapid deterioration of financial conditions leading to flight-to-quality flows. Conversely, a reversal in monetary policy, leading to higher interest rates, would likely bring challenges. In addition, China’s contribution to the gold market will be key: consumers have been on the sidelines while investors have provided support. But these dynamics hang on the direct (and indirect) effects of trade, stimulus and perceptions of risk.” – World Gold Council

If inflation reverses direction, central banks might have to revert to a more restrictive monetary policy, which would be a headwind for gold. Potential US tariffs are seen by many as a risk that could drive up inflation.

We'll have to wait until after 20-Jan to see how U.S. trade policy unfolds. Some central banks have specifically blamed Trump's tariff threats for stoking uncertainty.

I'm sticking to my choppy/consolidative call for the last several weeks of this year. Given this year's stellar price performance, investors and traders will likely look to lock in profits on upticks within the range. At the same time, gold is still in an uptrend so setbacks within the range continue to offer buying opportunities.

Today's Asian high at $2,723.70 now marks an intervening barrier ahead of the $2,736.55 Fibonacci level (78.6% retracement of the decline from $2,789.68 to $2,541.52). Above the latter, chart resistance at $2,748.72/87 is the last significant barrier ahead of the $2,789.68 all-time high.

Yesterday's low at $2,678.27 has contained the downside thus far, keeping the 50-day moving average ($2,670.62 today) at bay. The latter protects the 20-day MA at $2,648.96 and this week's low at $2,628.79.  
 

Silver reached a five-week high of $32.306 in overseas trade, but for the fourth straight session gains above $32.00 could not be sustained. Today's weakness in gold, this week's upward bias in the dollar, and ongoing concerns about economic growth in much of the world weigh on the white metal.



Silver plunged more than 4% intraday to challenge important support at $30.958/900, where the 20-day moving average corresponds closely with the low for the week. A breach of this level would shift focus to the 100-day moving average at $30.523.

Last week's low at $30.080 provides an additional tier of support ahead of the double bottom at $29.736/703. I continue to favor range trading into year-end, although as mentioned, the range may have narrowed to $32.306/$29.703.

A rebound above the midpoint of today's range at $31.628 is needed to ease short-term pressure on the downside. The $32.278/306 level has been fortified as a key resistance.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/11/2024

Gold reached five-week highs on geopolitical tensions and easing expectations 

OUTSIDE MARKET DEVELOPMENTS: The Bank of Canada (BoC) slashed its policy rate by 50 bps to 3.25%, as was widely expected. While the BoC signaled a more gradual easing path moving forward, "the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook."

The ECB will announce policy tomorrow. A 25 bps cut is anticipated, but a larger 50 bps cut is likely under consideration based on mounting growth risks. The SNB is expected to ease as well.

While U.S. CPI came in a little warmer than expected, it does not take next week's expected rate cut off the table. In fact, Fed funds futures now put the probability of a 25 bps cut at 94.7%, up from 88.9% yesterday and 78.1% last week.

Israel has conducted hundreds of attacks across Syria, hitting strategic weapons stockpiles, launchers, airfields, and warships. IDF ground troops have been deployed into the demilitarized zone and by some accounts beyond.

Other Arab nations are accusing Israel of taking advantage of the turmoil in Syria, raising the temperature in the region. Israel's ambassador to the UN maintains these are “limited and temporary measures to counter any further threat to its citizens.”

China is said to be considering allowing the yuan to weaken in 2025 to offset some of the price pressures expected from the Trump administration's threatened tariffs. A weaker yuan would be consistent with the Politburo's pledge of "appropriately loose" monetary policy as a means to underpin the floundering economy.

U.S. MBA Morgage Applications rose 5.4% in the week ended 06-Dec, versus +2.8% in the previous week. This was a refi-driven move as 30-year mortgage rates edged lower for a fourth week from a 19-week high of 6.9%

U.S. CPI rose 0.3% in November, above expectations of +0.2%, versus +0.2% in October; +2.7% y/y, up from 2.6% in October. Core was in line with expectations at +0.3% m/m, steady at 3.3% y/y.

U.S. Treasury Budget for November comes out later today. The market is expecting the deficit to increase to -$365.5 bln from -$257.5 bln in October. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$2.38 (+0.09%)
5-Day Change: +$65.80 (+2.48%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +33.62

Gold is trading back above $2700 for the first time in two weeks, buoyed by rising Middle East tensions and expectations of further monetary easing from several key central banks.  The yellow metal has tested the late-November highs at $2,714.94/$2,719.75, which have capped the upside thus far.



While gold has become rather overbought on a short-term basis, there should be some stops up here that the bull camp is going to want to run. I expect additional gains to $2,736.55 (78.6% retracement of the decline off the record high) and possibly as high as $2,748.87 (high from 05-Nov). 

Barring a severe escalation on the geopolitical front, I continue to think the range for the remainder of the year is in place. That being said, at this point, we're less than $70 away from the record high.

The underlying trend remains decisively bullish and price action since the $2,789.68 high was established on 30-Oct has all the indications of a continuation pattern. I'm just thinking the trend won't resume until after the first of the year, but each new uptick eats into my confidence on that call. 

On the downside, initial support is noted at $2,700.00/$2,694.64. A retreat below this level would favor a pullback to the 50-day moving average at $2,670.08 and further consolidation.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.188 (-0.59%)
5-Day Change: +$0.839 (+2.68%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +33.54

Silver continues to be underpinned by recent strength in gold. The white metal has probed back above $32, but Monday's high at $32.255 remains intact thus far.


  
Industrial metals continue to be suspicious of the stimulus pledges offered by Chinese policymakers. Investors are also uncertain about the implications of President-elect Trump's proposed tariffs, particularly regarding China which is the world's biggest consumer of these resources.

Monday's confirmation of the double bottom at $29.736/$29.703 favors the upside. A breach of $32.255/278 is needed to perpetuate the two-week uptrend and shift focus to the next tier of Fibonacci resistance at $32.886 (61.8% retracement level of the decline off the late-October peak).

On the downside, I'm watching the 50-day moving average at $31.723 on a close basis. Secondary support is marked by the overseas low at $31.582. More substantial support at $30.900/788 is presently considered well-protected.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/10/2024

Gold sets two-week highs on Middle East tensions and easing expectations

OUTSIDE MARKET DEVELOPMENTS: Uncertainty prevails in Syria, where the HTS rebel group now controls the country after taking Damascus and ousting Bashar al-Assad over the weekend. HTS spun off from al Qaeda and is considered a terrorist group by the U.S. and UN.

It is unclear at this point if the removal of Assad calms the region or dials up the risk level. Israel is not taking any chances and has seized a buffer zone in the Golan Heights and launched airstrikes against Syrian military installations. The IDF seeks to deny the rebels–or any other group–access to weapons that could be used against Israel.

The Reserve Bank of Australia held steady on rates today, as was widely expected. However, the RBA board took on a decidedly more dovish tone, suggesting rate cuts could be in the offing early in the new year.  The Aussie dollar fell in reaction.

The global bias remains toward easing, with rate cuts expected this week from the BoC, ECB, and SNB. The Fed is widely expected to trim rates again next week.

China's exports slowed significantly to a 6.7% annual pace in November, below expectations of +8.5% versus +12.7% in October. Imports fell 3.9%.

The bad news on the trade front comes a day after Chinese policymakers pledged additional stimulus measures. Trade and the broader Chinese economy will face further headwinds if the incoming Trump administration deploys threatened tariffs.

U.S. NFIB Small Business Optimism Index rose eight points to 101.7 in November, versus 93.7 in October. 

“The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners. Main Street also became more certain about future business conditions following the election, breaking a nearly three-year streak of record high uncertainty. Owners are particularly hopeful for tax and regulation policies that favor strong economic growth as well as relief from inflationary pressures. In addition, small business owners are eager to expand their operations.” – NFIB Chief Economist Bill Dunkelberg

U.S. Q3 Productivity was unrevised at 2.2%, versus 2.1% in Q2.

U.S. Q3 ULC was revised lower to 0.8%, versus a 1.9% advance print and -1.1% in Q2 (was +2.4%). This reduces labor costs as a source of inflation, further increasing the likelihood of a Fed rate cut next week.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$23.62 (+0.90%)
5-Day Change: +$35.05 (+1.33%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +31.14

Gold extended to fresh two-week highs as heightened Middle East tensions centered on Syria continue to attract haven interest. Impending rate cuts from several key central banks continue to offer support as well.



Yesterday's breach of resistance at $2,650.65/$2,655.48 and the violation of the 50-day moving average favored a short-term test above $2700. This level is now within striking distance. More substantial resistance is well defined by the late-November highs at $2,714.94/$2,719.75.

If the bull camp musters a breach of $2,719.75 focus will initially shift to the $2,736.55 Fibonacci level, 78.6% retracement of the decline off the record high at $2,789.68. A minor chart point is noted at $2,748.72/87.

Despite this week's gains, the yellow metal is still range bound and I suspect that will continue into year-end. However, I believe the underlying trend is still decisively bullish and is likely to reestablish itself early in the new year.

Heraeus is thinking along the same lines, suggesting that gold's price range will be $2,450 to $2,950 in 2025. The company sees geopolitical tensions in Ukraine and the Middle East, and ongoing central bank interest as the major supporting factors.

Silver remains generally well bid, at the high end of yesterday's range. The white metal is being supported by strength in gold and some level of optimism about the latest Chinese stimulus pledges.



The weak trade numbers out of China initially weighed on silver, but perhaps they will steel the resolve of policymakers in Beijing. Heraeus notes that "global industrial demand for silver is on track to reach a record high of at least 700 moz this year." They are optimistic about 2025 as well.

Strong demand and a supply deficit bode well for the underlying uptrend. However, choppy consolidative action is likely to prevail into year-end.

The midpoint of the $34.853/$29.703 range is at $32.278, just above yesterday's high at $32.255. Penetration of this level would clear the way for an upside extension to $32.886, the 61.8% retracement level of the decline off the late-October peak. A measuring objective off the double bottom that was confirmed yesterday targets $33.194.

Today's intraday low at 31.728 corresponds closely with the 50-day moving average and should keep congestive chart support at $31.454/291 at bay.

now provides support. This level protects the more important $30.900/788 zone, where today's Asian low corresponds closely with the 20-day moving average.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/9/2024

Gold firms on Middle East tensions, rate cut expectations, return of PBoC buying

OUTSIDE MARKET DEVELOPMENTS: Rebel forces in Syria seized the capital of Damascus, forcing President Bashar Assad to flee the country. Assad was granted asylum in Russia.

President Biden called Assad's ouster a “fundamental act of justice,” but warned it was also “a moment of risk and uncertainty.” The power vacuum created could lead to even greater turmoil in the region similar to what happened in Iraq and Libia.

Israel moved quickly to temporarily seize a buffer zone in the Golan Heights amid the heightened uncertainty. The IDF also struck chemical weapons sites and long-range rocket installations within Syria to prevent those weapons from falling into the wrong hands.

Chinese stocks and bonds rallied after policymakers signaled that more accommodations would be forthcoming to support the economy. The Politburo pledged to boost demand, and stabilize property and stock markets by pursuing "more proactive" fiscal policies, "moderately loose" monetary policy, and "extraordinary counter-cyclical policy adjustments."

In the wake of Friday's U.S. nonfarm payrolls report, the market is increasingly convinced that the Fed will continue its easing campaign when the FOMC meets next week. Payrolls modestly beat expectations, but the unemployment rate ticked up to 4.2%.

Fed funds futures currently reflect an 86% probability for a 25 bps rate cut at the last policy-setting meeting of the year. At this point, the market is leaning toward a hold in January.

The Fed's focus this week will be on U.S. CPI data for November. The market is expecting a headline increase of 0.2% m/m and +0.3% for core.

The global easing trend remains highlighted. The BoC is expected to deliver another 50 bps cut on Tuesday. The ECB and SNB are expected to cut rates by 25 bps on Thursday. The ECB may contemplate a larger cut amid weak growth and despite hotter inflation in November. 

U.S. Wholesale Sales fell 0.1% in October, below expectations of +0.2%, versus a positive revised +0.5% in September (was +0.3%). Wholesale inventories rose 0.2%, versus -0.2% in September.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$23.62 (+0.90%)
5-Day Change: +$29.51 (+1.12%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +30.45

Gold is up more than 1% to start the new week, buoyed by heightened geopolitical tensions in the Middle East, expectations of central bank rate cuts, and news that the PBoC bought gold in November. Despite today's gains, the yellow metal remains well within the well-defined $2,789.68/$2,541.42 that has dominated for more than three weeks.



The collapse of the Assad regime in Syria has stoked geopolitical risks in the region, prompting Israel to take preemptive actions.  Expectations that a number of major central banks will move to ease policy over the next two weeks are providing additional lift to gold.

China's central bank resumed buying gold for reserves in November after a six-month hiatus. Official data showed an increase of 160,000 ounces in gold reserves.

"The resumption will send a signal that the PBoC has grown accustomed to these record high price levels and is prepared to build reserves regardless," Saxo Bank's Ole Hansen told Reuters.

The RMB price of gold was up 28% through November. The high price and ongoing economic uncertainty dented Chinese jewelry demand this year, but investment demand for bars, coins, and ETFs were offsetting forces.

Global ETF holdings fell 8.2 tonnes in the week ended 06-Dec. It was the first net decline in three weeks and all regions were sellers.

The COT report for last week showed net speculative long positions increased by 9.4k to 259.7k contracts, versus 250.3k in the previous week. The second consecutive weekly increase puts spec-long positioning at a five-week high.

CFTC Gold speculative net positions

The breach of chart resistance at $2,650.65/$2,655.48 and the probe above the 50-day moving average at $2,668.31 set a more favorable tone within the broader range. Scope is seen for short-term tests above $2,700, but the late-November highs at $2,714.94/$2,719.75 look well protected.

Former resistance at $2,655.48/$2,650.65 now marks initial support. This level protects more important supports at $2,631.10/$2,628.79 (20-day MA and today's overseas low) and the lows from the past two weeks at $2,617.65/$2,609.76.

More choppy range trading into year-end remains favored.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.304 (+0.97%)
5-Day Change: +$1.590 (+5.21%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +33.33

Silver surged more than 4% intraday to trade above $32 for the first time in four weeks. The white metal was lifted by pledges for more Chinese stimulus, heightened Middle East tensions, and an easier tone in the dollar.



Net speculative long positioning in silver futures rose 0.5k to 43.3k contracts last week, versus 42.8k in the previous week. While the rise was modest, it broke a string of five weeks of consecutive contractions in long positioning.

CFTC Silver speculative net positions
 

While silver could not sustain probes above $32, today's gains confirm the double bottom at $29.736/$29.703. The move back above the 50-day moving average lends additional confidence to a bullish scenario that favors a move into the upper half of the $34.853/$29.703 range.

The midpoint of that range is at $32.278. Penetration of this level would clear the way for an upside extension to $32.886, the 61.8% retracement level of the decline off the late-October peak. The measuring objective off the double bottom targets $33.194.

Former congestive resistance at $31.454/291 now provides support. This level protects the more important $30.900/788 zone, where today's Asian low corresponds closely with the 20-day moving average.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/6/2024

Gold and silver shrug off jobs report to remain range-bound

OUTSIDE MARKET DEVELOPMENTS: U.S. nonfarm payrolls rose 227k in November, above expectations of +215k, versus a revised +36k in October (was +12k). The unemployment rate ticked up to 4.2%.

Hourly earnings rose 0.4% on expectations of +0.3%, versus +0.4% in October. The average workweek was 34.3 hours, versus a revised 34.2 hours in October.

While the labor market has recovered from hurricane-related distortions and the Boeing strike in October, the trend since Q1 reinforces the perception that the jobs market is cooling.

That concern is reflected in the jump in December rate cut expectations to near 90%. That's up from 71% yesterday and 66% a week ago.

Treasuries rallied and the dollar index slipped to a three-week low. Stocks firmed, although risk appetite remains broadly neutral.

Fed Governor Bowman (centrist-hawk) worries that cutting rates too quickly could revive inflation. “I would prefer that we proceed cautiously and gradually in lowering the policy rate, as inflation remains elevated,” she said.

U.S. Michigan Sentiment (prelim) rose 2.2 points to a seven-month high of 74.0 in December, above expectations of 73.3, versus 71.8 in November. Current conditions surged 21.6% to 77.7, while expectations moderated to 71.6. Year-ahead inflation expectations rose to a six-month high of 2.9% from 2.6% last month. Long-run inflation expectations ticked down from 3.1%, versus 3.2% in November.

U.S. Consumer Credit for October comes out later today. Median expectations are $10 bln.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$5.96 (+0.23%)
5-Day Change: -$14.35 (-0.54%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +29.34

Gold eked out a new low for the week in Asian trade, but the tone remains consolidative with little response to today's U.S. jobs data. The yellow metal needs to close above $2,650.59 to avoid a second straight lower weekly close. That seems unlikely as of this writing.



Last week's low at $2,609.76 remains protected with the new intervening barrier marked by today's earlier low at $2,617.65. With price action still confined to the lower half of last week's range, the short to near-term bias remains consolidative.

A breach of $2,609.76 early next week would shift attention to the rising 20-week moving average at $2,595.23 and the 100-day moving average at $2,583.31.

On the upside, initial resistance is well-defined by this week's series of highs at $2,650.65/$2,655.48. This zone provides a formidable barrier ahead of last Friday's high at $2,665.16 and the 50-day moving average at $2,667.78.

Gold-backed ETFs saw net outflows of 28.6 tonnes in November led by selling in Europe. It was the first global net monthly outflow since April as gold corrected from October's record high on soaring risk appetite in the wake of the U.S. election outcome. 

North American investors continued to be net buyers in November, notching a fifth consecutive month of inflows, albeit a scant 0.8 tonnes. The World Gold Council suggested it was largely the result of Canadian buying.

Silver edged to a new high for the week in Asian trading before falling back into the range, leaving resistance at $31.465 (19-Nov high) protected. An outside day is evident, but the white metal still appears poised for a higher weekly close as range trading continues.

 

A breach of $31.465 was needed to allow for a challenge of the more important $31.691/709 level (Fibonacci/50-day MA). Penetration of the latter would favor renewed probes above $32. 

A retreat below the 20-day moving average at $30.737 would leave chart support at $30.509/485 vulnerable to a challenge. Below the latter, the lows at $29.736/$29.703 would be back in play.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/4/2024

Gold remains range-bound as silver firms on economic optimism

OUTSIDE MARKET DEVELOPMENTS: Political turmoil continues in South Korea after President Yoon Suk Yeol imposed martial law on Tuesday, but quickly rescinded the order after intense pressure from Parliament. Opposition lawmakers are now calling for Yoon to resign or face impeachment.

The French government is on the verge of collapse, with grim implications for the economically struggling EU. PM Barnier is expected to face a vote of no confidence as soon as today. President Macron is also in jeopardy after his call for a snap election last summer set the stage for the current political upheaval.

Fighting in Syria has intensified as government forces counterattack against opposition forces that took the second-largest city of Aleppo last week. Russian warplanes are reportedly flying in support of President Bashar al-Assad forces. Iran has said it would send troops to Syria if asked.

Iranian-backed fighters fired upon U.S. troops operating in eastern Syria. The U.S. military struck back against those attackers. While unrelated to what's happening around Aleppo, U.S. forces are in harm's way and create the potential for escalation.

President-elect Trump has also told Hamas that there will be "all hell to pay" if the remaining hostages are not released by inauguration day. This suggests the potential for greater U.S. involvement in Israel's war against the terrorist group.

The latest OECD economic outlook highlighted the resilience of the global economy despite a fair amount of uncertainty this year. Global GDP growth is projected to strengthen slightly to 3.3% in 2025 and remain stable at this level through 2026.

Today's U.S. economic data misses, particularly in services ISM bolstered confidence that the Fed will cut rates by an additional 25 bps this month. FedSpeak from Barkin and Musalem towed the cautious, data-dependent line. Fed Chairman Powell speaks this afternoon. 

U.S. ADP Employment Survey showed private payrolls growth of 146k in November, below expectations of +165k, versus a negatively revised +184k in October (was +233k). "Manufacturing was the weakest we've seen since spring. Financial services and leisure and hospitality were also soft,” said Nela Richardson, ADP's chief economist.

U.S. S&P Global Services PMI was adjusted lower to 56.1 in November, versus a flash print of 57.0 and 55.0 in October. "Companies have reported stronger demand for services thanks to the clearing of political uncertainty following the election, as well as brighter prospects for the economy in 2025 linked to the incoming administration and hopes for lower interest rates," said  Chris Williamson, Chief Business Economist at S&P Global.

U.S. Services ISM fell 3.9 points to a three-month low of 52.1 in November, below expectations of 55.6, versus 56.0 in October. Weakness in the data was broad-based. 

U.S. Factory Orders rose 0.2% in October, below expectations of +0.3%, versus a positive revised -0.2% in September (was -0.5%). Inventories fell 0.1%, versus a revised -0.3% in September.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.27 (+0.01%)
5-Day Change: +$14.46 (+0.55%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +30.29

Gold remains generally consolidative in the lower half of last week's range. The yellow metal edged to a new high for this week on support from an uptick in rate cut expectations, a softer dollar, and heightened political and geopolitical tensions.

  
Scope is seen for a test of Friday's high at $2,665.16. Above that, the 50-day moving average at $2,669.08 resists. Penetration of the latter would favor renewed tests above $2,700.

Barring significant escalation on any of the geopolitical/political fronts, last week's high at $2,719.75 is a formidable short-term barrier. Choppy consolidative trading remains favored within the well-established $2,789.68/$2,541.42 range.

The bull camp is being encouraged by ongoing central bank gold demand. The World Gold Council reports 60 tonnes of net official sector buying in October, the highest monthly total of the year thus far.

Perhaps not surprisingly, gold reached a record high in October. India, Turkey, and Poland were the biggest buyers. 

"While rising gold prices appear to have inhibited some buying and prompted tactical sales over recent months, October's rebound in reported activity signals continued interest from central banks to accumulate gold within their reserve portfolios," according to the WGC.

On the downside, the 20-day moving average has been attracting some buying interest over the past two sessions, keeping Monday's low at $2,623.31 at bay. More substantial support is marked by last week's low at $2,609.76.

Silver jumped to a new high for the week stoked in part by OECD economic optimism. The white metal has pressured the highs of the previous three weeks at $31.417/465/503.



A push through this important resistance zone would confirm the potential double-bottom at $29.736/$29.703. Such a move would target $31.691/726 initially, where the 38.2% retracement level of the decline off the October high corresponds with the 50-day moving average.

A retreat below the 20-day moving average at $30.781 would leave today's overseas low at $30.509 and yesterday's low at $30.485 vulnerable to tests. Below the latter, the lows at  $29.736/$29.703 would be back in play.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

12/2/2024

Gold and silver weighed by firmer dollar

OUTSIDE MARKET DEVELOPMENTS: Ukrainian President Zelenski has suggested that he might be willing to cede territory currently in Russian hands – at least temporarily – if his country is accepted into NATO. “If we want to stop the hot phase of the war, we need to take under the NATO umbrella the territory of Ukraine that we have under our control,” Zelensky said.

This seems like a non-starter for Russia as NATO expansion to include Ukraine was seen by many as a pretext for the invasion. The FT reports that the Kremlin requires the end of U.S. aid to Ukraine, the removal of Zelenski, and a discussion between Putin and Trump on “all the issues of the global order at the highest level.”

Putin is warning that Russia could strike “decision-making centers” in Kyiv with ballistic missiles, while the U.S. is sending an additional $725M in military aid to Ukraine. Peace in Ukraine does not seem imminent.

Israel says Hezbollah fired on IDF positions in disputed territory, testing the fragile ceasefire. Hezbollah acknowledged the attack saying it was a “defensive and warning response” to repeated Israeli violations of the ceasefire.

Meanwhile, the HTS rebel group has seized Aleppo, the second-largest city in Syria with little opposition from government forces. It is widely believed that the Russian and Iranian-backed forces of Syrian President Bashar al-Assad will mount a counteroffensive.

President-elect Trump has warned the BRICS countries that he won't tolerate the creation of a new currency to challenge the status of the dollar as the preeminent global reserve currency. He threatened 100% tariffs and loss of access to U.S. markets for failing to heed his warning.

