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Gold approaches $4,000, and silver extends its rally to move within $1.25 of $50

Outside Market Developments: The partial government shutdown continues into the new week without any indication that either side is willing to negotiate a compromise. There may be another vote on the CR this afternoon in the Senate, but it is unlikely to pass. Key government data releases will continue to be delayed by the shutdown.

The absence of economic data will leave the market to focus on a bunch of Fedspeak this week. The minutes from the September meeting are slated to come out on Wednesday.  

Despite the ongoing political turmoil, risk appetite remains elevated amid widespread belief that the Fed will continue the recently restarted easing campaign. Another 25-bps rate cut is anticipated when the Fed meets later this month, and Fed funds futures currently imply 41.25 bps of easing by year-end. This is seen as a headwind for the dollar.

Sanae Takaichi has been elected President of Japan's Liberal Democratic Party, positioning her to become Japan's first female prime minister.  Takaichi supports "Abenomics-style" stimulus, including bond issuance for infrastructure and tech investments in AI, semiconductors, and defense. Asian markets jumped in reaction, and the yen weakened, providing some lift for the dollar.

A day ahead of the second anniversary of the Hamas attack on Israel, President Trump's peace deal appears to have gained some traction. Indirect talks between Israel and Hamas have begun, and a deal could be reached as soon as this week if momentum is sustained. However, if Hamas refuses to agree to terms, many believe Israel will redouble their efforts to wipe out the terrorist group.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$55.63 (+1.43%)
5-Day Change: +$123.85 (+3.23%)
YTD Range: $2,607.16 - $3,958.60
52-Week Range: $2,541.42 - $3,958.60
Weighted Alpha: +54.44

Gold begins the week on the bid, setting new all-time highs and moving within striking distance of $4,000. The yellow metal is already up more than 2.5% for October, which just began last week.



Uncertainty associated with the government shutdown continues to stoke safe-haven interest, helped by expectations of further Fed easing and a weaker dollar. A convincing push above $4,000 will lend credence to secondary upside objectives at $4,103.32 and $5,000.

Record-high prices have weighed on Indian jewelry demand ahead of Diwali. However, belief in gold's bull trend and a weak rupee have stoked investment demand, which is more than offsetting slack jewelry demand.

Indian gold and silver imports more than doubled in September versus August, according to a Reuters article last week. "Even with gold and silver hitting record highs, buyers kept chasing them, and investment demand surged," said one importer.

While gold remains overbought, there is nothing to suggest the trade won't continue to view setbacks as buying opportunities.

Intraday support at $3,941.13 protects former resistance marked by the $3.900.00/$3,891.42 zone. Below the latter, today's Asian low at $3,884.61 is an important level to watch, at least for the first half of the week.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.553 (+1.15%)
5-Day Change: +$1.692 (+3.61%)
YTD Range: $28.565 - $48.753
52-Week Range: $28.565 - $48.753
Weighted Alpha: +69.55

Silver has extended to the upside to start the week, setting another round of fresh 14-year highs. The white metal has traded within $1.25 of the critical $50 level, despite a firmer dollar and softer copper.

 

The convincing push above $48 