If this latest threat of tariffs has any teeth, the de-dollarization trend could be slowed. However, it highlights the "exorbitant privilege" the U.S. has maintained for decades. The fact that Trump is prepared to defend the dollar may harden the resolve of the BRICS and could draw the attention of other trading partners.

The dollar starts the week on firmer footing, retracing some of last week's losses. Trump's jawboning is likely a factor, as are trimmed expectations for additional rate cuts next year. While a 25 bps rate cut in December is still favored, Fed funds futures suggest a bias toward just one additional 25 bps cut in H1'25.

It's a data-heavy week ending with the November jobs report on Friday. We'll also hear lots of FedSpeak, including from Chairman Powell.

U.S. S&P Global Manufacturing PMI final rose to a six-month high of 49.7 in November versus a flash reading of 48.8 and 48.5 in October.

U.S. Manufacturing ISM jumped 1.9 points to a five-month high of 48.4 in November, above expectations of 47.7, versus 46.5 in October. Prices modered to 50.3 from 54.8 in October.

U.S. Construction Spending rose 0.4% in October, above expectations of +0.2%, versus +0.1% in September. The hurricanes provided a boost to spending.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$8.33 (-0.31%)
5-Day Change: +$12.24 (+0.47%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +29.45

Gold is under modest pressure, weighted by a firmer dollar. Despite four straight higher daily closes to end last week, the yellow metal still posted a 2.4% weekly loss. 



Monday's sharp drop spurred by the Israel-Hezbollah ceasefire was the dominant feature on the chart, but geopolitical tensions remain broadly elevated, providing some underpinnings for the market.

Dollar strength spurred by tough talk from President-elect Trump to the BRICS nations and expectations of a more hawkish Fed is seen as a headwind. Choppy consolidative trading within the $2,789.68/$2,541.42 range into year-end remains likely.

Today's probes above the 20-day moving average at $2,639.20 have been a struggle, leaving the more important 50-day MA protected at $2,669.47. The latter is bolstered by the midpoint of the range at $2,665.55.

Thursday's low at $2,623.08 has contained the downside and the bounce from $2,623.31 fortifies this support level. Last week's low at $2,609.76 marks secondary support. 

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -0.130 (-0.42%)
5-Day Change: +$0.123 (+0.41%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +27.36

Silver caught a bit of a bid in overseas trading after better-than-expected Chinese manufacturing data provided some demand optimism. However, upticks could not be sustained and the white metal continues to straddle the 100-day and 20-week moving averages.



With price action confined to the lower half of last week's range, the short-term technical bias remains to the downside. Support at $29.736/703 defines a potential double-bottom that perhaps warrants a challenge.

Penetration would shift focus to the rising 200-day moving average at $29.159.

It would take a breach of resistance at $31.417/465 to confirm the double-bottom and set a more favorable tone within the range. Good intervening resistance is noted at $30.853/656 where the 20-day moving average corresponds closely with Friday's high.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/27/2024

Gold edges higher on increased odds for a December rate cut and softer dollar.

OUTSIDE MARKET DEVELOPMENTS: The ceasefire between Israel and Hamas took effect last night and appears to be holding. Over the next 60 days, Hezbollah will withdraw at least 25 miles from the border and Israel will pull out of Lebanon. 

In the meantime, negotiations will continue to craft lasting peace. The Biden administration now turns its attention to a ceasefire between Israel and Hamas. That may be harder to achieve.

The minutes from the November FOMC meeting were released yesterday afternoon. While the bias remains toward normalization, the committee acknowledged that recent FedSpeak has been "interpreted as signaling a more gradual pace of policy easing than previously thought."

The minutes reiterated that the policy path remains data-dependent. Perhaps not surprisingly the members studiously avoided discussion of the election results.

The minutes didn't really move December rate cut expectations, but this morning's pre-Thanksgiving rush of data saw the potential for a 25 bps cut edge up to 70.0%, versus 59.4% yesterday and 55.7% a week ago.

U.S. Durable Orders rose 0.2% in October, below expectations of +0.3%, versus a positive revised -0.4% in September (was -0.8%). Ex-transportation was +0.1%. Shipments -0.6%.

U.S. Advance Indicators International Trade Deficit narrowed 8.8% to -$99.1 bln in October, inside expectations of -$102.0 bln, versus -$108.7 bln. Wholesale inventories rose 0.2% to $905.1 bln. Retail inventories rose 0.1% to $824.7 bln.

U.S. Q3 GDP (2nd report) unchanged at 2.8% in line with expectations. The chain price index was also unchanged and in line at +1.8%.

U.S. Initial Jobless Claims fell 2k to a 30-week low of 213k in the week ended 23-Nov, below expectations of +217k, versus a revised 215k in the previous week. Continuing claims rose to 1,907k in the 16-Nov week, versus a revised 1,898k in the previous week.

U.S. Personal Income rose 0.6% in October, above expectations of +0.3%, versus +0.3% in September.

U.S. PCE rose 0.4% in October, in line with expectations, versus a revised +0.6% in September. The chain price index rose 0.2% m/m and the annualized rate accelerated to 2.3%, versus 2.1% in September. Core +0.3% m/m and 2.8% y/y, up from +2.7% in September.

U.S. Pending Home Sales Index rose 1.98% to 77.4 in October, versus 75.8 in September. Despite the recent rebound, the index remains at weak levels with 30-year mortgage rates near 7%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$19.05 (+0.72%)
5-Day Change: -$8.77 (-0.33%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +27.19

Gold is trading higher for a second session, buoyed by an uptick in December rate cut expectations and a modestly firmer dollar. The yellow metal remains just below the midpoint of the $2,789.68/$2,541.42 range ahead of the holiday.



I continue to watch the 20- and 50-day moving averages which are at $2,655.49/$2,667.77 today and have successfully capped the upside thus far. The midpoint of the aforementioned range is at $2,665.55.

A push through this zone would bode well for renewed tests above $2,700. Monday's high comes in at $2,719.75 and protects the 78.6% retracement level at $2,736.55.

On the downside, the overseas low at $2,627.83 protects yesterday's low at $2,609.76. The 100-day MA comes in at $2,568.67 and stands in front of the $2,541.42 cycle low.

Silver continues to struggle on upticks above the 100-day moving average. While the range from the 11-Nov week remains intact, the downside looks vulnerable.



If yesterday's low at $30.087 gives way a retest of the $29.736 low from 14-Nov becomes likely. Below the latter, the rising 200-day moving average at $29.044 attracts.

The key resistance level for silver is 32.294, which is the halfway back point of the decline from $34.853 (22-Oct high) to $29.736 (14-Nov low). This level must be exceeded to return some credence to the longer-term uptrend, but it's well protected by multiple tiers of resistance.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/26/2024

Gold and silver remain defensive after Monday's losses

OUTSIDE MARKET DEVELOPMENTS: A ceasefire between Israel and Hezbollah appears imminent. As part of the deal, Hezbollah would vacate positions along Israel's northern border allowing the IDF to return its full attention to eradicating Hamas.

The prospect of a truce dialed down global geopolitical risks somewhat stoking risk appetite over the past 24 hours. However, the Israel-Hezbollah conflict is just one part of a complex web of risks. Arguably the recent escalation of the war in Ukraine has greater and far-reaching global implications.

Market enthusiasm over President-elect Trump's nomination of Scott Bessent for Treasury Secretary also contributed to the surge in U.S. risk-on sentiment. Bessent is a highly respected hedge fund manager who will provide sober counsel to President Trump and perhaps smooth some of the rough edges of his trade policies.

Trump is threatening America's largest trading partners with significant tariffs, including 25% on all products coming from Canada and Mexico, and an additional 10% on China. Markets are understandably concerned about a potential trade war and heightened inflation risks.

The President-elect has indicated that the tariffs are a penalty for failing to address the flow of illegal immigrants and drugs into the U.S. This suggests to me that Trump is leveraging access to the world's most desirable consumer market as a negotiating tool to further his broader agenda.

“One tariff would be followed by another in response, and so on until we put at risk common businesses," worried Mexico's President Claudia Sheinbaum. “I think we are going to reach an agreement,” she said.

Nonetheless, the threats of tariffs will foster a sense of global uncertainty and market angst at least through inauguration day. At that point, we'll see if the incoming President moves to impose those tariffs or if "agreements" are quickly achieved.

Scott Bessent is known to be a deficit hawk and if approved by the Senate he'll have his work cut out for him from the get-go. The deficit surged during the COVID crisis and while it moderated subsequently it remained generally larger than pre-COVID levels and is growing once again.

With the national debt now over $36 trillion and debt servicing expenses surging, the new Congress should at least consider reestablishing the debt ceiling to show of commitment to addressing this issue. 

U.S. Case-Shiller Home Price Index (nsa) fell 0.3% to 333.6 in September, versus a revised 334.8 in August. It was the first back-to-back monthly decline since January as prices moderated from the 335.8 record high in July. The annualized pace of home price appreciation slowed to 4.6% versus 5.2% y/y in August.

U.S. FHFA Home Price Index jumped 0.7% to a record high of 430.3 in October, above expectations of +0.3%, versus a revised 427.4 in September. It was the fifth consecutive monthly gain, as tight supply continues to override the headwind posed by high mortgage rates.

U.S. New Home Sales plunged 17.3% to 0.610M in October, well below expectations of 0.723M, versus 0.738M in September. Affordability remains a huge issue as prices continue to rise and mortgage rates remain elevated. Two major hurricanes in late September and early October adversely impacted sales as well.

U.S. Consumer Confidence rose 2.1 points to a 16-month high of 111.7 in November, above expectations of 111.4, versus a positive revised 109.6 in October (was 108,7). Consumers are optimistic about the incoming government. While the assessment of the family's current financial situation slipped, consumers had more favorable expectations for the labor market, inflation, and the stock market.

FOMC Minutes from the November 6-7 meeting and M2 come out later today.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$6.81 (+0.26%)
5-Day Change: +$0.23 (+0.01%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +26.62

Gold extended this week's losses in overseas trading to $2,609.76 before stabilizing somewhat. The yellow metal notched its biggest one-day loss in four years on Monday as hopes for an Israel-Hezbollah ceasefire and cheer over Trump's pick for Treasury spurred risk appetite.



Yesterday's optimism has been tempered somewhat today as markets digest Mr. Trump's latest threats of tariffs. There seems to be some consensus that tariffs will reignite inflation and perhaps prompt central banks to leave rates at restrictive levels.

If that proves to be the case, will gold react as the classic inflation hedge, or will it be weighed by its non-yielding status if interest rates rise? I'd lean toward the former based on gold's solid performance during Fed tightening cycles, including the most recent one.

I'd show you Fed fund with a gold price overlay but for some reason, the Fed removed the gold data set from FRED a couple of years ago. I guess it was inconvenient...

The short-term bias is to the downside, but I suspect that buying interest will resurface somewhere ahead of the $2,541.42 cycle low. We can consider support mentioned in yesterday's commentary at $2,610.94/$2,609.54 intact. This level is defined by the low from 19-Nov and 61.8% of the rally off the low.

A test back below $2,600 can not be ruled out, but I think the $2,580/$2,575 zone will contain the downside. Again, I believe choppy range trading will prevail into year-end.

The 20- and 50-day moving averages have converged at $2,662.22/$2,665.90 which is the resistance level to watch on the upside. Penetration would bode well for renewed tests above $2,700.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.236 (+0.78%)
5-Day Change: -$0.600 (-1.92%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +20.22

Silver continues to test below the 100-day moving average but price action remains confined to the range established two weeks ago between $31.503 and $29.736. Today's intraday low at $30.087 provides an intervening barrier ahead of the cycle low.



The short-term bias remains to the downside and tests back below $30 can not be ruled out. A breach of the $29.736 low from 14-Nov would shift focus to the rising 200-day moving average at $29.007.

The 20- and 50-day MAs are at $31.347 and $31.781 today. This area is bolstered by solid chart resistance at $31.417/465 and must be cleared to set a more favorable tone within the range.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/25/2024

Gold and silver hit hard by revived risk-on sentiment

OUTSIDE MARKET DEVELOPMENTS: Markets have been cheered by President-elect Trump's broadly appealing choice of Scott Bessent for Treasury Secretary. This has boosted risk appetite offsetting some of the risk-off flows associated with hot geopolitical tensions between Russia and the West.

Bessent is known to be a fiscal hawk who will hopefully be keen to address America's surging debt burden, which is now more than $36 trillion. To accomplish that and keep the economy on an even keel, Bessent may seek to temper Trump's campaign promises for aggressive tax cuts and tariffs.

Stocks and Treasuries are higher. Lower yields have pulled the dollar index off last week's 13-month high. 

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$26.83 (-0.99%)
5-Day Change: +$20.32 (+0.78%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +26.60

Gold has come under significant selling pressure amid revived risk appetite, notching the biggest one-day drop since 07-Jun when we saw surprisingly strong May jobs data. The yellow metal has retraced about half of last week's solid gains.



President-elect Trump's nomination for Treasury Secretary and optimism about a possible ceasefire between Israel and Hezbollah have shifted market focus to riskier assets and away from havens like gold.

However, the conflict between Israel and Hamas continues and tensions between Russia and the West remain extremely high. Any escalation in either theater could quickly swing market sentiment back toward risk-off.

I still anticipate a 25 bps rate cut in December, but recent FedSpeak has taken on a more cautious tone heading into 2025, which also poses a bit of a headwind for gold. Prospects for a December hold continue to hover around 40% but became close to a 50-50 proposition on Friday.

Global ETFs saw a modest net inflow of 3.4 tonnes last week on heightened geopolitical risks, ending the string of weekly outflows at two. North American buying eclipsed outflows from Europe and Asia.

Futures traders were apparently less inclined to buy into last week's rally. The latest CFTC COT report showed net speculative long positions fell 2.1k to 234.4k contracts in the week ended 22-Nov from 236.5k contracts in the previous week. It was the fourth consecutive weekly decline.

Last week's gains back above $2,700 went a long way toward suggesting the corrective low is in place at $2,541.42. From there I was expecting choppy consolidative trading to prevail into year end. Today's price action reinforces that expectation with competing risk-on/risk-off forces competing for the attention of investors.

I suggest that such a consolidation phase would bode well for an eventual continuation of the long-term uptrend. A rebound above $2,668.84/$2,669.91 would ease pressure on the downside and suggest potential for further probes above $2,700.

With gold back below the 20- and 50-day moving averages, the short-term bias is back to the downside. Supports to watch are at $2,621.25 (20-Nov low) and $2,610.94/$2,609.54. The latter is marked by the low from 19-Nov and 61.8% of the rally off the $2,541.43 cycle low.

Silver plunged more than 3% in sympathy with gold. The much smaller, more thinly traded silver market has a higher beta that lends itself to amplified moves, particularly on the downside.



Despite the recent swings, the white metal remains confined to the range established in the week ended 15-Nov. However, today's breach of last week's low at $30.260 and the move back below the 100-day moving average suggests the $29.736 cycle low from 14-Nov remains vulnerable to a challenge.

Unlike gold, last week's gains in silver failed to signal that the corrective low was likely in place. I was watching the 20- and 50-day moving averages and the $32.294 Fibonacci level for that confirmation.

The CFTC COT report for last week showed net speculative long positions declined by 1.3k to 46.3k contracts, versus 47.6k in the previous week. While the decline was slight, it was the fourth consecutive weekly decline in net spec long positioning.

CFTC Silver speculative net positions

The 20- and 50-day MAs are at $31.551 and $31.787 respectively and are protected by solid chart resistance at $31.417/465. A rebound through this zone is needed to reinvigorate the bull camp.

I still think we could get a range form as long as gold holds its low. However, a fresh cycle low in silver below $29.736 would shift focus to the rising 200-day moving average at $28.970.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/22/2024

Gold and silver poised for first weekly gain in four as geopolitical risks mount 

OUTSIDE MARKET DEVELOPMENTS: Russia fired a new advanced hypersonic ballistic missile at the Ukrainian city of Dnipro on Thursday in the latest escalation of the conflict. The Oreshnik missile system is nuclear-capable and carries multiple independently guided warheads. The missile is said to travel at ten times the speed of sound and is maneuverable in flight making it all but impossible to be intercepted.

The Kremlin confirmed that the use of the Oreshnik missile was retaliation for Ukraine’s use of U.S.- and UK-supplied missiles against targets inside Russia. "We consider ourselves entitled to use our weapons against the military facilities of those countries that allow their weapons to be used against our facilities," said Russian President Putin.

The stakes are extraordinarily high and continue to drive safe-haven flows. Gold is benefitting but so is the dollar. The dollar index has set a new two-year high at 108.07.

The greenback is also being boosted by euro and sterling weakness following dismal PMI data indicative of heightened recession risks. These risks also set the stage for accelerated easing from the ECB and BoE. The euro is trading at levels last seen in Nov'22 against the dollar, while cable reached a six-month low.

The comparatively resilient U.S. economy and higher yields make for an attractive investment environment. When foreign investors buy U.S. shares and Treasuries, the transaction starts with converting their local currency to dollars.

That being said, I still anticipate the Fed will cut rates by another 25 bps in December. However, Fed funds futures continue to suggest there is about a two in five chance of a hold.

U.S. S&P Flash Global Manufacturing PMI rose 0.3 points to a five-month high of 48.8 in November, below expectations of 48.9, versus 48.5 in October.

U.S. S&P Flash Global Services PMI surged 2.0 points to a 32-month high of 57.0 in November, well above expectations of 55.0, versus 55.0 in October.

Employment fell for a fourth straight month. Prices for goods and services "rose only very modestly in November."

"The prospect of lower interest rates and a more probusiness approach from the incoming administration has fueled greater optimism, in turn helping drive output and order book inflows higher in November," said S&P's Chris Williamson.

U.S. Michigan Sentiment Final was adjusted down to 71.8 for November, below expectations of 73.8, versus a preliminary read of 73.0 and 70.5 in October. The revised print is still a seven-month high. Inflation expectations ticked down to 2.6%.

The University of Michigan notes that the "stability of national sentiment this month obscures discordant partisan patterns." Not surprisingly, Republicans are more optimistic, while Democrats turned more pessimistic. This reflects "the two groups’ incongruous views of how Trump’s policies will influence the economy."

FedSpeak is due from Governor Michelle Bowman (centrist/hawk) this afternoon. Her topic is AI, and she may not comment on monetary policy.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$29.10 (+1.09%)
5-Day Change: +$131.67 (+5.14%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +34.39

Gold continues to retrace recent losses driven by rising geopolitical tensions. The yellow metal is poised for its first higher weekly close in four.



Gold has now retraced more than 61.8% of the entire decline from $2,789.68 (30-Oct high) to $2,541.42 (14-Nov low). Gold is also back above all the major moving averages.

Considerable credence has been returned to the long-term uptrend. I still think a period of choppy consolidation is possible within the $2,789.68/ $2,541.42 range if calmer heads in both Russia and the West prevail. If tensions continue to escalate I expect gold to resume its trend toward $3,000 and beyond.

The next levels I'm watching on the upside are $2,736.55 (78.6% retrace) and a minor chart resistance at $2,745.93/$2,748.72. Beyond the latter, confidence would be high for a retest of the record peak at $2,789.68.

On the downside, the 20-day moving average at $2,675.20 protects today's overseas low $2,668.84. 

Just as we noted that the historic inverse correlation between gold and the dollar was re-exerting itself, both are sharply higher today. Besides haven flows, the greenback is also being helped by euro and sterling weakness.

The strength of the dollar makes gold more expensive for buyers using other currencies. This could potentially reduce overseas demand unless they view the potential gains as outweighing their price sensitivity.  

The Reserve Bank of India (RBI) added about 28 tonnes of gold to reserves in October, bringing YTD purchases to 78 tonnes. Total RBI gold holdings are now 882 tonnes, accounting for about 10% of total reserves.

Record high XAU-INR prices in October clearly didn't dissuade the RBI  from adding to reserves. I suspect that will continue to be the case for many central banks.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +0.460 (+1.49%)
5-Day Change: +$0.885 (+2.93%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +27.26

Silver is probing above $31.00 once again, but remains below Monday's high at $31.465 and within last week's range. Like gold, the white metal is positioned to notch its first higher weekly close in four.



Gold's strength is helping to underpin silver, but two-year highs in the dollar and mounting growth risks in Europe and the UK are a counterbalance for the largely industrial metal.

A report released by The Silver Institute earlier this week makes a pretty compelling case for silver as a safe-haven asset. In the wake of some key geopolitical events silver actually outperformed gold.

With gold approaching record territory once again, it might be worth considering at least a partial allocation to silver as a hedge against mounting geopolitical risks.

A breach of last week's high at $31.503 would clear the way for a challenge of the $31.718/$31.795 zone where the 20-day moving average has converged with the 50-day. Penetration of the letter would shift focus to the more important $32.048/294 zone where good chart resistance corresponds with the halfway back point of the four-week decline.

A move above $32.294 would strongly suggest that the corrective low is in place at $29.736 (14-Nov).

An intraday chart point at $31.032 marks first support. More substantial support is found at $30.750/680


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/20/2024

Gold remains underpinned by geopolitical risks but revived dollar strength limits

OUTSIDE MARKET DEVELOPMENTS: Russia has pledged to retaliate for President Biden’s decision to allow Ukraine to strike targets within Russia with U.S.-made missiles. The U.S. embassy in Kyiv closed today in anticipation of significant Russian missile and drone attacks.

Sky News is reporting that Ukraine has fired British Storm Shadow missiles into Russia. Russia's recently revised nuclear doctrine views aggression from any non-nuclear state – but with the participation of a nuclear power – a joint attack on Russia.

Does Russia now view itself at war with the U.S. and UK, and perhaps NATO as a whole? While doctrine now suggests a nuclear response is possible, Russian nuclear saber-rattling is nothing new.

Markets are nervously awaiting a response from Putin. Events this week are most certainly escalations of the conflict and markets have shifted to more risk-off positioning.

The U.S. vetoed a UN Security Council resolution that demanded an "immediate, unconditional and permanent cease-fire" in Gaza. The U.S. objected because the resolution did not call on Hamas to release the remaining hostages.

While geopolitical tensions are at the fore of the market's consciousness, speculation about the Fed's policy intentions for the December FOMC meeting persists. Fed funds futures now suggest a 41% probability of rates being held at 4.50%-4.75%. That's up from 17.5% a week ago and 21.8% a month ago.

The prospect of a less-dovish Fed heading into the new year provides an additional tailwind for the dollar. The dollar index set a 13-month high last week largely on post-election investment flows driven by expectations of more market-friendly policies from the incoming President and Congress.

The recent setback in the greenback was limited and had the characteristics of a bull flag formation. This chart pattern favors additional near-term gains. Most of the setback from last week's high has already been retraced.



Scope is seen for a challenge of last year's high in the DX at 107.35. This level is bolstered by the 50% retracement level of the entire decline from the 2022 high at 114.78 to the 2023 low at 99.58.

MBA Mortgage Applications rose 1.7% in the week ended 15-Nov. It was the second consecutive week of improvement but with 30-year mortgage rates reaching a 19-week high of 6.90% headwinds for the housing market persist.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$4.51 (-0.17%)
5-Day Change: +$76.23 (+2.96%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +31.37

Gold remains underpinned by heightened geopolitical tensions. However, dollar strength and rising expectations of a December hold by the Fed are seen as limiting factors.



Nonetheless, the yellow metal is edging toward an important resistance level at $2,659.09/$2,665.55 where the 50-day moving average corresponds closely with the halfway back point of the recent decline. A push through this zone would suggest to me that the corrective low is in place at $2,541.42.

My initial expectation was that gold would meet resistance shy of the all-time high at $2,789.68 and choppy consolidative trading would prevail into year-end. Such price action would be a continuation pattern within the long-term uptrend. I do believe that trend ultimately resumes.

However, if tensions associated with the war in Ukraine continue to escalate, the uptrend could re-exert itself much faster. If Russia were to use a tactical nuclear weapon or if there is direct fighting between Russian and NATO forces, gold could surge to $3,000 and beyond. 

The World Gold Council noted healthy gold jewelry, coin, and bar buying in India during Diwali, despite record-high prices. According to the WGC, "Volatility in domestic equity markets, coupled with rising international prices, has added to gold’s investment appeal." This has also contributed to robust ETF inflows. 

Swiss gold exports jumped to 101 tonnes in October, helped by Indian seasonal demand. That's an 8% increase versus September. However, exports are still down about 38% y/y due to slack demand from China and Hong Kong stemming from record-high prices.

If gold is unable to move convincingly above $2,665.55 a move back below $2,600 would have to be considered. Today's overseas low at $2,621.25 and yesterday's low at $2,610.94 provide intervening barriers.
 

Silver is trading lower today, unable to build on gains notched earlier in the week. The white metal typically does not have the same haven appeal as gold, so there is less of a buffer against today's resurgent dollar.



That being said, the Silver Institute report I cited yesterday notes that Russia's initial invasion of Ukraine and the resulting sanctions corresponded closely with a significant turning point in silver. In times of geopolitical unrest, investors turn to alternative assets, including silver, as an investment.

"During times of safe haven demand due to flare-ups in geopolitical tensions many of the relationships with the fundamental drivers for silver are interrupted," according to the report.

Last week's high at $31.503 successfully contained the upside yesterday, leaving the 50-day moving average at $31.769 protected. Penetration of these levels is needed to shift focus to the more important $32.048/294 zone where good chart resistance corresponds with the halfway back point of the four-week decline.

A move above $32.294 is needed to suggest that the corrective low is in place at $29.736 (14-Nov).

Today's European low at $30.827 marks initial support. Penetration would bode well for another run at the 100-day moving average, which is at $30.394 today.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/19/2024

Gold extends gains on haven bid after Ukraine fires U.S.-made weapons into Russia

OUTSIDE MARKET DEVELOPMENTS: Ukraine reportedly fired six U.S.-made ATACMS missiles at a Russian military installation in the Bryansk region of Russia. Moscow reports that five missiles were shot down, the sixth was damaged, and there were no casualties.

The attack occurred just days after President Biden gave the green light for Ukraine to use U.S. weapons to hit targets on Russian soil.  President Putin warned in September that “This will mean that NATO countries – the United States and European countries – are at war with Russia."

Putin lowered the threshold for the use of nuclear weapons in response to Biden's decision. "The Russian Federation reserves the right to use nuclear weapons in the event of aggression with the use of conventional weapons against it," said a Kremlin spokesman.

The escalation of the conflict has put markets on edge awaiting Putin's response. Post-election risk-on flows that have dominated the past two weeks have been tempered and perhaps reversed. President-elect Trump has pledged a negotiated peace deal even before he moves into the White House. Uncertainty and risks abound.

The haven bid has buoyed Treasuries and gold. The dollar index remains off the 13-month high set last week, but the downside is seen as limited from here.

U.S. Housing Starts contracted to a 1.311M pace in October, below expectations of 1.330M, versus a revised  1.353M in September (was 1.354M). Building Permits slid to a 1.416M pace from 1.425M in September. Housing Completions tumbled to 1.614M versus 1.688M.

FedSpeak is due from KC Fed President Jeffrey Schmid (centrist) this afternoon. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$17.05 (+0.65%)
5-Day Change: +$39.37 (+1.52%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +30.57

Gold has extended to the upside lifted by safe-haven demand after Ukraine wasted no time in using U.S. weapons after receiving permission to do so from President Biden. Just over 38.2% of the two-week decline has now been retraced.



Further escalation in Ukraine should lead to further upside retracement. Russia's use of tactical nuclear weapons or the direct involvement of NATO forces could almost certainly send gold soaring to new record highs and beyond.

My position has been that the decline off the $2,789.68 record high (30-Oct) is a correction within the long-term uptrend. The high-to-low magnitude of the drop has been just shy of 9% thus far. I was also heartened by the fact that the 100-day moving average survived last week's challenge.

Nonetheless, it's premature to suggest the corrective low is in. My preferred scenario was that a range would develop and choppy consolidative trading would prevail into year-end.

Heightened risks associated with the war in Ukraine could absolutely reignite the dominant uptrend. Markets are nervously awaiting Putin's response to today's missile attack.

The next resistances I'm watching are $2,656.21 (50-day moving average) and $2,665.55 (50% retracement). Penetration of the latter would go a long way toward confirming that the corrective low is in place at $2,541.42.

If President-elect Trump, or some other party, can get Russia and Ukraine to the negotiating table geopolitical tensions could moderate pretty quickly. That would likely put gold back on the defensive.

A negotiated peace would almost certainly require Ukraine to cede territory to Russia, something they appear loathe to agree to. After 1,000 days of Russian aggression within Europe, is it even possible for the U.S. and its allies to put NATO expansion back on the table?

Failure to sustain the recent gains back above $2,600 would favor a test of the halfway back point of the rally at $2,589.86. A breach of the latter would leave the 100-day moving average and last week's low vulnerable to further tests.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.115 (+0.37%)
5-Day Change: +$0.671 (+2.18%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +28.73

Silver extended to new highs for the week in early U.S. trading, buoyed by strength in gold and helped by a generally neutral dollar. However, the white metal has since slipped back into negative territory leaving the price confined to last week's range.



With last week's high at $31.503 intact, the 50-day moving average at $31.722 is protected. Penetration of these levels is needed to shift focus to the more important $32.048/294 zone where good chart resistance corresponds with the halfway back point of the four-week decline.

A move above $32.294 would strongly suggest that the corrective low is in place at $29.736 (14-Nov).

The Silver Institute released a report today highlighting the benefits of a silver allocation for diversification and risk reduction. "Historically, silver has proven its value during economic and geopolitical crises, serving as a reliable hedge against inflation, currency devaluation, and systemic financial instability," according to the report.

New intraday lows below $31.099 would return focus to a pivot point at $30.890 with potential back to $30.600 (50% retrace of the rally from last week's low).


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/18/2024

Gold and silver bounce on revived geopolitical risks, softer dollar

OUTSIDE MARKET DEVELOPMENTS: President Biden has given Ukraine permission to use U.S. long-range missiles to strike military targets within Russia. Vladimir Putin had previously warned that such an attack would mean the U.S. and Russia are at war.

“Today, there is a lot of talk in the media about us receiving a permit for respective actions. Hits are not made with words. Such things don’t need announcements. Missiles will speak for themselves,” said Ukrainian President Zelensky.

After 1000 days of war, the Russian military is depleted – to the point of using North Korean troops on the frontline – and it seems unlikely they would seek direct conflict with the U.S. and NATO. However, Putin has already threatened to use nuclear weapons.

This is a rather significant escalation. After nearly two weeks of post-election repositioning, there has been a realization that geopolitical risks persist.

Israel conducted a targeted strike in Beirut on Sunday that killed a key Hezbollah spokesman. The terrorist group responded by firing more than one hundred rockets into Northern Israel.

China's Xi Jinping spoke with President Biden on the sidelines of the APEC conference in Lima, Peru. "China is ready to work with the new U.S. administration, to maintain communication, expand the cooperation and manage differences, so as to drive forward a steady transition of the China-U.S relationship for the benefit of the two peoples," said Xi.

The two leaders also agreed it was better for human beings rather than AI to control their nuclear arsenals. That's reassuring!

U.S. NAHB Housing Market Index rose three points to a seven-month high of 46 in November from 43 in October.  The future sales component was the driving force, defying the rebound in mortgage rates that began in October.

TIC Data for September comes out this afternoon.

Chicago Fed President Austin Austan Goolsbee warned that clearing in the $28 trillion US Treasury market has become much more concentrated in recent years. He views this as a risk.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$31.90 (+1.24%)
5-Day Change: -$15.28 (-0.58%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +28.32

Gold rebounded nearly 2% as market focus returned to geopolitical risks. The yellow metal appears poised for its first higher daily close in seven sessions, helped by a setback in the dollar.



The move back above $2,600 is encouraging following last week's bounce off the 100-day moving average. However, additional gains are needed to return confidence to the longer-term uptrend.

Initial resistances are at $2,614.77 (13-Nov high) and $2,625.32 (12-Nov high). More important levels to watch this week are $2,636.26 (38.2% retrace), $2,653,93 (50-day MA), and $2,655.65 (50% retrace).

Penetration of the latter would signal that the corrective low is in place. At that point, I expect choppy consolidative trading to prevail into year-end.

If tensions between Russia, the U.S., and NATO flare, the uptrend could certainly re-exert itself more quickly. A rebound above $2,700 would put the record high from 30-Oct at $2,789.68 back in play.

Initial support is marked by a minor intraday chart point at $2,582.71, which protects today's Asian low at $2,563.06 and Friday's low at $2,556.18. More important supports are noted at $2,548.47 (100-day MA) and $2,541.42 (14-Nov low).

There were 23.7 tonnes of net outflows from global ETFs last week. European investors were the leading sellers at -18.2 tonnes. It was the biggest net weekly outflow in more than a year. Interestingly, in the first full post-election trading week, there were 0.8 tonnes of inflows from U.S. investors.

Last week's COT report revealed net speculative long positions in gold futures contracted by 18.8k to 236.5k contracts. It was the third straight weekly drop and the lowest since the 14-Jun week.

Silver rebounded to a five-session high above $31, boosted by a higher gold price, a weaker dollar, and revived geopolitical risks. The white metal is up nearly 3% intraday.



The net speculative long position in silver futures declined by 5.7k to 47.6k last week according to the latest CFTC COT report. It was the third consecutive weekly decline and the lowest reading in nine weeks.

CFTC Silver speculative net positions

Silver still needs to regain the $32 level to ease pressure on the downside and to suggest that the low is in. Intervening resistance is noted at $31.664/691, where the 50-day MA corresponds closely with the 38.2% retracement level of the three-week decline.

On the downside, former resistances at $31.021/000 and $30.773 now offer support. Today's overseas low and the low from Friday at $30.260/200 now protect the cycle low at $29.736 (14-Nov low).


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/15/2024

Gold and silver rebound modestly but appear poised for a third straight weekly loss

I'm in Baltimore for the Whitman Winter Expo. I'm going to make today's commentary short and sweet so I can get to the show.

OUTSIDE MARKET DEVELOPMENTS: U.S. Retail Sales rose 0.4% in October, above expectations of +0.3%, versus a positive revised +0.8% in September (was +0.4%). Ex-auto rose 0.1% on expectations of +0.4%, versus an upward revised +1.0% in September (was +0.5%)

U.S. Empire State Index surged 43.1 points to a 38-month high of 31.2 in November, well above expectations of -0.9, versus -11.0 in October. 

U.S. Import Price Index +0.3% in October, above expectations of  -0.1%, versus -0.4% in September. Ex-petro was +0.2%.

U.S. Export Price Index +0.8 in October, well above expectations of  -0.1%, versus a revised -0.6% in September.

Industrial Production and Business Inventories come out later this morning. FedSpeak is due from Collins and Williams.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.30 (+0.21%)
5-Day Change: -$114.38 (-4.26%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +27.34

Gold is trading modestly higher, looking to end its five-day losing streak, but will still notch a third consecutive lower weekly close. 



The yellow metal remains confined to yesterday's range thus far, but we could see some additional short-covering into the weekend as traders ring up profits on this week's more than 4% plunge.

A breach of yesterday's high at $2,580.58 could spark a move back to $2,600.00. However, at this point, I'm inclined to view upticks as corrective within the short-term downtrend.

Bears are likely to view a bounce as a selling opportunity. There may also still be some longs in the market contemplating a belated capitulation at a higher price.

That being said, I like the rebound off the 100-day moving average that we saw yesterday. It's just premature to suggest the low is in.

A further retracement back above $2,636.26 and more importantly $2,665.55 would return a measure of credence to the uptrend. However, I'm not expecting new record highs until Q1'25 at this point. Choppy range trading is likely to prevail for the remainder of 2024.

On the downside, fresh cycle lows below $2,541.42 would shift focus to the next level of significant support at $2,482.74, which marks a 38.2% retracement of this year's rally.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.244 (+0.80%)
5-Day Change: -$0.578 (-1.85%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +27.57

Silver managed a higher daily close yesterday and there's been some modest upside follow-through today. Nonetheless, the white metal appears destined for a third straight lower weekly close.



Silver needs to regain the $32 level to ease pressure on the downside and to suggest that the low is in. Intervening resistances are noted at $31.021 (13-Nov high) and $31.618 (50-day MA).

A breach of yesterday's low at $29.736 would allow for a true test of the $29.706 Fibonacci level. Below the latter, $29.00 and the 200-day moving average at 28.727 would be the attraction.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/14/2024

Gold and silver bounce from two-month lows but the short-term trend remains bearish

I'm in Baltimore for the Whitman Winter Expo. I'm going to make today's commentary short and sweet so I can get to the show.

If you're at the show, look for a handsome guy in a grey Zaner polo and a black Tornado ball cap, and be sure to say hello!

OUTSIDE MARKET DEVELOPMENTS: U.S. PPI rose 0.2% in October, in line with expectations, versus unch in Sep; +2.4% y/y, up from +1.8% in September. Core +0.3%, also in line, versus +0.2% in September; +3.1% y/y, versus +2.8% in September.

The month-on-month gains in PPI were in line with expectations, but hotter-than-expected annualized rates of producer inflation bolster the narrative of a less-dovish Fed.

The market continues to favor a 25 bps rate cut in December, but chances for a December hold have edged up to 24.3% from 17.5% yesterday.

I think the Fed is going to hold its cards close to the vest until the Trump administration and the new Congress are in place and actually try to enact some of the policies that have been bandied about throughout the campaign and post-election. Until then, the Fed will follow through on its vow to focus on the incoming data.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$19.31 (-0.75%)
5-Day Change: -$152.09 (-5.62%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +26.28

Gold continues to be pressured by post-election risk-on repositioning. The yellow metal has traded lower for five straight sessions, eight of the last eleven.



However, today's post-PPI rebound off the 100-day moving average is at least modestly encouraging for the bulls, particularly in light of the oversold condition that worsened with the overseas drop to new two-month lows.

While the short-term trend is bearish, I still see it as corrective within the longer-term uptrend. The magnitude of the correction since the all-time high is just under 9%. Strategists at JP Morgan see the post-election sell-off as "a stumble not a sea change."

At this point, I'm inclined to agree but it's premature to suggest the low is in. Bears are likely to view a bounce as a selling opportunity and undoubtedly there are still longs in the market contemplating bailing.

Fresh lows from here would shift focus to the next level of significant support at $2,482.74, which is 38.2% retracement of this year's rally.

There are still plenty of bullish fundamentals in support of the long-term uptrend, but for now, the market's focus is squarely on the seismic shift in the U.S. political landscape.

Optimism about the U.S. economy and stocks is attracting foreign investment flows that have driven the dollar to 13-month highs. The inverse correlation between gold and the dollar has re-exerted itself and has proven to be a major headwind over the past week.

In the near term, I see gold finding a bottom somewhere between the present low and $2,482.74 and then choppy range trading is likely to prevail into year-end.

Silver fell to a two-month low below $30 in overseas trading. However, the white metal has subsequently rebounded and is trading higher on the day.



The $29.705 Fibonacci level (61.8% retracement of the leg up from $26.524 to $34.853) was confirmed as a downside target with last night's convincing breach of the 100-day moving average. While $29.705 was approached it successfully contained the downside.

A close today back above the 100-day ($30.344) would be mildly encouraging, but really $32 must be regained before I would have any confidence that the low is in.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/13/2024

Gold and silver remain defensive

OUTSIDE MARKET DEVELOPMENTS: Markets continue to process the U.S. election outcome. The trade implications of the second Trump Presidency seem to be the biggest area of concern.

On the campaign trail, President-elect Trump claimed that he didn't need Congress to enact his trade policies. Many beg to differ. While his hardline on trade could just be a negotiating tactic, U.S. trade partners are understandably worried.

Bundesbank President Joachim Nagel worries that Trump tariffs could have a -1% impact on German GDP. With Europe's largest economy already stagnant that could lead to a recession. "If the new tariffs actually materialise, we could even slip into negative territory," said Nagel.

Shares of Japanese automakers have been hit hard over the past week. Japan's auto exports to the U.S. are more than three times as large as its domestic market. 

The IMF forecasts Japan's GDP to be just +0.3% this year, and +1.1% in 2025. Japan's export-driven economy would be hard-hit by tariffs.

Trump appears to really have it in for China, threatening them with tariffs of 60% to 100%. However, China holds a trump card in the form of more than $800 bln in U.S. debt. Retaliation could turn the bond market ugly in a hurry.

With more than $1 trillion in U.S. debt, Japan certainly has the means to retaliate as well.

Reduced trade could also hasten de-dollarization and lead to weaker demand for Treasuries. That being said, our trading partners want and need access to U.S. consumers. There's plenty of room for negotiation in most instances.

Increasing optimism about the U.S. economy and the wealth effect of high-flying stocks could set the stage for the best Christmas buying season in years. Many Americans may be planning purchases of imported goods such as electronics before tariffs are applied.

My 18-year-old who has been kicking tires for several weeks is keen to get a car bought "before prices go up." I love that he's thinking about such things... 

U.S. MBA Mortgage Applications rose 0.5% in the week ended 08-Nov, versus -10.8% in the previous week. Purchases were up 1.9%, while refis fell 1.5%. New 17-week highs in the 30-year mortgage rate pose a headwind.

U.S. CPI +0.2% in October, in line with expectations, versus +0.2% in September; +2.6% y/y, up from 2.4% in September. Core CPI rose 0.3% on expectations of the same, versus +0.3% in Sep; +3.3% y/y, unchanged from September.

I call today's inflation reading fairly benign. Despite the slightly hotter annualized headline CPI print, the odds for a December Fed hold fell today to 17.7% from 41.3% yesterday.

Treasury Budget for October comes out this afternoon. Median expectations are -$242.5 bln. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$12.37 (+0.48%)
5-Day Change: -$51.04 (-1.92%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +29.99

Gold started the U.S. session with a bit of a bid, as prices not seen in September and an oversold condition prompted some bargain hunting and perhaps some short covering.  However, upticks could not be sustained and the yellow metal has subsequently fallen to fresh eight-week lows.



Yesterday's breach of chart/trendline support at $2,606.62/$2,604.16 (10-Oct) leaves the downside vulnerable to the next tier of support at $2,549.18 (18-Sep low). The rising 100-day moving average comes in modestly lower at $2,540.84 today.

Despite Fed funds futures showing more favorable odds for another 25 bps rate cut in December, the dollar remains on the bid. The dollar index extended to 12-month highs and continues to weigh on gold.

Losses since the $2,789.68 record high was set on 30-Oct have exceeded $200 (7.5%). The short-term trend remains down, but I still see it as corrective within the longer-term uptrend.

Today's earlier high at $2,614.77 marks first resistance. Yesterday's high at $2,625.32 and the 50-day moving average at $2,649.75 protect the halfway back point of the decline at $2,684.54.

The IMF is being urged to sell 4% of its gold holdings to replenish its Catastrophe Containment Relief Trust (CCRT) and help poor countries deal with climate-related catastrophes. The IMF currently has 90 Moz of gold so a 4% sale would equate with 3.62 Moz.

Such a sale strikes me as unlikely and is probably not contributing meaningfully to today's losses in gold. The IMF hasn't sold gold since the tail-end of the global financial crisis in 2009/10.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.164 (+0.53%)
5-Day Change: -$0.289 (-0.93%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +28.49

Silver ticked briefly back above the $31 level in early U.S. trading, but these gains could not be sustained as the dollar went back on the bid and gold fell to eight-week lows. While silver is back trading lower on the day, yesterday's low at $30.228 remains protected thus far.



If silver does set new cycle lows below $30.229/228 it would shift focus to $29.705 (61.8% retracement of the leg up from 26.524 to $34.853). A minor intervening chart point is noted at $29.850.

Today's intraday high at $31.021 marks initial resistance. More substantial resistance is noted at $31.503/536 where Monday's high corresponds closely with the 50-day moving average. The halfway-back point of the decline thus far is well protected at $32.540.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/7/2024

Gold still weighed by risk-on flows and dollar strength

OUTSIDE MARKET DEVELOPMENTS: It appears that the Republican Party has secured control of the House of Representatives. The 270ToWin site shows the GOP with 219 seats, one seat beyond the 218 majority threshold, with six races yet to call. The AP has yet to call a number of close races and their count remains at 214-205.

Trump is expected to push Russia and Ukraine toward a negotiated peace deal, but Ukraine is loath to give up any of its territory. While Trump is a staunch supporter of Israel, he indicated at the GOP convention that if elected he wanted Israel to wrap up operations before inauguration day. He has also demanded Hamas release the remaining hostages by 20-Jan or it will pay “a very big price.”

Perhaps there is some optimism about these foreign policy tactics built into the so-called "Trump trade." If the war in Ukraine and Israel's war with Iran and its proxies are wound down, it would be a major coup for the new President. However, new geopolitical hotspots are likely to flare.

The President-elect has been busy over the past week filling cabinet posts. China hawk Mike Walz has been tapped as National Security Advisor. Marco Rubio, another Israel-friendly foreign policy hawk, is widely expected to be named Secretary of State.

Amid Trump's frequent talk of tariffs trade tensions with China are already on the rise and are perhaps being amplified by the Middle Kingdom's existing economic woes. Tensions with Mexico are ramping up as well, on trade and anticipated pressure to staunch the flow of illegal immigrants to the U.S.

The FOMC studiously avoided commenting on the election last week and FedSpeak thus far today has been mum on that topic. As I said right after the election, the Fed is unlikely to alter monetary policy based on campaign rhetoric. When that rhetoric transitions to policy, that's another story.

The market has priced in about a 35% chance of a December hold by the Fed. That could creep up if forward-looking indicators continue to reflect economic optimism.

Case in point: 

U.S. RCM/TIPP Economic Optimism Index surged 13.4% to a 39-month high of 53.2 in November, versus 46.9 in October. That print is 8.3% above the historic average of 49.1.

"The index had been in negative territory for 38 consecutive months, starting in September 2021, and broke out decisively in November after President Donald Trump's historic return as the 47th President," said Real Clear Markets. 

U.S. NFIB Small Business Optimism Index rose 2.2 points to 93.7 in October, above expectations of 92.0, versus 91.5 in September. While nine of ten components rose, it was the 34th consecutive month below the 50-year average of 98.

The NFIB's uncertainty Index humped to a record high of 110 ahead of the election. “With the election over, small business owners will begin to feel less uncertain about future business conditions,” said NFIB Chief Economist Bill Dunkelberg.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$21.89 (-0.84%)
5-Day Change: -$143.42 (-5.23%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +29.45

Gold remains under pressure, reaching an eight-week low of $2,591.64 as the "Trump trade" continues to broadly impact global markets. The traditional inverse relationship between the yellow metal and the dollar seems to have re-exerted itself with gains in the greenback pushing gold lower.

 

Market worries that Trump policies may restoke inflation and cause the Fed to become less dovish are contributing to the dollar's gains. Additionally, optimism about the U.S. economy has sparked increased foreign flows into U.S. shares. Dollars are needed to make those stock purchases.

The World Gold Council saw a GOP win as increasing the opportunity costs for holding gold. That seems to be how things are shaking out in the immediate aftermath of the election.
  

That being said, the WGC views this as a "near-term phenomenon" and expects market focus to shift back to the following "more fundamental concerns":

• A world where protectionism is likely going to be more acute and current conflicts see no signs of abatement
• Equity markets are heavily concentrated and richly valued during the end of a business cycle
• Cryptocurrencies continue to be a marginal consideration and not a replacement for gold
• Western investors have, outside of futures, not added much gold this year and so there is unlikely a slew of sellers in the wings.

The Trump administration is perceived to be crypto-friendly, which has led to strong gains in BitCoin, Ethereum, and others. In the alternative asset realm, I suspect the rotation out of gold to crypto is not insignificant. Whether that's a sticky rotation or just a trade remains to be seen.

Gold the breach of important chart/trendline support at $2,606.62/$2,604.16 (10-Oct) leaves the downside vulnerable. The next significant support zone I'm watching is defined by the 18-Sep low at $2,549.18 and the rising 100-day moving average which is at $2,538.02 today.

The magnitude of the fall from the 30-Oct record high at $2,789.68 to today's low is just over 7%, still within the parameters of a correction. That cuts into the YTD gains significantly, but the yellow metal is still up more than 25% in 2024.

With the market increasingly oversold there is scope for a short-term bounce. Initial resistance is marked by today's Asian high at $2,625.32. Above that, additional resistances are noted at $2,648.04 (50-day MA), $2,685.11 (yesterday's high), and $2,690.66 (halfway-back point of the decline).

Silver extended losses to trade briefly below the 100-day moving average, but has since bounced modestly to trade higher in the day. Weak gold, a strong dollar, and ongoing concerns about Chinese economic weakness continue to pose headwinds for the white metal. 



Enthusiasm about a potentially more robust U.S. economy may be counterbalancing the worries about China, at least to some degree. However, I think it's still going to be a while before the post-election dust settles.

A more convincing violation of support at $30.229 (9-Oct low) would shift focus to $29.705 (61.8% retracement of the leg up from 26.524 to $34.853). A minor intervening chart point is noted at $29.850.

Former support at $30.903/921 marks initial resistance. More substantial resistance is defined by yesterday's high at $31.503, which corresponds closely with the 50-day moving average. The halfway-back point of the decline thus far is well protected at $32.540.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/11/2024

Gold and silver remain under significant post-election pressure

OUTSIDE MARKET DEVELOPMENTS: Today is Veterans Day in the U.S. and Remembrance Day in Canada. Bond markets and central banks are closed in both countries. Stock and commodities markets are open.

Thank you to those who served.

The U.S. Republican Party edged closer to a majority in the House of Representatives over the weekend. The GOP needs four of the remaining 18 uncalled races to break their way to secure majorities in both Houses of Congress.

Full control of Congress will make it easier for the Trump administration to enact its policy agenda. Markets are optimistic with the prospect of lower taxes and less regulation leading to risk-on flows into shares at the expense of safe-haven assets like gold.

The market is however concerned Trump's policies, particularly his trade policies, will increase inflationary pressures. This may prompt the Fed to become less dovish…and potentially even hawkish.

The Fed cut rates by 25 bps last week, in line with expectations. The central bank steered clear of commenting on the election results in the policy statement. “In the near term, the election will have no effects on our policy decisions," said Fed Chairman Powell in the post-meeting presser.

Powell did acknowledge that there is a "fair amount of uncertainty" and the Fed doesn't think “it's a good time to be doing a lot of forward guidance.”  Fed funds futures still reflect expectations for another cut in December, but the outlook for future cuts has been trimmed.

A less-dovish Fed outlook, still dovish ECBSpeak, and hints of a more cautiously hawkish BoJ provide lift for the dollar. The dollar index reached a four-month high of 105.71.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$21.61 (-0.80%)
5-Day Change: -$121.35 (-4.43%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +30.48

Gold has extended to the downside to begin the new week, reaching a four-week low of $2,613.53. The yellow metal continues to be weighed by post-election risk-on flows.



Strong gains in stocks, dollar strength, and a less-dovish Fed outlook all conspire against gold at the moment. However, I believe these losses are corrective and the long-term uptrend remains intact.

Not surprisingly, there were 8.6 tonnes of net outflows from global ETFs last week. It was the biggest net outflow since the 26-Apr week. North American investors were the biggest sellers at -10.0 tonnes.

Spec longs in the futures market beat a retreat last week as well. The COT report showed that the net speculative long position was reduced by 23.4k to 255.3k contracts, versus 278.7k in the previous week.

CFTC Gold speculative net positions

A corrective/consolidative phase is likely as the market continues to hash out the implications of the election results. I am now less optimistic about new record highs before year-end.

Once the post-election dust settles, market focus will return to geopolitical tensions, concerns about the Chinese and European economies, central bank easing elsewhere in the world, soaring global debt levels, ongoing central bank gold buying, and the political uncertainty in Germany and Japan.

And if inflation is revived as many fear, gold is still the classic hedge. A number of bullish fundamentals remain aligned in gold's favor.

The next significant support level I'm watching is the October low at $2,606.62 (10-Oct). It corresponds closely with a trendline drawn off of the low for the year at $1,986.16.

With gold quite oversold on a short-term basis, we could see the bears ring up some profits and the bulls start testing the water ahead of this level. The 14-day RSI hasn't reached oversold territory, but it is the lowest it's been since February. Gold hasn't been oversold on the daily chart since October of 2023, a testament to the strength of the uptrend.

On the upside, I'm watching the 50-day moving average on a close basis as an important indicator. The 50-day MA is at $2,645.79 today and is bolstered by resistance marked by the 7-Nov low at $2,648.46.

However, a convincing move back above $2700.00 is needed to suggest the low for the range has been established. The halfway-back point of the correction thus far is at $2,701.16.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.025 (+0.08%)
5-Day Change: -$1.976 (-6.09%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +26.13

Silver has followed gold lower, reaching a five-week low of $30.447. Many of the same factors that have hit gold are also impacting silver.



While there is heightened optimism about the U.S. economy, the trade continues to be disappointed by Beijing's efforts to stimulate the world's second-largest economy. Last week was no exception and over the weekend China's inflation data for October reflected heightened deflation risks.
 
Last week's CFTC COT report showed the net speculative long position fell 7.1k to 53.3k contracts, versus 60.4k in the previous week. It was the biggest weekly drop in net spec longs since the week ended 26-Jul. 

CFTC Silver speculative net positions

Good support is noted at $30.293/229, where the 100-day moving average corresponds closely with the low for last month (9-Oct low). While the market may try to run stops below this important level, the short-term oversold condition may make a sustained penetration difficult.

However, if $30.293/229 does give way, focus would shift to $29.705 (61.8% retracement of the leg up from 26.524 to $34.853).

Former support at $30.921 now defines initial resistance. More substantial resistance is marked by today's high and the still-rising 50-day moving average is at $31.431/503. The halfway-back point of the decline thus far is well protected at $32.650.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/7/2024

Gold and silver retrace some of Wednesday's sharp losses

OUTSIDE MARKET DEVELOPMENTS: Markets are continuing to digest yesterday's election results with control of the House yet to be decided. Today's focus is on the Fed's policy decision.

A 25 bps rate cut remains widely anticipated. The trade will be paying close attention to the guidance in the hope of discerning if there will be any significant change to the policy path.

An additional 25 bps of easing in December is still favored. While odds for a December hold continue to hover around 32%, Fed funds futures are suddenly reflecting a very slight change of a 50 bps cut at the last FOMC meeting of the year.

Yesterday the markets expressed heightened concern that the trade policies of the new Trump administration will stoke inflation and cause the Fed to become less dovish. However, I do not think the Fed will proactively adjust policy guidance based on campaign talking points.

I believe that Trump's tariff threats against China are likely a negotiating tactic to get Xi Jinping to pull back on direct subsidies to Chinese corporations that give them an unfair competitive edge. See China's 'hidden' subsidies fuel export onslaught. 

The current state of the Chinese economy probably makes ending any subsidies problematic. In fact, Beijing is currently contemplating additional measures to boost the flagging economy.

Today's 25 bps BoE rate cut was widely expected. There was a single lone dissenter on the MPC. Governor Bailey said the BoE will continue to take a gradual approach to further easing, 

Sweden's Riksbank trimmed rates by 50 bps and indicated further easing is in the offing. The policy statement said the move was to "provide further support to the economy and help inflation stabilise at the target".

Norway's Norgesbank left rates unchanged at a 16-year high of 4.5%. Governor Ida Wolden Bache indicated the central bank will likely stay on hold for the remainder of the year.

German Chancellor Scholz fired Finance Minister Christian Lindner on Wednesday creating political uncertainty in Europe's largest economy on the same day U.S. election results were coming in. Lindner's Free Democratic Party withdrew from the ruling coalition government forcing Scholz to call for a confidence vote to be held on 15-Jan with new elections likely by the end of March.

U.S. Q3 Productivity (preliminary) rose 2.2%, below expectations of +2.6%, versus a negative revised +2.1% in Q2 (was +2.5%). ULCs fell to a +1.9% pace, above expectations of +1.1%, versus a sharply upward revised +2.4% in Q2 (was +0.4%).

U.S. Initial Jobless Claims rose 221k in the week ended 02-Nov, below expectations of +225k, versus a revised +218k in the previous week (was +216k). Continuing jobless claims increased 39k to 1,892k in the 26-Oct week from 1,853k in the previous week.

U.S. Wholesale Sales rose 0.3% in September, above expectations of +0.1%, versus a positive revised +0.2% in August (was -0.1%). Wholesale inventories fell by 0.2%.

U.S. Consumer Credit is expected to print a $14.0 bln increase later today.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$7.67 (+0.29%)
5-Day Change: -$48.41 (-1.76%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +38.77

Gold is retracing some of yesterday's sharp losses, attempting to regain the $2,700 level. With U.S. election results behind us, the focus today is on the anticipated Fed rate cut and the forward guidance. Yields and the dollar have moderated from yesterday.



Rate cuts by the BoE and Riksbank today indicate that the overarching bias of the world's major central banks remains toward easing. This is a positive for gold.

Markets, including gold, will continue to make adjustments as the new Trump administration trots out its policy priorities in the weeks ahead. As of this morning, the Republican Party is seven seats shy of a majority in the House with 34 races yet to be called.

Even as political uncertainty in the U.S. moderates, uncertainty in Germany has spiked after the Finance Minister was sacked, fracturing the coalition government. The German government is now likely to be hamstrung until after a confidence vote in January which could lead to new elections in March.

Choppy consolidative trading is likely to prevail in the short term, although the underlying trend is still perceived to be bullish. A trade above $2,702.41 would clear the way for additional retracement to the halfway back point of the correction at $2,719.07. Penetration of the latter would bode well for a retest of the record high at $2,789.68.

While it's premature to suggest the corrective low is in place at $2,648.46 (today's Asian low), I like that Fibonacci support at $2,645.79 (78.6% retrace of the leg up from $2,606.62 to $2,789.68) and $2,639.70 (50-day moving average) remains intact. These are the levels to be watching on the downside.

Silver is trading higher in the lower half of yesterday's range. While the midpoint of yesterday's range was slightly exceeded the downside remains vulnerable as traders hash out the medium to longer-term potential in light of yesterday's seismic shift in the U.S. political picture.



With the presidential race designated as 'too close to call' into election day, a Trump victory was always a possibility. However, I think the odds for a Trump win plus Republican majorities in both houses of Congress were pretty long.

Commodities are likely to remain volatile as the market debates the merits and likelihoods of President-elect Trump's trade and fiscal policies.   

A close today back above the 50-day moving average at $31.338 would be mildly encouraging to the bull camp. Gains above $32 would bode well for a retest of the 20-day moving average and chart resistance at $32.805/860.

Penetration of the latter would return confidence to the underlying uptrend and call for renewed tests above $34 with potential back to the 12-year high at $34.853 (22-Oct).

Failure to sustain today's gains would mean the $30.856 low from 15-Oct remains vulnerable to a test. The recent lows at $31.921/903 provide an intervening barrier.

More substantial support is marked by last month's low and the 100-day moving average at $30.264/229.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/6/2024

Gold and silver break hard on U.S. election outcome

OUTSIDE MARKET DEVELOPMENTS: The U.S. election is over, and former President Trump won a decisive victory. Besides surpassing the 270 electoral vote threshold to secure the Presidency, Trump appears poised to win the popular vote. With no doubt about the outcome, VP Harris is expected to concede today.

With the Nation calm thus far, markets are unwinding the political uncertainty trade and shifting to a risk-on profile. U.S. stocks are surging in anticipation of a more business-friendly regulatory environment. Treasury yields are on the rise.

Concern that inflation could reignite if Trump follows through on plans to impose tariffs on some foreign goods may alter the Fed's easing path. The Fed began its two-day FOMC meeting today and is still expected to announce a 25 bps rate cut tomorrow.

While another 25 bps cut remains favored for December, the prospects for a hold increased to 32.4%, versus 22.0% yesterday, 26.7% a week ago, and 2.1% last month. Bets on additional rate cuts in 2025 were also trimmed.

The dollar index has surged to four-month highs buoyed by rising yields. The 10-year note has reached a five-month high of 4.467%. Some of the dollar gains are certainly attributable to foreign investors rotating into U.S. shares.

Oil fell nearly 2% on Trump's promise to "drill baby drill" would increase supply. Meanwhile, trade war risks could also sap demand. Lower energy costs would at least partially offset inflation risks.

With the Chinese economy already on the ropes, a second Trump term increases the likelihood that China will have to deploy much larger stimulus measures to offset negative market sentiment associated with a potential trade war. The National Peoples Congress is already in session and could make an announcement by the end of the week. 

U.S. Mortage Applications plunged 10.8% in the week ended 01-Nov, versus -0.1% in the prior week. The drop in refinances was even greater at -18.5%. Rising mortgage rates continue to pose a headwind with the 30-year mortgage rate reaching a 14-week high of 6.81%.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$44.23 (-1.61%)
5-Day Change: -$105.39 (-3.78%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +37.77

Gold has come under heavy selling pressure as haven bets associated with political uncertainty were unwound. The prospects for less-dovish Fed policy, rising yields, a higher dollar, and the rotation out of haven assets into risk assets are all weighing on the yellow metal.



Thus far, the correction from last week's record high at $2,789.69 to today's intraday low at $2,655.59 is less than 5%. It may take a week or more for the market to stabilize and buyers to step back in, but the longer-term trend is still unquestionably bullish.

There are a number of fundamental factors that remain bullish for gold:

While the Fed may have to adopt a less-dovish policy stance, the bias is still toward easing through 2025. The ECB, BoE, and BoC are likely to remain on their easing paths.

Geopolitical risks still abound. While there is some level of hope that Trump's foreign policies could ease global tensions, other hot spots may flare.

We remain in the midst of a period of heightened seasonal demand associated with the Indian wedding season. The Lunar New Year holiday in Asia is just around the corner. These lower prices are likely to be appealing.

Global central banks still have plenty of incentive to diversify reserve holdings. Gold is likely to remain a popular alternative to foreign currency, particularly the dollar.

The next support level I'm watching is the 50-day moving average at $2,636.32, which is bolstered by a minor chart point at $2,639.35 (15-Oct ow). Below that, October's low at $2,606.62 will correspond with the rising trendline early next week.

On the upside, minor intraday chart resistance is noted at $2,676.02. A rebound above the 20-day moving average at $2,714.32 would ease pressure on the downside and suggest the corrective low is in.

A breach of the $2,748.72/87 level would clear the way for a challenge of the $2,789.69 record high and return a measure of credence to the previously established $2,810.38 Fibonacci objective.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -0.876 (-2.68%)
5-Day Change: -$2.360 (-6.99%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +38.07

Silver plunged to a three-week low of $30.903 as markets made significant adjustments in anticipation of a second Trump Presidency. The white metal now appears poised for a third consecutive lower weekly close.



The market is worried that restrictive trade policies particularly against China could weigh on demand for consumer electronics, solar panels, cars...and by extension silver. This same concern is what may prompt China to unleash new fiscal and monetary stimulus to support the economy.

Gold's weakness, a higher dollar, and higher yields are also contributing to the sell-off in silver.

With more than 78.6% of the rally from $30.229 to $34.853 already retraced, and the 50-day moving average violated, further attacks on the $30.856 low from 15-Oct seem likely. A breach of this level would leave last month's low and the 100-day moving average at $30.229/$30.253 vulnerable to a test.

Initial resistance is marked by the 50-day moving average and a minor intraday chart point at $31.290/$31.381. A close above the 50-day would be mildly encouraging but I suspect upticks will be viewed as selling opportunities for at least one more day.

It will take a short-term rebound above $33 to suggest the low is in place. At that point, I'd anticipate a period of choppy consolidation as the bulls and bears hash out the longer-term implications of the election outcome.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/5/2024

Gold and silver mildly corrective to consolidative awaiting election outcome

OUTSIDE MARKET DEVELOPMENTS: It's election day in America and more than 80 million votes have already been cast. The outcome of the Presidential race remains too close to call.

Boeing machinists have agreed to a new employment contract, ending a 7-week strike. The workers will receive a 38% raise over the next four years.

U.S. Secretary of State Anthony Blinken says Hamas has rejected a short-term ceasefire deal proffered by Egypt. Arab mediators contend that Netanyahu's intransigence remains a major roadblock as well.

Iran's supreme leader Ayatollah Ali Khamenei continues to threaten retaliation against both Israel and the U.S. The regime is also warning it may restart its nuclear weapons program which would be very destabilizing to the region.

A 25 bps rate cut is fully priced in for the two-day FOMC meeting that begins tomorrow. Fed funds futures continue to show a chance for a pause in December. The trade will be paying close attention to the guidance, but I think the central bank will stick to the 'data-dependent' mantra.

U.S. Goods & Services Trade Deficit surged to $84.4 bln in September, outside expectations of -$84.1 bln, versus -$70.8 bln in August (was -$70.4 bln). "The September increase in the goods and services deficit reflected an increase in the goods deficit of $14.2 billion to $109.0 billion and an increase in the services surplus of $0.6 billion to $24.6 billion," according to the BEA report.

U.S. S&P Service PMI fell to 55.0 in October, below expectations of 55.3, versus a preliminary read of 55.3. "Particularly welcome news comes from the cooling inflation picture," said Chris Williamson of S&P Global Market Intelligence.

U.S. Services ISM rose to a 27-month high of 56.0 in October, above expectations of 53.5, versus 54.9 in September. Prices moderated to 58.1 from 59.4. The employment gauge rebounded 4.9 points to 53.0.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.64 (+0.21%)
5-Day Change: -$34.68 (-1.25%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +41.93

Gold edged to an eight-session low in Asian trading before rebounding into the range. The short-term tone is consolidative to mildly corrective as the market awaits the U.S. election outcome.



Ultimately, the trend in gold remains decidedly bullish. While election results will remove the risk associated with U.S. political uncertainty, the technicals and a host of fundamental factors will continue to drive the uptrend.

Geopolitical risks, debt, easing by some major central banks, growth risks in Europe and China, official sector gold buying, and seasonal demand are all on the bullish side of the ledger. A resilient U.S. economy and stock market, cooling inflation, and recent three-month highs in the dollar pose headwinds.

The latest COT report shows the net speculative long position in gold futures contracted by 17.5k contracts to 278.7k in the week ended 01-Nov. This was likely associated with profit-taking and position squaring ahead of the election.

I'm hopeful that the U.S. election will go smoothly with a winner in the Presidential race declared by late this evening. Without any significant political unrest, we could see gold extend the correction.

I'm watching chart support at $2,715.51/$2,711.17, which is bolstered by the 20-day moving average at $2,711.08 today. Secondary support is at $2,698.15 (50% retracement of the leg up from $2,606.62 to $2,789.68).

Anything that extends the political uncertainty such as a drawn-out period of recounts, legal challenges, and unrest would put the yellow metal back on the bid. Initial resistance is marked by the intraday high at $2,748.87, which protects the more important $2,757.95/$2,762.22 area.

Penetration of the latter would bode well for a retest of the $2,789.68 record high from last week. Beyond that, the previously established $2,810.38 Fibonacci objective attracts.

Silver slipped to a 12-session low in Asian trading but subsequently rebounded to exceed yesterday's high and set up a potential key reversal. Like gold, I call the short-term tone consolidative to mildly corrective ahead of the U.S. election results.



The CFTC COT report for the week ended 01-Nov showed the net speculative long position in silver fell by 6k to 60.4k contracts versus 66.4k in the previous week. The fact that the spec long position remains above 60k contracts despite the 3.8% price decline is encouraging.

CFTC Silver speculative net positions

The dominant trend remains bullish with the white metal just 6% off the 12-year high set 22-Oct at $34.853. However, ongoing concerns about the Chinese economy and worries that a Trump win may lead to more restrictive trade policies that could negatively impact demand for imported silver-centric products like consumer electronics, solar panels, and cars are headwinds.

Further downside potential to $31.995 (61.8% retracement of the leg-up from $30.229 to $34.853) can't be ruled out. Today's Asian low at $32.309 provides an intervening barrier.

A rebound above Friday's high at $33.066 would further ease pressure on the downside and shift focus to the halfway back point of the correction at  $33.581. Penetration of the latter would bode well for renewed short-term tests above $34.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/4/2024

Gold and silver consolidate ahead of election day

OUTSIDE MARKET DEVELOPMENTS: New eight-foot security fencing has been installed around the White House, U.S. Capitol, the Vice President's residence, and the Treasury Complex as Washington, DC, prepares for potential post-election unrest. Businesses and commercial buildings in the nation's capital have also begun boarding up.

Let's hope these all prove to be unnecessary precautions.

The Des Moines Register poll showed that Kamala Harris has "leapfrogged" Donald Trump to take the lead in historically Republic-leaning Iowa. While the poll was within the margin of error, it has sparked the unwinding of so-called "Trump trades".

The Chinese yuan and Mexico peso rallied as tariff bets were unwound, putting pressure on the dollar. U.S. Treasuries also rallied providing additional weight to the greenback as the trade reduced bets for more aggressive government spending and a less dovish Fed. Stocks are mixed.

In other FX news, the Indian rupee fell to another record low against the dollar amid ongoing equity outflows. The RBI is expected to continue intervening to defend the 84 zone.

China's National Peoples Congress began a week-long meeting to discuss additional stimulus measures. The body is expected to approve China's largest fiscal spending package yet, but many experts believe it won't be enough.

The challenge faced by policymakers has been to revive confidence among Chinese consumers beset by a prolonged property crisis. That goal remains elusive even as those policymakers have continued to reveal new monetary and fiscal measures.

U.S. Factory Orders fell 0.5% in September, in line with expectations, versus a negative revised -0.8% in August (was -0.2%). Inventories fell 0.2%.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$4.68 (+0.17%)
5-Day Change: -$5.27 (-0.19%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +41.75

Gold remains generally well bid and within striking distance of the $2,789.68 record high set on 30-Oct, despite last week's corrective setback. Uncertainty about tomorrow's U.S. election, persistent geopolitical risks, and expectations that the Fed will continue its easing campaign on Thursday are all seen as supportive.



If the election goes smoothly with a winner in the Presidential race declared in a reasonable time frame, and without resulting in political unrest, gold could correct further. However, I'd expect those losses to attract buying interest as focus returns to the geopolitical situation and the overarching easing campaigns of many key central banks.

Throughout this year's rally, the 20-day moving average has been an attraction during corrective phases. The 20-day MA comes in at $2,705.1o today, bolstering chart support at $2,715.51/$2,711.17. Additional support is noted at $2,698.15 (50% retracement of the leg up from $2,606.62 to $2,789.68.

On the other hand, a drawn-out period of recounts, legal challenges, and unrest would keep the yellow metal underpinned with the potential for fresh record highs. A rebound above resistance at $2,757.95/$2,762.22 would bode well for a retest of $2,789.68 and an eventual extension to the previously established $2,810.38 Fibonacci objective.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.353 (+1.09%)
5-Day Change: -$1.278 (-3.80%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +44.13

Silver has fallen to a two-week low having failed to sustain earlier upticks. The white metal is trading lower for a fourth consecutive session.



Price action in silver suggests the market doesn't have much faith in what Chinese policymakers are likely to come up with to stoke the flagging economy. Friday's breach of support at $32.700/$32.542 suggested further downside potential to $31.995 (61.8% retracement of the leg-up from $30.229 to $34.853).

A rebound above Friday's high at $33.066 would ease pressure on the downside somewhat and shift focus to the halfway back point of the correction at  $33.591. Penetration of the latter would bode well for renewed short-term tests above $34.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

11/1/2024

Gold starts November on defense, but ongoing haven demand should limit the downside

OUTSIDE MARKET DEVELOPMENTS: Iran's Supreme Leader Khamenei has ordered his military to strike back at Israel for last week's retaliatory attack on Iranian military targets by Israel. While the Iranians initially downplayed last Friday's attack, Khamenei has now deemed it too big to ignore.

Iranian officials indicated to the NYT that their next move is unlikely to happen before the U.S. election. They reportedly don't want to do anything that might benefit Donald Trump.

Despite renewed U.S. efforts to negotiate a cease-fire, the retaliatory cycle between Israel and Iran seems destined to continue. The risk of an all-out regional war between the two nations remains elevated.

According to Nikkei Asia reporting, four Toyota group companies cut guidance for the current fiscal year due to concerns about the Chinese economy. "Sluggish sales in China had a major impact," said Denso Executive Vice President Yasushi Matsui. "This will likely continue for a long time."

The potential that the economic woes of the world's second-largest economy will continue for a "long time,"  despite expectations for additional stimulus, will continue to have a significant impact on global markets.

The UN has warned that current demographic trends portend a halving of China's population by 2100. No amount of stimulus the CCP could muster can offset that potential reality. China needs to increase birth rates.

U.S. Nonfarm Payrolls rose 12k in in October, below expectations of +125k, versus a negative revised +223k in September (was +254k). That's the weakest print since December 2020.

The unemployment rate held steady at 4.1%.

August NFPs were revised down to +78k from +159k previously. That makes total back-month revisions  -112k.

Private nonfarm payrolls plummeted to -82k on expectations of +105k. That's the first negative print since December 2020.

Manufacturing jobs fell by 46k, notching a third straight month of declines.

Hourly earnings rose 0.4%, above expectations of +0.3%, versus a negative revised +0.3% in September. The average workweek ticked up to 34.3 hours.

Overall this was a fairly grim jobs report with the recent hurricanes and strikes certainly playing a roll. In a note appended to the jobs report, the BLS warned that the establishment survey is not designed to isolate effects from extreme weather events and therefore "it is not possible to quantify the net effect" on changes in employment, hours, or earnings.

U.S. S&P Manufacturing PMI rose 0.7 points to 48.5 in October from 47.9 in September.

U.S. Manufacturing ISM fell to a 15-month low of 46.5, below expectations of 47.6, versus 47.2 in September. It was the seventh consecutive month in contraction territory and the 23rd time in the last 24 months. Prices paid rebounded 6.5 points to 54.8 from 48.3 in September.

According to one respondent from the transportation equipment sector: “Market demand has significantly decreased in the second half of 2024 and is expected to be soft through the first quarter of 2025. Although inflation has stabilized and returned to historical levels, and interest rates are decreasing, there appears to be a general pessimism in the economy that is driving customers to be more restrictive in their capital expenditures, including investment in commercial vehicles."

U.S. Construction Spending rose 0.1% in September, in line with expectations.

U.S. auto and light-truck sales for October come out this afternoon. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.61 (+0.20%)
5-Day Change: -$4.54 (-0.17%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +40.07

Gold notched a ninth consecutive higher monthly close in October but begins November on its back foot. The yellow metal appears poised for its first lower weekly close in four. Beware of the reversal week (higher high, lower close).



Today's U.S. economic data are suggestive of heightened growth risks, dimming the prospects for a Fed-orchestrated soft landing. A 25 bps Fed rate cut is fully priced in for next week, but bets on a December hold have been reduced.

Indian festival demand was muted this week due to near-record-high prices. While sales volume was down, the value of those sales was up significantly due to the sharply higher price. Reuters reported that the price of gold in rupees was up nearly 33% since last Diwali.

This evidence of price sensitivity is perhaps raising demand concerns as we move deeper into the Indian wedding season. While still several months away, price sensitivity could also impact Lunar New Year demand in Asia. Call that a potential near-term headwind.

With geopolitical tensions still very high, most central banks in easing mode, and the U.S. election looming, I see downside potential in gold as limited. Good support is noted at $2,715.51/$2,711.17, and the rising 20-day moving average ($2,700.51 today) should correspond with this level early next week.

A rebound above resistance at $2,757.95/$2,762.22 would ease short-term pressure on the downside and favor a retest of Wednesday's record high at $2,789.68. Beyond that, the $2,810.38 Fibonacci objective remains valid.

Silver remains on the defensive having established fresh two-week lows and trading lower for a third straight day. The white metal seems destined to notch a second consecutive lower weekly close.  



Silver is being weighed by ongoing concerns about the Chinese economy and today's evidence of a faltering U.S. economy. A firmer dollar and continued pressure on gold also weigh.

Concerns that Donald Trump will increase trade barriers if he becomes President again are also providing some headwinds. Silver is used in consumer electronics, solar panels, and automobiles that the U.S. imports.

Today's convincing violation of the $32.700/$32.542 support zone suggests further downside potential to $31.995 (61.8% retracement of the leg-up from $30.229 to last week's 12-year high at $34.853).  Secondary support is noted at $31.645 (18-Oct low), which should closely correspond with the 50-day moving average next week.

The midpoint of the recent decline now comes in at $33.617 with today's overseas high at $33.066 providing an intervening barrier. A rebound above the former would favor renewed tests above $34 and another run at the cycle high at $34.853.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/31/2024

Gold and silver turn corrective ahead of month-end

OUTSIDE MARKET DEVELOPMENTS: Senior White House negotiators are in Israel today in a new push to broker cease-fires in both Lebanon and Gaza. A deal with Hamas would include at least a partial hostage release.

The Times of Israel reports that Prime Minister Netanyahu believes a "ceasefire in Lebanon is appropriate so long as it fulfills the objective of returning northern residents safely to their homes." A deal with Hamas seems less likely.

U.S. stocks are under pressure after warnings from tech companies about rising AI costs and election uncertainty stoked risk aversion. 

The BoJ held steady on policy, which was widely expected, particularly given the political turmoil ignited by last weekend's snap election. Moderating growth risks leave the door open for more rate hikes and Governor Ueda took a less-dovish tone in his comments. Ueda also noted receding risks in the U.S.

The yen rallied to new highs for the week against the dollar based on expectations that the BoJ would continue its tightening campaign. I do expect the upside in the yen to remain limited, at least until a new government is formed.

U.S. Challenger Layoffs fell 17k to 55.6k in October, versus 72.8k in September. Announced hirings plunged -137.2k to 266.7k. “Job openings have fallen and hiring is pretty flat at the moment. Companies appear to be in a holding pattern as we await election results and the potential regulatory and market environment that follows,” said Andrew Challenger, Senior Vice President and workplace expert for Challenger, Gray & Christmas, Inc.

U.S. Initial Jobless Claims fell 12k to 216k in the week ended 26-Oct, below expectations of 233k, versus a revised 228k in the previous week. Continuing jobless claims dropped 26k to 1,862k.

U.S. Q3 Civilian ECI rose 0.8%, above expectations of +0.9%, versus +0.9% in Q2. Annualized ECI moderated to a 3.9% pace from 4.1% in Q2.

U.S. Personal Income rose 0.3% in September, below expectations of +0.4%, versus +0.2% in August.

U.S. PCE rose 0.5% in September, above expectations of +0.4%, versus an upward revised +0.3% in August. The chain price inflation gauge rose 0.2% on expectations of +0.1%; 2.1% y/y. Core inflation +0.3%; 2.7% y/y.

Chicago PMI tumbled 5.0 points to a 5-month low of 41.6 in October, well below expectations of 46.2, versus 46.6 in September. Of the five subcomponents, only Supplier Deliveries rose. Nearly 40% of respondents reported lower production.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$6.25 (-0.22%)
5-Day Change: +$16.57 (+0.61%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +40.76

Gold has turned corrective after successive record highs on Tuesday and Wednesday. A new push for a cease-fire in the Middle East and perhaps some month-end profit-taking weigh.



While gold is currently trading lower on the week, a ninth consecutive higher monthly close is likely. The yellow metal is up more than 4% in October and +32.6% YTD. The last lower monthly close was in January.

The breach of Tuesday's low at $2,740.53 leaves the low for the week at $2,725.94 vulnerable to a challenge. However, setbacks are still likely to be viewed as buying opportunities.

More substantial support is found at $2,715.51/$2,711.17. The important 20-day moving average comes in at $2,696.05.

A rebound above $2,757.95/$2,762.22 would ease short-term pressure on the downside and bode well for a retest of yesterday's record high at $2,789.68. Beyond that, the $2,810.38 Fibonacci objective remains valid.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -0.310 (-0.92%)
5-Day Change: -$0.879 (-2.61%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +43.01

Silver inability to sustain recent tests above $34 has led to a corrective plunge below $33 as markets adopted a risk-off posture ahead of month-end and next week's election. Despite today's retreat of more than 3%, the white metal still appears poised for a second straight higher monthly close.



Yesterday's commentary suggested there was scope for a challenge of Monday's low at $33.627. With that level negated in overseas trade, focus shifted to the $32.700/$32.542 zone, where previous chart resistance, the 20-day moving average, and the halfway back point of the most recent leg higher all converge.

This is a pretty substantial support area, so I suspect the downside is limited from here. A rebound above $33.000/109 would take some of the pressure off the downside. 

The midpoint of the decline comes in at $33.708. A climb back above this level would clear the way for renewed tests above $34 and another run at the cycle high at $34.853.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/30/2024

Gold nears $2,800 on strong demand picture 

OUTSIDE MARKET DEVELOPMENTS: Western intelligence sources say there are already a small number of North Korean troops embedded with Russian forces inside Ukraine. According to reports, there are approximately 10,000 North Korean troops training in Russia that will presumably be deployed to fight in Ukraine.

South Korea has thus far refrained from sending weapons to Ukraine, but combat-hardened DPRK troops may be cause for concern. “While we have maintained our principle of not directly supplying lethal weapons, we can also review our stance more flexibly, depending on the level of North Korean military activities,” said South Korean President Yoon Suk Yeol.

The U.S. Q3 GDP report showed an advance print of +2.8%, below expectations of +3.0%, versus 3.0% in Q2. Consumer and government spending remain robust contributors to economic growth.

PCE increased 3.7%, the strongest reading since Q1'23, and accounted for 2.46% of overall growth. That's up from 1.90% in Q2.

According to the Bureau of Economic Analysis report: "Within goods, the leading contributors were other nondurable goods (led by prescription drugs) and motor vehicles and parts. Within services, the leading contributors were health care (led by outpatient services) as well as food services and accommodations."

Government consumption expenditures and gross investment were the second biggest contributors at 0.85%, up from +0.52% in Q2. Defense spending at +0.51% was the biggest subcategory within GCE.

The PCE price index dropped a full percentage point from 2.5% in Q2 to 1.5% in Q3. The core chain price index fell to 2.2%, compared to 2.8% in Q2. September PCE data come out tomorrow and the market expects a scant 0.1% m/m rise in the headline price index.

The U.S. ADP Employment Survey blew away expectations, with a private payrolls gain of 233k in October, more than double the median expectation of +114k, versus an upwardly revised 159k in September (143k). This strong number, despite two hurricanes and several significant strikes, is generating whispers of a potential NFP beat on Friday (expectations +125k).

U.S. Pending Home Sales Index rebounded 7.4% to 75.8 in September, above expectations of 71.9, versus 70.6 in August and a record low of 70.2 in July. Lower mortgage rates in September spurred buying but rates are back on the rise more recently with 30-year fixed rates back above 7%.

Decent economic growth, moderating inflation, and a resilient labor market lend considerable credence to the soft landing scenario. The data support the Fed continuing with the easing cycle into 2025.

The Fed is widely expected to cut rates by 25 bps on 07-Nov. While the market still favors an additional 25 bps cut in December, chances for a hold persist and actually rose today. Fed funds futures now put the probability of steady policy in December at 28.7%, compared to 25.5% yesterday.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$6.27 (+0.23%)
5-Day Change: +$71.44 (+2.63%)
YTD Range: $1,986.16 - $2,788.53
52-Week Range: $1,812.39 - $2,788.53
Weighted Alpha: +43.21

Gold continues its march higher, establishing new record highs and baring down on $2,800. The yellow metal is up nearly 1.5% this week and it has been three weeks since consecutive lower closes have been seen. The uptrend continues to look very strong.



The World Gold Council reports Q3 gold demand rose 5% y/y to 1,313 tonnes, a record for a third quarter. The corresponding rise in the price drove the value of this demand beyond $100 bln for the first time ever. "Falling interest rates, geopolitical uncertainty, portfolio diversification and momentum buying were among the key drivers," according to the WGC.

While bar and coin demand and central bank buying moderated, investors finally jumped on board in Q3 leading to 94.6 tonnes of ETF inflows. That's a marked shift from nine consecutive quarters of outflows. "Q3 was the first positive quarter since Q1’22, with a y/y swing from hefty (-139t) Q3’23 outflows," said the WGC.

The WGC is optimistic about the remainder of the year saying, "resurgent professional flows combined with solid bar and coin investment will offset weaker consumer demand and slower central bank buying."

On the supply side, mine production rose 5.8% to 989.8 tonnes. With diminished adds from net producer hedging and recycling, total supply was exactly in balance with total demand at 1,313 tonnes.

The next resistance level is at $2,800.00/$,2,804.73 based on a range extension target. However, scope remains for a test of the $2,810.38 Fibonacci objective.

The overseas low at $2,773.20 protects former resistance at $2,757.95. Additional support levels are noted at  $2,748.17/$2,747.38 and $2,740.53 (29-Oct low).

Silver slipped back below $34, weighted by a slightly weaker than expected initial read on Q3 GDP. However, fresh record highs in gold and hopes for more Chinese stimulus should continue to limit the downside.



Support marked by yesterday's low at $33.627 was slightly exceeded but the white metal subsequently rebounded back into the range. While silver remains lower on the day, a close above $34 would be encouraging for the bull camp.

If a close above $34 can not be generated, Monday's low at $33.268 might be the short-term attraction before renewed buying interest surfaces. More substantial support is at $33.109/$33.000.

The PGMs have corrected sharply on diminished expectations for additional Russian sanctions.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/29/2024

Gold sets new record highs after brief and limited correction

OUTSIDE MARKET DEVELOPMENTS: With just one week until the U.S. election, most polls remain within the margin of error. Many believe the stakes are extraordinarily high, and the likely results remain uncertain.  

The recent Japanese election heightened political uncertainty with the LDP party losing its majority for the first time since 2009. "Voters have handed us a harsh verdict and we have to humbly accept this result," said PM Shigeru Ishiba.

While Ishiba has pledged he will remain PM, he'll need to secure enough votes in a special session of the Diet slated for 11-Nov. Ishiba will attempt to build a coalition over the next couple of weeks.

The yen remains on the offer amid concerns that the BoJ's tightening campaign is on hold until the political situation is sorted out. The BoJ will announce policy on Thursday and is widely expected to leave its benchmark rate unchanged at 0.25%. 

China is considering adding C¥ 10 trillion ($1.4 trillion) in new debt over the next three years to juice its flagging economy. The new fiscal plan could be approved as soon as next week. Commodities appear hopeful.

U.S. JOLTS Job Openings declined -418k to 7,443k in September, below expectations of 8,000k, versus 7,861k (was 8,040k). There are now just 1.1 job openings for each job seeker.

U.S. Advance Economic Indicators revealed a $14.0 bln widening of the international trade deficit to $108.2 bln in September, outside expectations of -$95.5 bln, versus -$94.2 bln in August. Advance wholesale inventories contracted by 0.1%, while retail inventories grew by 0.8%. 

The Q3 GDP contribution from net exports fell from +0.04% to -0.38%. The Atlanta Fed's GDPNow forecast tumbled to 2.8%, down from 3.3% on Friday.

U.S. S&P/Case-Shiller home price index for 20 cities dipped -0.3% to 334.7 in August, down from the all-time high set in July at 335.8. The annualized pace of home price appreciation slowed to a 10-month low of 5.2%, versus 5.9% in July.

U.S. FHFA Home Price Index rose 0.3% to 427.0 in August, versus an upward revised 425.8 in July. With mortgage rates back on the rise, expect supply to remain tight and prices near record highs.

U.S. Consumer Sentiment surged to 108.7 in October, above expectations of 99.1, versus a revised 99.2 in September (was 98.7). “Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$2.04 (+0.07%)
5-Day Change: +$20.49 (+0.75%)
YTD Range: $1,986.16 - $2,769.89
52-Week Range: $1,812.39 - $2,769.89
Weighted Alpha: +41.93

Gold has extended to new record highs, buoyed by haven bids associated with geopolitical tensions, and political uncertainty. The recent corrective phase was short-lived and limited in terms of magnitude, suggesting the dominant uptrend remains strong.



Revived hopes of additional Chinese stimulus provide an additional tailwind, even though Q3 gold demand in China was pretty dismal according to Bloomberg. The weak economy, ongoing concerns stemming from the property crisis, and record-high prices led to a 22% plunge in demand. 

Jewelry demand was particularly hard hit, falling 29% to 130 tons. Demand for bars and coins fell 9% to 69 tons.

With the world's largest buyer of gold largely sidelined, again you have to be impressed by the market's resilience. I imagine there's some pent-up demand just waiting to be unleashed, particularly with monetary and fiscal stimulus targeting disinflation.

Reuters reports that Indian buyers "brushed off record high prices" ahead of this week's Dhanteras and Diwali festivals. "People are still into gold big time, even with prices at record highs during Dhanteras. With gold giving better returns than the stock market, there's been solid demand for coins and bars," said Saurabh Gadgil, chairman of PNG Jewellers.
 
Today's move to new all-time highs lends credence to the bullish scenario targeting $2,810.38 based on a Fibonacci objective. The $2,800.00/$,2,804.73 level marks a minor intervening attraction.

Former resistance at $2,757.95 now marks initial support. Secondary support at $2,748.17/$2,747.38 protects the intraday low at $2,740.53.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.466 (+1.38%)
5-Day Change: -$0.549 (-1.58%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +52.20

Silver surged back above $34 on hopes that additional Chinese stimulus will boost industrial demand. While the recent cycle high at $34.853 remains intact, fresh record highs in gold are helping to underpin the white metal.



More than 61.8% of the recent corrective losses have now been retraced, favoring a retest of last week's high at $34.853. An eventual penetration would bode well for the anticipated test of the $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703).

First support is now $34.000/$33.988. A minor level at 33.893 stands in front of today's overseas low at $33.627.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/28/2024

Gold and silver continue to consolidate ahead of next week's election

OUTSIDE MARKET DEVELOPMENTS: Israel conducted precision strikes against military targets within Iran over the weekend. The strikes were retaliation for Iran's 01-Oct missile barrage against Israel, which was retaliation for the killing of Iranian Republican Guard, Hezbollah, and Hamas leaders.

Arguably Israel showed restraint. Iran said the damage was limited. Is this the opportunity to end the retaliatory cycle and dial down regional tensions? The market seems hopeful.

“It looks like they didn't hit anything other than the military targets. My hope is this is the end,” said President Biden.

Already elevated political uncertainty was further stoked by Sunday's snap election in Japan. The long-ruling Liberal Democratic Party was severely rebuked by voters and lost control of the lower house for the first time in 15 years.

Recently elected Prime Minister Shigeru Ishiba's gamble to consolidate power and form a government backfired. While Ishiba has pledged to remain PM, gains by the LDP's main rival CDPJ party are going to make the formation of a coalition government challenging.

Japan's political uncertainty may force the BoJ to pause its tightening campaign. The yen tumbled in reaction to set a 13-week low against the dollar before rebounding in later trading. The Nikkei 225 closed up nearly 2% on hopes of slower monetary tightening.

The U.S. Dallas Fed General Business Activity Index rose six points to a 30-month high of -3 in October. While the index has been in contraction territory for more than two years.

Prices paid for raw materials declined 1.9 points to 16.3. It was the second straight monthly decline.

Market focus this week is on PCE inflation on Thursday and October jobs data out on Friday. The chain price index is expected to rise 0.1% m/m, while the market is forecasting a 125k rise in nonfarm payrolls.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -15.17 (-0.55%)
5-Day Change: +$22.04 (+0.81%)
YTD Range: $1,986.16 - $2,757.95
52-Week Range: $1,812.39 - $2,757.95
Weighted Alpha: +39.99

Gold remains within the range that was established last Wednesday. Corrective activity since the $2,757.95 record high was set that day has been very limited, leaving focus on the dominant uptrend.



Israel's limited retaliatory strikes against Iran have not led to renewed Iranian saber-rattling (at least not yet), suggesting regional tensions may have moderated somewhat. Broadly speaking however geopolitical tensions and political uncertainty remain elevated and supportive to gold.

As I noted in commentary last week, gold is agnostically bullish when it comes to next week's election results. Regardless of the winner, half of the country is going to disappointed and perhaps angry.

I expect rhetoric in the media and on social media to be hyperbolic. There are radical fringe elements on both sides that may be incited to political unrest and violence.

A push to new all-time highs would lend credence to the bullish scenario that calls for a challenge of $2,810.38 based on a Fibonacci objective. Beyond that, the $3,000 level looks increasingly attractive.

Citi Bank has raised its three-month projection for gold to $2,800 from $2,700 previously. Citi sees $3,000 gold in the 6 to 12-month timeframe.

“We note that gold and silver have performed extremely well despite weakening China retail physical demand and rising US interest rates since the Fed cut 50 (basis points) and payrolls beat last month,” according to Citi analysts.

Investment demand remains a bullish driver with a net inflow into global ETFs of 14.7 tonnes. It was the second consecutive weekly inflow. 

There have only been five weekly outflows out of the last 24 weeks. The last time there were two straight weekly outflows was in early May. 

The COT report for last week showed the net speculative long position in gold rose by 9.8k to 296.2k contracts from 286.4k in the previous week. It was the second straight weekly increase.

Support marked by Wednesday's low at $2,711.17 has increased in importance. Minor intervening barriers are noted at $2,725.94, $2,717.88 and $2,715.51.

Silver is trading modestly higher within the confines of Friday's range. Recent corrective downticks have attracted buying interest ahead of $33, keeping focus on the dominant uptrend.



A climb back above $34 would bode well for a retest of last week's high at $34.853. Intervening resistance is marked by Thursday's high at $34.285.

The net speculative long position in silver surged 12.4k to 66.4k contracts last week according to the CFTC's COT report. That's the largest net spec long position since 28-Feb'20.

CFTC Silver speculative net positions

This year's rally to 12-year highs has got to be putting considerable pressure on the large commercial short potion in silver. If those commercial shorts start covering, it would be a substantial tailwind for the market.

An eventual violation of the $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703), could be the trigger for that short covering as it would be suggestive of potential back to the $50 zone.

In the report referenced above, Citi raised its 6 to 12-month forecast for silver from $38 to $40. That makes a good intermediate objective ahead of $50.

Last week's low at $33.109 now protects $33.00 and previous resistance at $32.700/657. Buying strategies remain highlighted.

Palladium continues to charge higher after the U.S. lobbied the G7 to impose additional sanctions on Russian exports of the precious metal. Spot palladium is up nearly 15% since the middle of last week and is trading at new highs for the year. Palladium gains are providing some support for platinum as well. 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/24/2024

Gold consolidates recent losses within Wednesday's range

OUTSIDE MARKET DEVELOPMENTS: Doubts about how aggressively the Fed might ease into year-end are on the rise. While a 25 bps cut to the Fed funds rate in November remains baked into the cake, the trade is now less sure about December.

With much of the incoming data suggesting a resilient economy and some worries of a "mission accomplished" moment on inflation, the Fed's policy path has turned somewhat cloudy.

The Beige Book for the upcoming FOMC meeting that was released yesterday showed economic activity was stable or increased modestly in nine of twelve Districts since early September. Economic activity in the Philly, Atlanta, and Minneapolis Districts declined only slightly.

Half the Districts saw employment increases, while the remainder showed little or no change."Demand for workers eased somewhat, with hiring focused primarily on replacement rather than growth."

Inflation "continued to moderate" in most Districts, but the prices of "some food products, such as eggs and dairy, were reported to have increased more sharply." Increasing price sensitivity among consumers was noted in most Districts, but that wasn't reflected in the September retail sales data.

Cleveland Fed President Beth Hammack indicated she is unwilling to declare victory over inflation. "We have made good progress but inflation is still running above the 2% objective," she said.

Treasury yields have been on the rise for a month. With the 10-year yield reaching three-month highs, so too has the dollar index. U.S. stocks seemed to finally take notice on Wednesday, prompting a risk aversion sell-off. The Dow fell more than 400 points on Wednesday, its worst day in over a month.

U.S. 10-Year Treasury Note Yield

On Wednesday the BoC slashed rates by 50 bps, its largest rate cut since the COVID crisis. Amid persistent growth risks in Europe, particularly Germany the largest economy in the EU, talk of an accelerated ECB easing path has intensified.

The prospect for interest rate differentials to rotate more favorably toward the U.S. could be an ongoing tailwind for the greenback. The upside potential for the dollar index is back to the 106.00 level.

U.S. Initial Jobless Claims fell to 227k in the week ended 19-Oct, below expectations of 244k, versus a revised 242k in the previous week. Continuing jobless claims rose to 1,897k for the 12-Oct week, from a revised 1,869k in the previous week.

U.S. New Home Sales rose 4.1% to a 0.738M pace in September, above expectations of 0.718M, versus a negative revised 0.709M in August (was 0.716M). The pullback in mortgage rates from last October's 23-year highs has been generally supportive this year, but the more recent rebound is likely to weigh on October sales.

S&P Global Manufacturing PMI (Flash) rose to 47.8 in October, above expectations of 47.5, versus 47.3 in September.

S&P Global Services PMI (Flash) edged up to 55.3 in October, above expectations of 55.0, versus 55.2 in September.

Chicago Fed National Activity Index fell to  -0.28 in September, versus a negative revised -0.01 (was 0.12) in August. The index has been in negative territory for seven of nine months so far this year.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$21.22 (+0.78%)
5-Day Change: +$43.91 (+1.63%)
YTD Range: $1,986.16 - $2,757.95
52-Week Range: $1,812.39 - $2,757.95
Weighted Alpha: +39.64

Gold has rebounded from yesterday's retreat, but remains confined to Wednesday's range. Today's price action tempers the technical significance of yesterday's key reversal, but I wouldn't completely discount that chart pattern just yet.

 

More than half of yesterday's decline has been retraced, but I'd like to see a close above $2,734.56 to suggest we're more likely to see new record highs than a challenge of the $2,700 level on the downside.

Initial support is well-defined at $2,715.50/$2,711.17 and protects the $2,700.00/$2,692.49 zone. Penetration of the latter would shift focus to the 20-day moving average at $2,670.14. The 20-day has been a pretty consistent attraction during the corrective phases of this rally.

Gold has recorded just a single close below the 100-day moving average in more than a year. That occurred on 14-Feb, was slightly more than a dollar, and lasted just one day. That's a strong testament to the strength of this rally.

Fresh record highs above $2,757.95 would bode well for a challenge of the previously established $2,810.38 Fibonacci objective. 

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.435 (+1.29%)
5-Day Change: +$1.989 (+6.28%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +49.57

Silver extended corrective losses in U.S. trading today. Scope remains for a challenge of the $33 zone, but I am seeing some buying interest at the lower end of today's range.

 

A convincing move back above $34 would ease short-term pressure on the downside and return credence to the dominant uptrend. The midpoint of the corrective decline is at $34.087.

A breach of this level would favor a challenge of the 12-year high from Tuesday at $34.853. New cycle highs would bode well for the anticipated test of the $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703).


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/22/2024

Gold sets new highs once again as silver nears $35

OUTSIDE MARKET DEVELOPMENTS: Top secret documents leaked in the U.S. seemed to confirm that Israel is preparing for a retaliatory strike on Iran that will undoubtedly lead to another Iranian strike on Israel. The weekend attack by Iranian proxy Hezbollah on the residence of Israeli Prime Minister Benjamin Netanyahu further raises the stakes. 

Israel continues to strike Hamas positions in Gaza and Hezbollah in Lebanon. Attacks on Hezbollah's financial network are a new twist designed to interdict the terrorist group's financing mechanisms that largely flow through Iran.

Israel and Iran seem to be hurdling toward a broader regional war, keeping markets on edge.

The IMF has trimmed its 2025 global growth outlook to 3.2% from 3.3% in July. The IMF has a brighter outlook for U.S. growth with an upgrade of 0.3% to 2.2%.

Nonetheless, the first sentence of the executive summary says it all: "Global growth is expected to remain stable yet underwhelming." The five-year forecast at 3.1% "remains mediocre compared with the prepandemic average."

Tepid growth prospects fortify global easing expectations, but the IMF warned that price risks persist: "Further disruptions to the disinflation process, potentially triggered by new spikes in commodity prices amid persistent geopolitical tensions, could prevent central banks from easing monetary policy, which would pose significant challenges to fiscal policy and financial stability," according to the report.

The resilience of the U.S. economy and risks of revived inflation has prompted the trade to reduce bets for an additional 50 bps of Fed easing into year-end. A 25 bps cut in November remains widely anticipated, but doubts are creeping in about December.

FedSpeak from Daly and Schmid reiterated the mantra of data dependency. Jeffrey Schmid, the new KC Fed president is a centrist and will be a voter in 2025. He said he favors a "cautious and gradual approach to policy," preferring to “avoid outsized moves.”

The Richmond Fed Composite Manufacturing Index rose 7 points to -14 in October, inside expectations of -17, versus -21 in September. The index has been in contraction territory for nearly a year.

"Of its three component indexes, shipments increased from −18 to −8, new orders rose from −23 to −17, and employment increased from −22 to −17," according to the Richmond Fed.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$19.12 (+0.70%)
5-Day Change: +$76.85 (+2.89%)
YTD Range: $1,986.16 - $2,743.84
52-Week Range: $1,812.39 - $2,743.84
Weighted Alpha: +39.85

Gold has set new record highs once again. The yellow metal has set all-time highs for four sessions in a row, driven by rising geopolitical risks and intensifying political uncertainty in the U.S. just two weeks out from the election.

 

A Reuter's reporter asked me this morning how gold will react based on who wins the U.S. presidential race. I believe gold is agnostically bullish. Half the population will be incredibly disappointed by the outcome regardless of the winner.

This disappointment has the potential to morph into political unrest as the results are questioned, and almost certain legal battles play out. It seems the U.S. is destined to remain bitterly divided politically for some time to come.

The next upside target at $2,810.38 remains highlighted based on a Fibonacci projection. The $2,800 level is deemed an intervening psychological attraction.

Short-term corrective downticks have attracted buying interest and that's likely to continue. A more protracted correction could be triggered by a Middle East cease-fire or signs that inflation is reigniting, which could cause a shift in easing expectations.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.605 (+1.79%)
5-Day Change: +$3.215 (+10.21%)
YTD Range: $21.945 - $34.711
52-Week Range: $20.704 - $34.711
Weighted Alpha: +43.76

Silver continues its march higher in the wake of last week's upside breakout above $32.700. The white metal has traded higher in eight of the past nine sessions and is up more than 10% in just the last five.


 
The critical $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703) has quickly come within striking distance. A breach of this level would return considerable credence to the long-term uptrend and favor an eventual return to the $50 zone.

Contingent on a breach of $35.217, the $35.997/$36.000 level will become the next upside target based on a Fibonacci projection. Retreats back into the range should continue to be viewed as buying opportunities.  


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/21/2024

Gold sets new record highs as silver extends gains above $34

OUTSIDE MARKET DEVELOPMENTS: Israeli Prime Minister Benjamin Netanyahu's residence was struck by a Hezbollah drone over the weekend. The PM and his wife were not home at the time. “The agents of Iran who tried to assassinate me and my wife today made a bitter mistake,” said Netanyahu.

The U.S. is investigating the leak of top secret documents that revealed details of Israel's planned retaliatory strike against Iran for its 01-Oct missile barrage. The source of the documents appears to be the U.S. National Geospatial-Intelligence Agency.

Iran fired missiles at Israel in April and earlier this month as retribution for Israeli actions. Israel has vowed retaliation for the latest barrage with one Israeli official calling it a "done deal." Of course, Iran is threatening revenge for this anticipated strike. This cycle continues, heightening risks for an all-out regional war.

China continues to talk a big game on stimulus, but accommodations implemented thus far have failed to relieve market angst over growth risks. Liu Shangxi, head of the Ministry of Finance's Chinese Academy of Fiscal Sciences, told the South China Morning Post that measures ‘should absolutely surpass’ C¥10 trillion to prevent the Chinese economy from "falling off a cliff."

The probability of steady Fed policy in November is back at 15% after falling to 9.7% late last week. With the economy showing signs of resilience, the trade remains somewhat worried that the central bank will pause its easing cycle to prevent inflation from heating back up.

At a speech in New York this morning, Dallas Fed President Lorie Logan said the economy is "strong and stable," but "meaningful uncertainties" remain. "If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals," Logan said.

U.S. leading indicators fell 0.5% to 99.7 in September, below expectations of -0.3%, versus a negative revised -0.3% in August (was -0.2%). The 99.7 print is the lowest since May 2016.

The Conference Board said, “Weakness in factory new orders continued to be a major drag on the US LEI in September as the global manufacturing slump persists.” The report also cited the fact that the yield curve remains inverted, a decline in building permits, and a "tepid" outlook for future business conditions.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +13.81 (+0.52%)
5-Day Change: +$75.97 (+2.87%)
YTD Range: $1,986.16 - $2,739.66
52-Week Range: $1,812.39 - $2,739.66
Weighted Alpha: +38.78

Gold started the new week with another round of fresh record highs. The yellow metal traded as high as $2,739.66 before pulling back into the range.

 

High geopolitical tensions, uncertainty about the outcome of the upcoming U.S. elections, expectations of further central bank easing and gold purchases, and dedollarization continue to be the primary driving forces behind gold's rally.

The breach of the $2,732.55 Fibonacci target lends credence to the next upside objective at $2,810.38. With each new record high, the $3,000 level looks increasingly appealing.

Bank of America reaffirmed its $3,000 objective last week in a research note that argued gold may be a better safe-haven option than U.S. Treasuries given the ballooning debt. "Indeed, with lingering concerns over US funding needs and their impact on the US Treasury market, the yellow metal may become the ultimate perceived safe haven asset," analysts wrote.

Importantly, physical gold is arguably the only asset not simultaneously someone else's liability. This makes the yellow metal an ideal hedge.

Not surprisingly, inflows into gold-backed ETFs (someone else's liability) surged last week to 23.7 tonnes. It was the largest weekly inflow in nearly a year. Both U.S. and European investors were strong buyers.

The COT report for last week showed that net speculative long positions increased by 8.2k to 286.4k contracts. There haven't been more than two consecutive weeks of declines in spec long positions since the January/February period.

Silver extended to the upside to trade with a 34 handle for the first time since late November 2012. Last week's impressive performance marked the fifth higher weekly close out of the past six weeks.



Last week's upside breakout above the previous range high at $32.700 is a bullish technical event that bodes well for a short-term challenge of the $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703). An eventual breach of the latter would bode well for a return to the record-high $50 level.

Last week's COT report saw the net speculative long position in silver fall by a modest 0.7k to 54.0k contracts. It was the third consecutive weekly contraction and was likely attributable to market disappointment over Chinese stimulus early last week. I imagine Friday's upside breakout pulled a lot of longs back in.

CFTC Silver speculative net positions

The intraday low at $33.573 protects a minor chart point from Friday at $33.094/00. The first level of significant support is marked by former resistance at $32.700.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/18/2024

Gold pushes to record highs above $2,700 while silver surges to new 12-year highs

OUTSIDE MARKET DEVELOPMENTS: Hamas leader Yahya Sinwar, the architect of the October 7th atrocities, was killed by an Israeli drone on Thursday. "This is a good day for Israel, for the United States, and for the world,” said President Joe Biden.

Biden believes that Sinwar's death may have opened a "path to peace — a better future in Gaza without Hamas.” He urged that stalled cease-fire talks be reinvigorated and a hostage release deal be reached.

However, Sinwar's deputy Khalil al-Hayya said Hamas’s conditions for a cease-fire and hostage deal remain unchanged. “Today, evil has suffered a heavy blow, but the task before us is not yet complete,” said Israeli Prime Minister Netanyahu.

It is Netanyahu's position that the war "is not over yet.” Arguably the elimination of Hamas leadership creates uncertainty. It is possible that the next leader of Hamas could be more extreme than Sinwar.

China's GDP slowed to 4.6% in Q3, above expectations of 4.5%, versus 4.7% in Q2. It's the weakest quarterly print in more than a year. Persistent housing market woes, weak consumer demand, and slower exports are all weighing on growth.

The PBoC immediately announced a C¥800 bln ($112.38 bln) stock buyback and equity swap scheme to bolster markets. China's benchmark CSI300 index rebounded from early losses to end the session 3.6% higher.

The central banks also pledged to "strengthen inter-department coordination, create synergies and make full use of the policies to reinvigorate market confidence, improve people's expectations and promote sustained economic recovery."

While Beijing appears committed to attaining its 5% growth target, jawboning and dribbling out stimulus measures has disappointed the trade in recent weeks. We'll see if there's upside follow-through in Chinese shares next week, or if markets continue to press Beijing to fire a policy howitzer to bolster the bazooka-sized measures announced in September.

U.S. housing starts slowed by 0.5% to 1.354M pace in September, above expectations of 1.349M, versus an upward revised 1.361M in August. Single-family starts rose 2.7% to 1.027M, the strongest in five months, but multi-family starts fell 9.4% to a four-month low of 0.361M. The recent rebound in mortgage rates suggests a persistent headwind for housing into year-end.

We'll get the September Treasury Budget later today. The market is expecting to see a $16 bln surplus.

FedSpeak is due from Bostic, Kashkari, and Waller.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$19.77 (+0.73%)
5-Day Change: +$57.87 (+2.18%)
YTD Range: $1,986.16 - $2,719.06
52-Week Range: $1,812.39 - $2,719.06
Weighted Alpha: +39.91

Gold jumped to new record highs above $2,700 buoyed by persistent geopolitical tensions and expectations of further central bank easing. The yellow metal is poised for a second consecutive higher weekly close.  



With less than three weeks until the U.S. elections most presidential polls remain within the margin of error. Similarly, which parties will secure House and Senate majorities appear to be toss-ups. The resulting uncertainty, and perhaps some fears of unrest, are contributing to safe-haven demand for gold.

Analysts at UBS believe the rally could continue for another six to twelve months, driven by central bank easing and ongoing "strong" official sector buying of gold. UBS sees potential for the yellow metal to reach $2,900 by September 2025.

I continue to believe gold could reach $3,000 in Q1'25. My measuring objective at $2,718.42 has been satisfied and exceeded, shifting focus to a Fibonacci projection at $2,732.55. The next Fibonacci level beyond that comes in at $2,810.38.

We could see some profit-taking ahead of today's close, but corrective setbacks should continue to attract buying interest. Initial support is noted at $2,702.75/$2,700.00, which protects the more important $2,692.49/$2,684.45 zone and $2,673.68 level.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.464 (+1.46%)
5-Day Change: +$1.239 (+3.93%)
YTD Range: $21.945 - $32.910
52-Week Range: $20.704 - $32.910
Weighted Alpha: +43.76

Silver is on the bid after pushing to new 12-year highs above $32.700 helped by gold market strength and the latest PBoC accommodations. Stops were likely triggered above $32.700 contributing to more than 20¢ of follow-through buying.



Today's upside breakout lends considerable credence to the bullish scenario that calls for a challenge of the $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703). An eventual breach of this level would bode well for a return to the record high around $50.

Former resistance at $32.700 now marks initial support. Secondary support is $32.0904/$32.000.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/17/2024

Gold sets new record highs while silver consolidates below $32

OUTSIDE MARKET DEVELOPMENTS: As widely expected, the ECB cut its deposit facility rate by 25 bps. The vote was unanimous. This was the first back-to-back cut since the easing cycle began in June.

The ECB may now be comfortable accelerating the pace of rate cuts to achieve a truly accommodative policy stance. "No question that we are currently restrictive," said ECB President Christine Lagarde.

While the policy statement contends the "disinflationary process is well on track," the ECB is not pre-committing to a particular rate path. The central bank reiterated that it will "continue to follow a data-dependent and meeting-by-meeting approach to determining appropriate level and duration of restriction."

The Bank of Canada is expected to cut rates next week. The Fed and the Bank of England are expected to ease when they announce policy on 07-Nov.

Iran has warned Israel not to retaliate for the massive missile barrage that hit the country on 01-Oct. " If you do, and target us in any way, whether in the region or in Iran, we will strike you in a painful manner again," said the commander of Iran's Revolutionary Guards.

Meanwhile, Russia's Deputy Foreign Minister warned Israel against striking Iran's nuclear facilities. He said such an attack would be a "catastrophic development."

China pledged to nearly double the funds available for loans to complete existing real estate projects to C¥4 trillion. Once again, Chinese markets were not impressed.

China's property crisis began several years ago when Beijing cracked down on the sector's high levels of debt. Adding debt that also adds inventory to the market, without addressing weak homebuyer confidence doesn't seem like a well-thought-out plan.

U.S. retail sales rose 0.4% in September, above expectations of +0.3%, versus +0.1% in August. Ex-auto rose 0.5% on expectations of +0.2%, versus a positive revised +0.2% in August (was +0.1%). A resilient consumer provides support to the broader economy.

U.S. Philly Fed Index rose 8.6 points to 10.3 in October, above expectations of 3.0, versus 1.7 in September. More than 24% of participants reported increases in general activity. Nearly 35% of firms reported increases in input prices, 5% reported decreases, and 60% reported no change.

Philly Fed Manufacturing Business Outlook Survey

U.S. NAHB Housing Market Index rose 2 points to 43 in October, versus an eight-month low of 39 in August. The recent rebound in mortgage rates intensified the headwind faced by the housing market.

U.S. industrial production fell 0.3% in September, below expectations of -0.1%, versus a negative revised +0.3% in August (was +0.8%). Cap use slipped to 77.5%.

U.S. initial jobless claims fell 19k to 241k in the week ended 12-Oct, inside expectations of 245k, versus 260k in the previous week. 

U.S. business inventories rose 0.3% in August in line with expectations, versus a negative revised +0.3% in July.  


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +13.81 (+0.52%)
5-Day Change: +$63.22 (+2.40%)
YTD Range: $1,986.16 - $2,695.77
52-Week Range: $1,812.39 - $2,695.77
Weighted Alpha: +38.37

Gold has set new record highs against the dollar, following the path blazed by the yellow metal against other currencies yesterday. Geopolitical tensions, political uncertainty, dedollarization, and the latest central bank rate cut are all seen as supportive.



Today's ECB rate cut is seen as just the latest evidence that most central banks are on a protracted easing path. Additional cuts are expected from the BoC, BoE, and the Fed in the weeks ahead. Lower interest rates make non-yielding gold increasingly attractive.

Ongoing central bank gold buying has been a hot topic at the LBMA conference in Miami. Robert Armstrong of the Financial Times observed, “If you are a central bank and you see the U.S. government trying to turn the screws on another nation’s foreign reserves, you are going to start thinking about alternatives and how to protect your economy."

Armstrong went on to say, “I think diversification works for everyone, and after the U.S. dollar, gold is probably the only show in town.” That's an important message to central banks, and individual investors alike and should provide an ongoing source of demand.

The latest gains in gold bode well for tests above $2700 and attainment of previously established objectives at $2,705.62 and $2,718.42. Another Fibonacci projection is found at $2,732.55. With each new high, the $3,000 level looks increasingly appealing.

The previous high at $2,684.45 now provides initial support, protecting the low for the day at $2,673.42. Yesterday's low at $2,659.20 should be bolstered by the rising 20-day moving average by the end of the week. The 20-day is at $2,649.88 today.

Silver is consolidating below $32, weighed by another disappointing Chinese stimulus announcement and further evidence of weakness in the U.S. manufacturing sector. While the white metal has traded below yesterday's low and the 20-day moving average, new record highs in gold should help limit the downside.



I continue to believe the supply and demand fundamentals are positively aligned for silver. However, it may take a decisive announcement on stimulus from China to catapult silver back toward its record high near $50.

This year's move to a new 12-year high at $32.700 is a step in the right direction. More than 50% of the entire decline from $49.752 (Apr'11 high) to $11.703 (Mar'20 low) has already been retraced. The 61.8% retracement level of that move is at $35.217 and becomes my next significant target upon a breach of $32.700.

In an interview in the Jerusalem Post, Rick Rule made note of Russia's recently stated intention to buy silver as a reserve asset, suggesting other central banks are interested in silver as well.

"When silver does break out, it's truly an amazing financial circumstance for those speculators who can afford it and those speculators who have the emotional stability to handle the volatility that you're going to see in the silver market," said Rule. His caution about silver market volatility should be heeded.

Dips within the range should continue to attract buying interest. I still see $30.950/856 as a formidable downside barrier in the short term.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/16/2024

Gold sets record highs against multiple currencies, but the dollar high holds for now

OUTSIDE MARKET DEVELOPMENTS: This week's generally weak EU and UK inflation readings have sent yields lower as the trade contemplates the likelihood of more aggressive ECB and BoE easing into year-end. 

The ECB will announce policy tomorrow and another 25 bps cut is widely anticipated. The Bank of Canada is expected to cut next week. The Fed and the BoE are both expected to ease on 07-Nov. 

The BoJ is an outlier that began a tightening campaign earlier this year. There is scope for another hike on 30-Oct.

Broadly speaking, interest rates are heading lower as inflationary pressures ebb, albeit slowly. While this is allowing central banks to focus more on growth risks, it will be some time before monetary policy is truly accommodative.

U.S. export prices fell 0.7% in September, outside expectations of -0.6%, versus a revised -0.9% in August (was -0.7%). Import prices fell 0.4% on expectations of -0.3%, versus a revised -0.2% in August (was -0.3%). Import prices ex-petro rose 0.2%.  

U.S. mortgage applications plunged 17.0% in the week ended 11-Oct according to the Mortgage Bankers Association. Both purchase and refis fell as 30-year mortgage rates continued to rebound, reaching a 9-week high of 6.52%.

It looks like the mortgage market got ahead of itself and is correcting. This poses a headwind for home sales.

Chinese shares remain under pressure as investors lose patience with Beijing. The PBoC injected C¥642.4 bln in liquidity via seven-day reverse repos in an effort to shore up the market.

The South China Morning Post reports "Some prominent economists have called for China to roll out a stimulus plan worth 10 trillion yuan ($1.4 trillion)." Anything close to that would certainly get the market's attention and would send shares and commodities soaring. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$11.61 (+0.44%)
5-Day Change: +$64.17 (+2.46%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +36.90

Gold approached the $2,684.45 record high in early U.S. trading. While the yellow metal was unable to set a new high against the dollar, it did reach fresh records against the euro, pound, C$, yen, yuan, rupee, and others.



I believe a new all-time high against the dollar is just a matter of time. The dollar is benefitting from safe-haven interest along with gold, but I continue to be impressed with gold's resilience in the face of that dollar strength.

A survey of the delegates at the LBMA conference in Miami projects gold will reach $2,941 over the next 12 months. I think gold could reach $3,000 as soon as Q1'25.

The fourth quarter is a seasonally significant period where we typically see heightened demand from festival and wedding-related buying out of India. Clarification of China's stimulus intentions could provide a boost to the market as well. Certainly, anything close to C¥10 trillion would likely send gold sharply higher.

John Lee, chief executive of the Hong Kong Special Administrative Region, said Hong Kong will become a major international gold trading center. China is already the largest producer and consumer of gold and has aspirations of becoming the global trading hub. The Shanghai Gold Exchange has gained prominence since opening in 2002 and is already the world's largest purely physical spot exchange.

The anticipated breach of $2,684.45 would favor an upside extension to a measuring objective off the recent correction at $2,718.42. Beyond the latter, I have a Fibonacci projection at $2,732.55.

An intraday chart point at $2,668.37 provides intervening support ahead of the overseas low at $2,659.20. Tuesday's low at $2,639.35 is bolstered by the 20-day moving average that comes in at $2,644.74 today.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.298 (+0.95%)
5-Day Change: +$1.226 (+4.02%)
YTD Range: $21.945 - $32.700
52-Week Range: $20.704 - $32.700
Weighted Alpha: +37.41

Silver tested back above $32 today, but those gains once again proved unsustainable. I'm beginning to feel that a sustained push above $32 and a breach of the 12-year high at $32.700 may be dependent on China announcing additional stimulus measures.



I do think such an announcement is forthcoming, making dips within the recent range buying opportunities. Attendees of the LBMA conference in Miami think silver could reach $45 over the next year. That would be more than a 40% rise from the present level.

Such a move seems likely based on the realities of supply and demand. Demand for industrial and green applications continues to rise. Mining output and recycling have not been able to keep pace, leading to structural deficits for the past four years. If demand is greater than supply, the price must rise.

Yesterday's close above the 20-day moving average provided some impetus for the test above $32. An eventual breach of $32.70 would initially shift focus to $33.372 based on a Fibonacci projection.

Former resistance at $31.620/615 now marks first support, protecting the intraday low at $31.434. More substantial support is well-defined at $30.950/856.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/15/2024

Gold and silver firm despite dollar strength

OUTSIDE MARKET DEVELOPMENTS: In what the AP called a "symbolic display of anger," North Korea blew up unused sections of roads and rail lines that once linked the two Koreas. The action prompted the South Korean military to fire warning shots.

North Korea was angered this week by anti-north leaflets being dropped by drones over its capital Pyongyang. Seoul has not taken responsibility for the drone flights, but civilization unification groups frequently send propaganda north by balloon. The North sends trash balloons south in retaliation.

North Korean leader Kim Jong Un has accused South Korea and the U.S. of provoking hostilities in the region because of their tighter military ties. Kim has threatened to use the country's nuclear weapons in the event of a conflict.

China surrounded Taiwan on Monday with warplanes and warships to simulate a blockade as part of a large-scale one-day military drill. Chinese military drills around Taiwan have become increasingly frequent in recent years. Taipei and Washington have condemned China for raising tensions in the region.

With the Russia-Ukraine conflict raging, NATO began its annual nuclear exercise on Monday ramping up tensions on the Continent. NATO Secretary General Mark Rutte said the exercise is a display of the alliance's deterrence capabilities.

That messaging is clearly aimed at Russia. A Russian government spokesman said the "exercises lead to nothing but further escalation of tension."

All these factors, along with Israel's ongoing multifront war against regional terrorists, have global geopolitical risks quite high at the moment. Safe haven assets such as gold, the Swiss franc, and the dollar have seen stronger buying interest.

Canadian CPI fell 0.4% m/m in September, below expectations of -0.2%, versus -0.2% in August. The annualized pace of consumer inflation eased to 1.6% from 2.0% in August, the lowest since Feb'21. This raises the likelihood of a 50 bps rate cut by the BoC next week.

U.S. Empire State Index tumbled 23.4 points in October to a five-month low of -11.9, well below expectations of 3.0, versus 11.5 in September. However, optimism about the six-month outlook rose to a 25-month high of 38.7.

NY Fed Empire State Manufacturing Survey

The evidence of weakness in the manufacturing sector didn't impact Fed policy expectations much. The market is still widely anticipating an additional 50 bps points in easing through year-end, evenly divided into 25 bps cuts in November and December.

Fed Governor Christopher Waller worried yesterday that the economy is not cooling at the central bank's desired pace. "I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +4.67 (+0.18%)
5-Day Change: +$36.83 (+1.40%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +35.95

Gold firmed to a two-week high as the trade reduced bets on steady Fed policy in November after a weak Empire State reading. The yellow metal approached the high for the month at $2,670.67 (01-Oct) before retreating into the range.



Gold remains supported by heightened geopolitical tensions and continues to shrug off strength in the dollar. The dollar index remains well-bid after setting an 11-week high on Monday at 103.36. The last time DXY was above 103.30 was 08-Aug. Gold closed at $2,427.04 that day.

Talk out of the London Bullion Market Association's annual conference in Miami indicates that official sector buying is likely to remain a tailwind for the gold market. Reserve diversification is a primary motivation for central bank purchases.

A breach of initial resistance at $2,670.67 would clear the way for a retest of the record high at $2,684.45 (26-Sep). Penetration of the latter would bode well for an upside extension to a measuring objective off the recent correction at $2,718.42. New record highs would also boost confidence in the longer-term target at $3,000.

Today's overseas low at $2,639.35 protects the more important $2,628.36 low from Friday. Key short-term support is well defined at $2,606.62/$2,604.09.

Silver has once again bounced from intraday tests below $31 helped by strength in gold. While the breach of resistance at $31.537/615 is encouraging, ongoing worries about the state of the Chinese economy and weakness in U.S. manufacturing pose headwinds.



Beijing continues to promise it will take appropriate measures to reach its 5% growth goal, but the market is keen to hear plan specifics. Simple jawboning over the past week has resulted in some degree of uncertainty.

A close above the 20-day moving average at $31.361 today would provide some additional technical encouragement. A move back above $32 is needed to clear the way for a retest of the 12-year high at $32.700 (04-Oct).

On the downside, keep an eye on $31.361 on a close basis. This level protects the more important $30.950/856 zone.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/9/2024

Gold and silver consolidate yesterday's losses amid hopes for more Chinese stimulus

OUTSIDE MARKET DEVELOPMENTS: Chinese stocks are retracing recent stimulus-driven gains on revived growth concerns. The Shanghai Composite Index closed down 6.62% and the CSI300 lost 7.05% today. These were the biggest daily losses since the COVID crisis.

Hong Kong's Hang Seng index lost another 1.7% today, following a plunge of 9.5% on Tuesday. That was the biggest drop since the global financial crisis in 2008. Commodities remain defensive.

The market is demanding more stimulus, which will likely be met. Beijing has announced that a fiscal policy briefing will be held on Saturday, where Finance Minister Lan Fo’an is expected to introduce additional measures to boost growth.

The ECB is widely expected to cut rates by another 25 bps next week. "A cut is very probable, and furthermore it won't be the last," said Banque de France Governor Francois Villeroy de Galhau. With inflation continuing to moderate, ECB policy remains tilted toward easing amid persistent growth risks.

While the Chinese and European (especially German) economies continue to display weakness, last week's strong U.S. jobs report reflects a resilient U.S. economy. Today's update to the Atlanta Fed's GDPNow model estimates Q3 GDP to be 3.2%, up from 2.5% on October 1. The Blue Chip consensus remains below 2% but is rising gradually. 

With the prospects for a U.S. recession considerably diminished, the market has priced out the possibility of another oversized Fed rate cut. However, solid growth has the potential to revive inflationary pressures.

U.S. CPI and PPI data are out on Thursday and Friday respectively. While the market expects both to show benign 0.1% monthly increases, there are whispers of upside risk.

Dallas Fed President Lorie Logan (moderate hawk) warned today of "still meaningful" upside risks to inflation. "I continue to see a meaningful risk that inflation could get stuck above our 2% goal," she said. Logan sees "a more gradual path back to a normal policy stance" as appropriate.

The dollar has rebounded in recent weeks as the market pivoted to less-dovish policy expectations. The dollar index reached a new eight-week high today.

U.S. MBA mortgage applications fell 5.1% in the week ended 04-Oct, weighed by a five-week high in 30-year mortgage rates of 6.36%. Refinances fell 9.3%.

U.S. wholesale sales fell 0.1% in August, below expectations of +0.4%, versus +1.1% in July. Wholesale inventories rose 0.1%.

The minutes from the September 17-18 FOMC meeting will be released this afternoon.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -0.51 (-0.02%)
5-Day Change: -$41.33 (-1.55%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +36.01

Gold is consolidating yesterday's losses with price action confined to the lower end of Tuesday's range. While the yellow metal is trading lower for a sixth session, the magnitude of the correction thus far from the $2,684.45 record high (26-Sep) has been less than 3%.



High geopolitical tensions and political uncertainty are seen as supportive factors that should limit the downside. The shift in Fed rate cut expectations toward a more conservative 25 bps and the corresponding rise in the dollar pose headwinds for gold.

UBS believes gold's rally still has legs. They see ongoing central bank buying and steady consumer demand in China and India as important driving forces. UBS now forecasts $2,800 by year-end and $3000 in 2025.

HSBC has a year-end target of $2,725 and expects a broad range of $2,350 to $2,950 through 2025. HSBC cites central bank demand, expectations for further Fed easing, and rising concerns over fiscal deficits in major economies at tailwinds for gold.

I'd like to see gold climb back above the 20-day moving average at $2,623.57 to boost confidence in the longer-term bullish outlook.

On the downside, initial support at $2,607.26/09 protects the more important $2,600.00/$2,597.42 level. Penetration of the latter would shift focus to $2,579.26 (50% retrace of the rally from $2,474.08 to $2,684.45).

Silver has stabilized somewhat in the wake of yesterday's 3.2% plunge. While the white metal is trading lower for a third session, additional downside progress has not been seen today.



Revived hopes for additional Chinese stimulus are providing some support, but markets seem inclined to wait until after Saturday's policy briefing to see exactly what Beijing is considering. A much-anticipated press conference on Tuesday disappointed, leading to the recent sell-off.  

While the double top formation on the daily chart remains troubling, I believe China is inclined to make whatever accommodations are necessary to ensure the attainment of its 5% growth target.

News this week that Russia is considering holding silver as a reserve asset has rather bullish implications as well. Russian reserve buying has the potential to boost demand considerably in a market that is expected to notch its fourth consecutive structural supply deficit in 2024.

A close back above the 20-day moving average at $31.186 would ease short-term pressure on the downside and favor renewed tests above $32.  The eventual negation of the double top at $32.657/$32.700 would put silver back on track for attainment of previously established objectives at $33.00 and $33.972.

On the other hand, if solid support at $30.00/$29.85 gives way, a more protracted corrective/consolidative phase becomes likely. The 100- and 50-day moving averages are rising to bolster this area and come in at $29.743 and $29.577 today. Today's intraday low at $30.281 and yesterday's low at $30.229 mark the initial downside barriers.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/8/2024

Gold and silver correct on tepid post-holiday stimulus messaging from China

OUTSIDE MARKET DEVELOPMENTS: Risk-off sentiment has surfaced on renewed worries about the Chinese economy. The Golden Week holiday has ended and a much-anticipated press conference by the chairman of the National Development and Reform Commission was a disappointment. No new stimulus measures were announced.

Chinese stocks saw record volume after the weeklong holiday closure. Initial strong gains were pared into the close. Meanwhile, Hong Kong’s Hang Seng index plunged 9.5%, its worst day since 2008. Commodities are in retreat.

Hurricane Milton continues to strengthen, prompting evacuation orders as the storm approaches the west coast of Florida. Milton is expected to make landfall near Tampa Bay tomorrow and could be the worst storm to hit the U.S. in more than a century.

Tensions remain extremely high in the Middle East amid expectations that Israel is preparing to strike Iran in retaliation for last week's missile barrage. Iranian nuclear facilities are considered by many to be likely targets.

A rare earthquake in Iran over the weekend has some speculating that a nuclear weapon test may have been conducted. CIA Director William Burns said on Monday that he sees no evidence that Iran is rushing the development of such a weapon.

A Wall Street Journal article worries that Iran may now realize that its ballistic missiles and Hezbollah proxies in Lebanon are "less powerful than previously thought." This may prompt Iran to accelerate its nuclear program to achieve a more substantial deterrent against Israel.

The Israeli and U.S. position has always been that Iran can not be allowed to get a nuclear weapon. The deterrent Iran seeks is the exact thing that could prompt a joint strike on the country.

The Japanese yen has come under renewed pressure as prospects for another big Fed rate cut have dimmed. This elicited warnings from key Japanese policymakers that hinted at the potential for direct intervention to support the yen.

The U.S. NFIB Small Business Optimism Index edged up to 91.5 in September from 91.2 in August. It is the 33rd consecutive month below the 50-year average of 98. The Uncertainty Index jumped 11 points to a record high of 103 with the U.S. election less than a month away.

RCM/TIPP Economic Optimism Index rose 0.8 points to a 16-month high of 46.9 in October, versus 46.1 in September. While an improvement, it was the 38th straight month below 50. A sub-50 reading indicates economic pessimism.

The U.S. trade deficit narrowed to -$70.4 bln in August, inside expectations of -$70.6 bln, versus a revised -$78.9 bln in July. The deficit narrowed 10.5% from a 25-month high in July to a 5-month low that some attribute to proactive moves by importers and exporters in advance of what at the time was a threatened strike by longshoremen.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$3.58 (+0.14%)
5-Day Change: -$17.86 (-0.67%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +38.04

Gold slid to a three-week low in early U.S. trading on dampened risk sentiment after China failed to announce any new stimulus as the Golden Week holiday came to an end. The yellow metal is trading lower for a fifth straight day.



The breach of chart support at $2,633.48/$2,627.20 cracked the range that had held for five sessions, prompting a challenge of the important 20-day moving average at $2,614.80. While gold has tested below the SMA, the next tier of chart support at $2,600.00/$2,597.42 remains intact thus far.

High geopolitical tensions and persistent political uncertainty ahead of the U.S. elections continue to provide some underpinning to the market. Meanwhile, the erosion of Fed rate cut expectations and the firm dollar weigh.

September saw a fifth consecutive month of inflows into gold-backed ETFs. Inflows totaled 18.4 tonnes ($1.4 bln). North American investors continue to lead the charge.

North Americans have been net buyers for three straight months. Asian investors extended their buying streak to 20 consecutive months. 

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -0.376 (-1.19%)
5-Day Change: -$0.220 (-0.70%)
YTD Range: $21.945 - $32.700
52-Week Range: $20.704 - $32.700
Weighted Alpha: +37.57

Silver came under selling pressure along with the rest of the commodities sector on revived concerns about the health of the Chinese economy. The white metal plunged more than 4% intraday to approach the $30 zone.



The violation of support at $30.963 confirms the $32.657/$32.700 double top. A more serious challenge of the $30.00/$29.85 zone seems likely, especially on a close below the 20-day moving average at $31.090. The 100- and 50-day moving averages come in at $29.745 and $29.545.

Given the short-term market fallout stemming from China's tepid stimulus messaging today, I suspect at a minimum they'll start jawboning in favor of further accommodations as soon as Wednesday. Ultimately, more stimulus is likely forthcoming based on Beijing's commitment to its growth targets.

A rebound above the 20-day would ease short-term pressure on the downside and favor renewed tests above $32.00. A minor intraday chart point at $30.595 marks an intervening barrier.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/7/2024

Gold and silver consolidate near historic highs as focus shifts to U.S. inflation data

OUTSIDE MARKET DEVELOPMENTS: Hamas reportedly fired rockets from the Gaza Strip at Tel Aviv on the first anniversary of the horrific October 7th terrorist attack. Israel has issued evacuation warnings for northern Gaza in advance of what may be a major new offensive.

Meanwhile, rockets fired by Hezbollah in the north struck the Israeli city of Haifa. Israel continues to attack Hezbollah positions within Lebanon and the IDF is said to be preparing a “serious and significant” retaliatory strike on Iran.

Hurricane Milton is tracking toward Tampa Bay, an area still reeling from the effects of Hurricane Helene. Milton is projected to make landfall on Wednesday.

Market focus this week will be on U.S. inflation data. September CPI will be released on Thursday and PPI comes out on Friday. Median expectations are +0.1% m/m for both, although Friday's better-than-expected jobs data suggests some upside risk to inflation.

The market is suddenly worried that the Fed's 50 bps rate cut in September was too aggressive. Consequently, expectations for another large rate cut in November have fallen to zero. A more cautious 25 bps cut is now favored, but the probability of a hold has increased to 16.5%.

Today's economic calendar is light with just August Consumer Credit. The market is expecting an increase of $12.0 bln.

We'll hear Fedspeak from Bowman, Kashkari, Bostic, and Musalem later today. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$2.69 (+0.10%)
5-Day Change: +$11.61 (+0.44%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +38.09

Gold remains narrowly confined within striking distance of record highs, as ongoing haven interest is offset to some degree by less dovish Fed expectations and a strong dollar. While the yellow metal notched a second consecutive lower weekly close, I continue to be impressed by this market's resilience in the face of recent seven-week highs in the dollar index.



For five sessions, the yellow metal has been confined to the 01-Oct range ($2,670.67 - $2,633.48). Such price action does not indicate a top is forming but is more likely a continuation pattern. An eventual upside breakout is favored.

A breach of $2,670.67 would clear the way for a retest of the record high at $2,684.45. Above the latter, the $2,700.00/$2,709.14 objective remains valid.

The $2,633.48/$2,627.20 area marks initial support. The rising 20-day moving average will correspond with this support later in the week and is presently at $2,613.66.

The COT report for last week showed that net speculative long positions fell 15.5k to 299.9k contracts from 315.4k in the previous week. I imagine the spec longs that left the market will be quick to jump back on board with new record highs.

Indian gold imports hit a more than three-year high of 125 tonnes in August, driven by strong consumer demand and industry restocking ahead of the festival and wedding season according to the latest edition of Heaeus's weekly market report. Consumption in India continues to be supported by this summer's steep cut in import duties.

Central bank demand remains an important driving force behind the rally in the gold market. Poland has been a leading buyer, adding 39 tonnes to its holdings over the past five months. The WGC reported The National Bank of Poland held 398 tonnes of gold as of the end of August.

"We now hold 420 tonnes," Adam Glapiński, president of the National Bank of Poland, told reporters last week.  Glapiński went on to note that Poland now has more gold reserves than the UK, viewing that as an important benchmark that ushers Poland into the "exclusive club of the world's largest gold reserve holders."

You may recall that Chancellor of the Exchequer Gordon Brown famously sold about half of Britain's gold between 1999 and 2000, at an average price of $275. It became known as Brown's Bottom.

Silver saw its fourth consecutive higher weekly close last week, and a fresh 12-year high at $32.70. While gains above $32 have proven unsustainable thus far, the trend remains positive.



Recently announced Chinese monetary and fiscal stimulus remains a primary supporting factor. We may see this influence re-exert itself this week as the Golden Week holiday winds down.

Russia has been a consistent buyer of gold as a means to sidestep international sanctions stemming from its invasion of Ukraine. Russia's Draft Federal Budget specifically mentions silver for the first time as part of its plan to continue increasing its holdings of precious metals.

While no real specifics were provided, a nation-state buyer in the silver market would have rather bullish implications. The silver market is substantially smaller than the gold market. The estimated market capitalization of the silver market is about a tenth that of the gold market.

First support at $31.451 (03-Oct low) protects the more substantial $31.041/$30.963 zone. The 20-day moving average has risen to $30.989 today, further bolstering this support level.

While the upside remains favored, be aware of the potential double-top formation at  $32.657/$32.700 that would be confirmed on a breach of $30.963. Such a move would suggest downside potential to the $30 zone initially.

At this point, buying strategies remain favored. An eventual breach of $32.700 would bode well for tests of previously established objectives at $33.00 and $33.972.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/4/2024

Gold remains consolidative despite dollar strength while silver hits a new 12-year high

OUTSIDE MARKET DEVELOPMENTS: U.S. nonfarm payrolls surged 254k in September, well above expectations of +150k, versus a positive revised +159k in August (was +142k). The unemployment rate ticked down to 4.1% from 4.2% in August.

Hourly earnings rose 0.4% on expectations of +0.3%, versus a positive revised +0.5% in August (was +0.4%). The average workweek edged down to 34.2 hours.

Stronger-than-expected jobs and earnings growth suggest growth risks may not be as worrying as the market thought. Arguably, there are also heightened price risks into year-end. This has prompted the market to completely unwind bets for another oversized rate cut. Fed funds futures now favor a 25 bps cut in November with a slight chance for steady policy.

Chicago Fed President Austan Goolsbee called the jobs report "superb" on BloombergTV. Goolsbee believes it is still appropriate for the Fed to bring the policy rate down "a lot" over the next 12 to 18 months.

"With the benefit of hindsight, the 50 basis point cut in September was a mistake...," wrote former Treasury Secretary Larry Summers on X. Summers believes "Caution in rate cutting" is required.

The Fed is still widely expected to ease in November and December. At the moment the bias is for more conservative 25 bps cuts. The Fed continues to remind us that the policy path is data-dependent and there are 34 days until the next FOMC meeting; plenty of time for more surprises. 

Given the recent more-dovish talk out of the ECB and BoE, shifting expectations for interest rate differentials has led to new seven-week highs in the dollar index. The low-to-high move in the DXY thus far has been 2.5%.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$2.23 (+0.08%)
5-Day Change: +$2.21 (+0.08%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +44.88

Gold initially retreated in reaction to this morning's significant NFP beat, weighed by less-dovish Fed policy expectations and the corresponding rise in the dollar. Nonetheless, price action remains confined to Tuesday's range for a third session. An inside week is evident as well.

 

I wrote yesterday about gold's impressive resilience in the face of the dollar's recent rebound. That is even more evident today although dollar strength is seen as limiting the upside. High geopolitical tensions and rising political uncertainty a month out from U.S. elections provide the counterbalance.

A close above $2,658.20 is needed for the yellow metal to notch a fourth consecutive higher weekly close. That would bode well for a retest of the record high set last week at $2,684.45. Above that, the $2,700.00/$2,709.14 objective remains valid.

On the downside, the $2,633.48/$2,627.20 area marks first support. This level was reinforced by today's earlier intraday low at $2,637.43. The 20-day moving average is now at $2,606.50.

Setbacks into the range are likely to be viewed as buying opportunities even as the trade looks ahead to next week's important inflation data. Both CPI and PPI are expected to come in at a benign +0.1%.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.026 (+0.08%)
5-Day Change: +$0.952 (+3.01%)
YTD Range: $21.945 - $32.700
52-Week Range: $20.704 - $32.700
Weighted Alpha: +52.02

Silver continues to probe above the $32 level, heartened by today's better-than-expected jobs data and demand optimism stoked by Chinese stimulus. The white metal shrugged off seven-week highs in the dollar to slightly exceed last week's high at $32.657, eking out a new 12-year high of $32.70.



Silver is up nearly 2% this week and appears poised for a fourth consecutive higher weekly close. The last time that happened was in March.

A more convincing breach of the previous high would clear the way for short-term tests above $33 and lend credence to the previously established Fibonacci objective at $33.972.

Further out, $35.217 is an important level to watch as it marks 61.8% retracement of the entire decline from $49.752 (Apr'11 high) to $11.703 (Mar'20 low). An eventual breach of this would bode well for the bullish scenario that calls for a return to the $50 zone.

Initial support at $32.00 stands in front of the intraday low at $31.697. Several additional tiers of support now protect the key $31.041/$30.963 zone. 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/3/2024

Gold and silver display resilience in the face of dollar gains 

OUTSIDE MARKET DEVELOPMENTS: The IAF struck Hezbollah's intelligence headquarters in Beirut as Israel continues to degrade the terrorist organization's ability to wage war. IDF forces continue to conduct ground operations in southern Lebanon.

BoE Governor Bailey warned that the situation in the Middle East could lead to a 1970s-style oil shock. So far, oil gains have been limited and Bailey senses there is "a strong commitment to keep the market stable" from counterparts in the region.

If inflation continues to moderate, Bailey said the central bank could be “a bit more activist” in its policy decisions. Solid UK PMI readings with "improving order books accompanied by cooling inflationary pressures" suggest the BoE may indeed have room for more aggressive rate cuts. 

The prospect for accelerated BoE easing sparked a rally in Gilts and Sterling came under pressure. Cable tumbled to a three-week low, providing an additional tailwind for the dollar. The dollar index extended to a six-week high of 102.08.

Ongoing weakness in the Eurozone economy revealed by the latest PMI readings, has the market leaning toward another ECB rate cut in October. While inflation remains above target, the ECB's Mario Centeno worries that keeping policy restrictive for too long could result in inflation undershooting the 2% target.

ECBSpeak in general has tilted more dovish this week, raising the likelihood of another 25 bps cut this month. The euro is under pressure, reaching a three-week low against the dollar.

The U.S. Challenger report saw announced layoffs fall 3.1k to 72.8k in September, versus 75.9k in August. 
Announced hirings surged 397.8k to 403.9k led by the retail and transportation sectors that are looking ahead to seasonal holiday hiring needs.

U.S. initial jobless claims rose 6k to 225k in the week ended 28-Sep, above expectations of 223k, versus a revised 219k in the previous week. Continuing claims fell 1k to 1,826k in the week ended 21-Sep.

U.S. services PMI for September was revised down to 55.2, versus 55.4 flash and 55.7 in August. However, further solid expansions in output and new orders were noted. Price pressures increased to 54.6 from 52.9. Business confidence "dropped markedly due to concerns of a slowdown in the economy."

U.S. services ISM rose 3.4 points to 54.9 in September, above expectations of 51.7, versus 51.5 in August. That's the highest reading since February 2023. The sector has expanded in 49 of the last 52 months. Prices jumped to 59.4 from 57.3 in August.

U.S. factory orders fell 0.2% in August to $590.4 bln, below expectations of +0.2%. This modest setback comes on the heels of the 4.9% rise in July, the largest one-month percentage gain in more than four years.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$12.11 (-0.46%)
5-Day Change: -$27.67 (-1.04%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +43.71

Gold continues to consolidate within the confines of Tuesday's range. The upside is being hindered by heightened expectations of more aggressively dovish policy paths for both the BoE and ECB, which has pushed the dollar index to six-week highs.



Scope for another aggressive 50 bps Fed cut in October has waned over the past week. Fed funds futures put the current probability at 33.3%, down from 35.2% yesterday and 49.3% a week ago. This too is providing a tailwind for the dollar.

However, the yellow metal is proving to be quite resilient in the face of this dollar strength. The last time the dollar index was this high was on 19-Aug and gold closed at $2,586.83 that day.

Global central banks reported just 8 tonnes of net gold purchases in August according to the World Gold Council. While it was the fifteenth consecutive monthly net gain, it was the smallest since March. Poland was the largest buyer in August at 6 tonnes, followed by Turkey and India at 3 tonnes each.

The WGC's Marissa Salim notes that "sales have not increased which may signal a likely wait and see approach rather than a change in trend." They believe that all of the drivers of central bank gold demand remain in place, although demand this year will be weaker than in 2023.

First support at $2,642.77 protects the more substantial $2,633.48/$2,627.20 area. The important 20-day moving average is at $2,598.89 today.

On the upside, sights remain set on the $2,700.00/$2,709.14 objective. Beyond that, psychological barriers at $2,800 and $2900 stand in front of the longer-term target at $3,000.

Silver continues to probe above the $32 level but remains confined to yesterday's range thus far. The white metal is also displaying impressive resilience in the face of today's dollar strength.

 

A breach of yesterday's high at $32.259 would clear the way for a retest of last week's 12-year high at $32.657. Beyond that, I have targets at $33.00 and $33.972.

An intraday level at $31.887/80 now protects the low for the day at $31.451. The importance of the $31 zone has been reinforced by buying interest that emerged in this area.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/2/2024

Gold consolidates within yesterday's range as silver tests back above $32 

OUTSIDE MARKET DEVELOPMENTS: Israeli Prime Minister Netanyahu has vowed retaliation for Iran's 'retaliatory' missile attack on Israel. Iran "made a big mistake tonight and it will pay for it,” warned Netanyahu. The cycle of retaliation seems likely to continue and the regional risks grow with each exchange.

Israel is thought to be considering taking out Iranian oil infrastructure and nuclear sites. It is believed that any response will be coordinated with the U.S.

Iran fired at least 180 missiles at Israel on Tuesday, but Israeli air defenses including the Iron Dome intercepted most. There are reports that U.S. forces participated in the defense effort. Despite the magnitude of the attack, damage and loss of life in Israel has been limited.

Hezbollah fighters in southern Lebanon say that they are engaged with IDF forces. Israel reports that eight soldiers have been killed in the fighting.

MBA mortgage applications fell -1.3% in the week ended 27-Sep, following some big weekly gains in the wake of the Fed's oversized rate cut on 18-Sep. Thirty-year mortgage rates ticked up for the first time in nine weeks to 6.14% from a 23-month low of 6.13%.

The ADP Employment Survey showed that private employers added 143k jobs in August, above expectations of +125k, versus a revised +103k in July (was +99k). Strength in the ADP report suggests some upside risk for Friday's NFP report, where the median payrolls estimate is +150k.

Richmon Fed President Thomas Barkin (moderate hawk) said there is still "significant uncertainty" about inflation and employment. Along with Fed Chairman Powell, he worries that core inflation won't come down much more until next year.

Incoming data and less dovish FedSpeak have seen the prospects for another 50 bps rate cut in October diminish to 34.7%. That's down from 36.8% yesterday and 57.4% a week ago.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$14.34 (-0.54%)
5-Day Change: -$6.03 (-0.23%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +44.18

Gold is consolidating within yesterday's range but remains generally well-supported by elevated Middle East tensions.  Given that yesterday's Iranian attack on Israel was largely ineffectual, some of the haven bid has come out of the market.



Geopolitical risks are still elevated, and gold is the preferred hedge against such risks. An article by The World Gold Council outlines the advantages of a gold allocation in times of geopolitical crisis.

According to the WGC: "In almost every week during which the GPR [Geopolitical Risk] index soared by over 100%, gold saw positive returns. Gold averaged a weekly return of 1.6% during these spikes while global equities declined, on average, by 0.8%." 

Gold, a consistent outperformer during geopolitical crises

The dollar remains on the bid as the market pares expectations for another jumbo rate cut in October. This is providing a bit of a headwind for gold.

Nonetheless, the trend remains decisively bullish with fresh record highs anticipated. Initial resistances are noted at $2,670.67/$2,673.67 (01-Oct and 27-Sep highs), and $2,684.45 (26-Sep high).

Sights remain set on the $2,700.00/$2,709.14 objective. Beyond that, psychological barriers at $2,800 and $2900 stand in front of the longer-term target at $3,000.

First support at $2,644.46 protects the more substantial $2,633.48/$2,627.20 area. The important 20-day moving average is at $2,591.53 today.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.022 (+0.07%)
5-Day Change: +$0.544 (+1.77%)
YTD Range: $21.945 - $32.657
52-Week Range: $20.704 - $32.657
Weighted Alpha: +43.32

Silver tested back above $32 today as a little more risk-on sentiment allows some level of focus to return to China's massive monetary and fiscal stimulus efforts. This is providing support to the broader commodity complex, but silver is likely garnering some additional lift from being a less costly alternative to gold.

 

While the white metal has slipped back into the range, leaving last week's high at $32.657 intact, focus remains on buying strategies. The three daily lows so far this week reinforce the importance of the $31 zone as short-term support.

An eventual move to new 12-year highs above  $32.657 would bode well for the bullish scenario that targets $33.972 based on a Fibonacci projection. The $33 area can be considered an intervening barrier.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/01/2024

Gold rebounds from recent corrective losses on rising Middle East tensions

OUTSIDE MARKET DEVELOPMENTS: Israel has launched its anticipated ground incursion into Lebanon, to push Hezbollah forces further back from the border. Israel also revealed that its special forces had already conducted more than 70 small raids within Lebanon since the war began to destroy Hezbollah positions, tunnels, and weapons.

Besides strikes in Lebanon and Gaza, Israel has also attacked military targets in Yemen and Syria this week.

The AP is reporting that Iran is preparing to “imminently” launch a ballistic missile attack on Israel, citing senior administration officials. That same official warned that such an attack would have “severe consequences” for Iran.

The Pentagon announced on Monday that additional U.S. fighter jet squadrons were being sent to the Middle East. “The United States is committed to Israel’s defense,” said U.S. Secretary of State Anthony Blinken. As tensions rise, uncertainty about President Biden's mental acuity is particularly concerning.

NATO's new Secretary General Mark Rutte has pledged ongoing support for Ukraine. "We have to make sure that Ukraine prevails as a sovereign, independent, democratic nation," he said.

Rutte indicated he supported Ukraine's use of weapons supplied by alliance members to "strike legitimate targets on the aggressor's territory." 

Rutte also accused China of being a "decisive enabler" of Russia's war effort. "(China) cannot continue to fuel the largest conflict in Europe since the Second World War without this impact in its interests and reputation," he said.

In Nashville on Monday, Fed Chairman Jerome Powell said that policy is "not on any preset course," reiterating the Fed's data dependency. He noted that the labor market “clearly cooled over the last year.” The market is expecting a NFP print of +150k on Friday.

The JOLTS job openings increased 329k to 8,040k in August, versus a revised 7,711k in July. That's the highest print since May.

U.S. manufacturing PMI was revised to 47.3 in September, versus a preliminary print of 47.0. However, the final reading was down 0.6 points from 47.9 in August. "The US manufacturing sector moved deeper into contraction territory at the end of the third quarter of the year," said S&P. 

New orders saw the sharpest drop since June 2023. The employment component fell to 48.3, the lowest reading since June 2020, as "job shedding intensified."

U.S. manufacturing ISM was unchanged at 47.2 in September, below expectations of 47.5, and holding just above July's low at 46.8. Prices slid to a nine-month low of 48.3 from 54.0 in August.

U.S. construction spending fell 0.1% in August, below expectations of +0.2%, versus a negative revised -0.5% in July (was -0.3%). June was revised sharply lower to -1.1% from unchanged previously. 

Auto and light truck sales for September come out later today. The market is expecting 2.0M and 9.9M respectively.

Today marks the beginning of the Golden Week holiday in China. Many Chinese take advantage of factory and business closures to travel, although the recent tough economic times are expected to dull spending this year. Chinese markets are closed for the remainder of the week.  

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$15.10 (+0.57%)
5-Day Change: +$5.26 (+0.20%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +45.04

Gold has rebounded from recent corrective action on heightened haven demand stemming from the most recent developments in the Middle East. The yellow metal has moved back within $20 of last week's record high at $2,684.45 on reports that Iran has indeed fired missiles at Israel.



Friday's high at $2,673.67 is the next intervening resistance level to watch. If the U.S. becomes directly involved in the fight, gold could quickly go much higher.

Near-term potential remains to the $2,700.00/$2,709.14 objective. Psychological barriers at $2,800 and $2900 stand in front of the longer-term target at $3,000.

Goldman Sachs has raised their gold price forecast for early 2025 to $2,900 from $2,700. If things heat up in the Middle East we could see those levels before year end.

"We reiterate our long gold recommendation due to the gradual boost from lower global interest rates, structurally higher central bank demand and gold's hedging benefits against geopolitical, financial, and recessionary risks," the bank said in a note.

Silver has recovered somewhat from recent corrective action, buoyed by gains in gold. While the white metal remains confined to yesterday's range thus far, further short-term probes above $32 are considered likely.



Silver gains are being muted by today's soft U.S. manufacturing data and safe-haven buying in the dollar. While I do expect some spillover haven buying in silver, the vast majority of silver demand comes from industry.

First resistance is marked by yesterday's high at $31.829, the penetration of which would favor a retest of last week's 12-year high at $32.657. Friday's high at $32.227 provides an additional intervening barrier.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

9/30/2024

Gold and silver remain corrective ahead of month-end and quarter-end

OUTSIDE MARKET DEVELOPMENTS: China's CSI 300 stock index surged 8.5% on Monday, its biggest gain since 2008, as markets continued to digest last week's bazooka stimulus. Hong Kong's Hang Seng Index posted a 2.4% gain and is now up 24% YTD.

The easing of home-buying restrictions in three major Chinese cities provided additional lift to shares and its troubled real estate sector. Steel and iron ore prices surged. Copper reached a 4-month high of $4.7382 before retreating somewhat.

Bejing is pulling out all the stops to get growth back to its 5% target. There's a growing sense that if additional stimulus is needed to achieve that goal, it will be forthcoming. That provides a considerable market tailwind.

Iran has vowed retaliation for recent Israeli attacks that have effectively decapitated Hezbollah. The Wall Street Journal is reporting that Israeli special forces have been conducting targeted raids within southern Lebanon, possibly paving the way for a broader IDF ground incursion. 

ECB President Christine Lagarde is worried that the EU "recovery is facing headwinds."  That acknowledgment may boost the prospects for an October ECB rate cut, but European bonds and shares were under pressure today.

German HICP inflation fell to 1.8% y/y in September, versus 2.0% in August. Italian HICP inflation fell to 0.8% y/y in September from 1.2% in August. These readings below the ECB target of 2.0% may provide clearance for more easing, but Lagarde sees scope for a Q4 inflation rebound driven by energy prices.

Chicago PMI rose to 46.6 in September, above expectations of 45.9, versus 46.1 in August. While comfortably above the May low of 35.5, the barometer has been in contractionary territory for 24 of the past 25 months. Troubles at Boeing continue to pose a headwind.

The Dallas Fed Index improved to -9.0 in September, inside expectations of -10.7, versus -9.7 in August. "Moderate upward pressure on prices and wages continued in September," according to the Dallas Fed. The comments section highlights how political uncertainty ahead of the November election has weighed on sentiment. 

Fed President Powell will speak at the NABE conference later today.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$6.68 (-0.25%)
5-Day Change: +$5.07 (+0.19%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +42.86

Gold is maintaining a corrective tone to start the new week as traders ring up profits for month-end and quarter-end. The yellow metal is lower for a second session after setting a record high of $2,684.45 on Thursday.



Despite the recent setback, gold is poised to notch an eighth consecutive monthly rise and a fourth straight quarterly gain. The quarterly gain should be the best since Q1'16.

The trend remains decisively bullish. Consequently, pullbacks are likely to be viewed as buying opportunities. The  $2,700.00/$2,709.14 objective remains valid, with intervening barriers noted at $2,665.36, $2,673.67, and $2,684.45.

Supports at $2,624.58 and $2,614.86 protect the $2,600 zone. The rising 20-day moving average, which provided good support earlier in the rally, comes in at $2,575.17 today.

The COT report showed net speculative long positioning increased 5.3k contracts to 315.4k last week. That's the highest spec long positioning in more than four years.

CFTC Gold speculative net positions

I'm anticipating that gold ETFs saw good inflows last week as well, although my source for that information has not been updated yet. I'll cover ETFs tomorrow.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -0.485 (-1.53%)
5-Day Change: +$0.544 (+1.77%)
YTD Range: $21.945 - $32.657
52-Week Range: $20.704 - $32.657
Weighted Alpha: +43.32

Silver has corrected to the $31 zone on position squaring on this, the last trading day of September and Q3. However, last week's move to fresh 12-year highs has swung the technical picture decisively back in favor of the bull trend off the COVID-era low at $11.703.



I suspect the housing market reforms in China will ultimately have a positive impact on silver, as they have for steel and copper today. Silver has become an increasingly important component in home construction.

The net speculative long position in silver futures jumped 3.9k to 62.2k contracts according to the latest COT report. That's the biggest net-long position since late February 2020 and may be contributing to the recent corrective pressure.

 CFTC Silver speculative net positions

While additional downticks toward the $30 zone can not be ruled out, market focus is likely to remain on buying strategies in anticipation of further tests above $32.

On the upside, I have a Fibonacci projection at $33.972. Intervening barriers are found at $31.829, $32.227, and $32.657. Further out, a key retracement level is highlighted at $35.217 (61.8% retracement of the entire decline from $49.752 to $11.703). 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

9/27/2024

Gold and silver turn corrective after this week's big run-ups

OUTSIDE MARKET DEVELOPMENTS: Japan's former Defense Minister Shigeru Ishiba has been chosen to lead the ruling Liberal Democratic Party and is set to become the country's next Prime Minister. Ishiba favors a strong military and close security ties with the U.S.

Ishiba has pledged to continue the economic policies of outgoing PM Fumio Kishia, focusing on increasing real wages, boosting consumption, and ending deflation. He also favors more government spending to revitalize depopulated regions. Addressing Japan's declining population is a priority.

The yen surged in reaction and Japanese stocks fell. Ishiba supports an independent BoJ and the market seems to think there is now a heightened chance of more rate hikes.

Israel and Hezbollah forces in Lebanon continue to trade fire. IDF troops have been told to prepare for possible ground operations within Lebanon. This would be a significant escalation.

“Israel has every right to remove this threat and return our citizens to their home safely. And that’s exactly what we’re doing … we’ll continue degrading Hezbollah until all our objectives are met,” Israeli Prime Minister Benjamin Netanyahu told the UN General Assembly this morning. 

Netanyahu made no mention of the 21-day ceasefire proposal being brokered by the U.S. and France, suggesting that the deal is not in play.

Hurricane Helene has been downgraded to a tropical storm after making landfall on Florida's Gulf Coast last night. Floridians are dealing with mass power outages and flooding. At least 11 have died as the storm tracks north through Georgia causing severe flooding.

U.S. personal income rose 0.2% in August, below expectations of +0.4%, versus +0.3% in July. The savings rate ticked down to 4.8%.

PCE was up 0.2% in August, below expectations of +0.3%, versus +0.5% in July. The PCE inflation rose 0.1% resulting in a 2.2% annualized pace. Core PCE inflation also ticked up 0.1%; 2.7% y.y.  

The final Michigan Sentiment reading for September was 70.1, up from a preliminary print of 69.0 and 67.9 in August. The current conditions index was revised up to 63.3, while the final expectations reading was raised to 74.4. The one-year Inflation rate was adjusted down to 2.7%, the lowest since December 2020.

The U.S. Advance Indicators report for August showed the trade gap narrowed by 8.3% to -$94.3 bln thanks to a better-than-expected $4.1 bln rise in exports to $177 bln. Wholesale inventories rose 0.2% and retail inventories climbed 0.5%. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$8.05 (-0.30%)
5-Day Change: +$49.01 (+1.87%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +45.46

Gold has slipped to a three-session low as traders took profits after this week's gains. Today is the first day of the week that a new record high has not been established. When September ends on Monday, it will mark the eighth consecutive higher monthly close.



Today's losses are seen as corrective within the well-established uptrend. Renewed buying interest is likely to surface with good supports noted at $2,624.58 (24-Sep low) and $2,414.86 (23-Sep low).

While the trade is arguably getting crowded, all the fundamental factors that have been driving gold higher are still very much in place. Heightened geopolitical tensions, political uncertainty, generally easier global monetary policy, a weaker dollar, Chinese stimulus, and strong central bank buying are all likely to persist and perhaps even intensify.

My next upside target is $2,700.00/$2,709.14. There are psychological barriers at $2,800 and $2,900 on the way to the longer-term objective is $3,000.

On last night's earnings call, Costco CFO Gary Millerchip said their physical gold sales were up "double digits" in Q3. Bullion is a driving force behind Costco's eCommerce revenue. Costco CEO Ron Vachris said the company had "no plans at this time" to create Kirkland Signature branded bullion.

Silver has retreated to approach the midpoint of this week's broad range. Even with today's pullback, the white metal is still up 4.7% this week.



Chinese monetary stimulus and expectations for up to CN¥2 trillion in fiscal stimulus drove silver to a 12-year high of $32.657 on Thursday. This upside breakout returns a measure of credence to the longer-term uptrend that began when silver bottomed at $11.703 in March 2020.

Silver has risen $20.954 (+179%) since that low was established. The $33.00 psychological barrier is the next upside target. Beyond that, there's a Fibonacci projection at $33.972.

An eventual violation of a key retracement level at $35.217 (61.8% of the entire decline from the March 2011 high at $49.752 to $11.703 low) would bolster a scenario that calls for a return to the $50 zone.

Keep in mind that the beta in the silver market is high and corrective action can be volatile. A pullback to the $30 zone can't be ruled out, although such a move is likely to attract additional buying interest.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

9/26/2024

Gold hit another record and silver extended to 12-year highs in anticipation of Chinese fiscal stimulus

OUTSIDE MARKET DEVELOPMENTS: China's Politburo has pledged to deploy "necessary fiscal spending" to boost growth back to its 5% target. Citing sources, a Reuters article reports that the Ministry of Finance plans to issue CN¥2 trillion in sovereign bonds this year.

This comes on the heels of a surprise move by the PBoC earlier in the week that saw reserve requirements and key interest rates lowered. Bloomberg suggests the additional measures would "supercharge" China's stimulus.

"China’s policymakers are pulling out the stops," said David Qu of Bloomberg Economics. Qu noted that China is showing "an unusually high degree of urgency and determination to support the economy."

European stocks and bonds are rallying on mounting expectations that another ECB rate cut is in the offing. The latest ECB Bulletin sees scope for an uptick in inflation in Q4 before resuming the downward path to the 2.0% target in 2025. However, the central bank believes "risks to economic growth remain tilted to the downside."

U.S. durable orders for August were unchanged, better than the -2.6% market expectations, versus a revised +9.9% in July. The ex-transportation print was -0.5%.

The third report for U.S. Q2 GDP came in unrevised at 3.0%. Consumption was revised down to 2.8% from 2.9% in the second report. The price index was steady at 2.5%.

Initial jobless claims fell 4k to 218k in the week ended 21-Sep, below expectations of 225k, versus an upward revised 222k in the previous week. That's the lowest print since May. Continuing jobless claims rebounded 13k to 1,834k.

Today's U.S. data were generally positive, consequently, bets on another jumbo rate cut have moderated somewhat. The potential for a 50 bps rate cut in November stands at 52.1% currently, down from 57.4% yesterday.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$15.74 (+0.59%)
5-Day Change: +$76.87 (+2.97%)
YTD Range: $1,986.16 - $2,684.45
52-Week Range: $1,812.39 - $2,684.45
Weighted Alpha: +44.90

Gold has now set record highs in five consecutive sessions, nine of the last eleven. News that China will add CN¥2 trillion in fiscal stimulus on top of the monetary stimulus announced earlier in the week is the latest driving force.



While gold has retreated into the range after setting the latest ATH at $2,684.45, pullbacks are still seen as corrective and are expected to attract further buying interest. Initial support is marked by the overseas low at $2.656.34, which protects Wednesday's low at $2,652.08. More substantial supports are at $2,624.58 (24-Sep low) and $2,414.86 (23-Sep low).

With the latest Fibonacci objective at $2,674.84 satisfied and exceeded, focus shifts to $2,700.00/$2,709.14. Confidence in the longer-term target at $3,000 continues to grow.

Incrementum, the producers of the In Gold We Trust report, reminded us via X that their bullish projection from 2020 is "almost exactly on track." Incrementum sees potential to $4.821 by 2030!

The most recent In Gold We Trust report 2024 was released in May and is well worth a read if you haven't done so already. The yellow metal is up nearly 13% since the report came out.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.811 (+2.55%)
5-Day Change: +$1.240 (+4.03%)
YTD Range: $21.945 - $32.657
52-Week Range: $20.704 - $32.657
Weighted Alpha: +46.19

Silver clearly likes the idea of "supercharged" Chinese stimulus. The white metal established a new 12-year high of $32.657 before retreating into the intraday range. Silver has gained more than 37% year-to-date.



The violation of the May high at $32.379 reestablishes the 4-year uptrend off the $11.703 low from March 2020. The $33.00 psychological barrier is the next upside target. Beyond that, there's a Fibonacci projection at $33.972.

The next major level I'm watching is $35.217 which marks 61.8% retracement of the entire decline from $49.752 (April 2011 high) to $11.703. 

The Asian low at $31.799 remains protected thus far, keeping yesterday's low at $31.642 at bay. Pullbacks are expected to be viewed as buying opportunities with Chinese stimulus and a global bias toward monetary easing expected to provide a persistent tailwind for the market.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
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Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

9/25/2024

Gold sets another new high as silver consolidates Tuesday's gains

OUTSIDE MARKET DEVELOPMENTS: The U.S. is sending an additional $375M in military supplies to Ukraine, including controversial cluster munitions. Ukraine is still trying to get clearance to use U.S. and UK long-range missiles to strike deep inside Russia.

President Biden said in his final speech before the UN General Assembly, "We will not let up on our support for Ukraine, not until Ukraine wins with a just, durable peace." Meanwhile, President Zelensky of Ukraine contends that "Russia can only be forced into peace." Biden is scheduled to meet with Zelenskiy on Thursday.

President Biden also urged Israel and Hamas to accept the ceasefire proposal that's on the table. "Full scale war is not in anyone's interest, even if situation has escalated, a diplomatic solution is still possible," said Biden.

These two wars are almost certain to outlast Biden's presidency and pose geopolitical challenges for the next administration. Countering growing regional influence by the likes of Russia, China, and Iran will also continue to test the next president.

The yuan reached a 16-month high against the dollar as markets digest China's largest stimulus since the COVID crisis. The market is broadly expecting additional PBoC stimulus.

The greenback has been under pressure since mid-year as markets initially looked forward to the Fed beginning its easing campaign.  interest rate cuts and now anticipate further easing.

The dollar index set a new low for the year last week at 100.21 and this level remains under pressure. A challenge of last year's low at 99.58 is anticipated. If this level also gives way, focus will shift to a Fibonacci level at 78.6.

The Institute of International Finance (IIF) reports that global debt rose by $2.1 trillion to reach a record $312 trillion. Estimates for 2024 global GDP are around $108 trillion, resulting in a debt-to-GDP ratio approaching 300%. Most of the recent rise is global debt is attributable to the U.S. and China.

"With the Fed’s new easing cycle expected to accelerate the pace of global debt buildup, a significant concern is the apparent lack of political will to address rising sovereign debt levels in both mature and emerging market economies," the IIF report said.

As debt burdens continue to grow, countries must allocate an ever-greater share of revenue to servicing that debt. While lower interest rates may lighten the load, the risks to growth are considerable.

U.S. mortgage applications surged 11% in the week ended 20-Sep. Refinancings accounted for most of the gains as 30-year mortgage rates fell to 23-month lows.

New home sales fell 4.7% to 716k in August on expectations of 700k, versus a revised 751k in July. Home inventories rose 1.7% to 467k and the median price fell 2.0% as lower mortgage rates may finally be loosening up an extremely tight real estate market.

GOLD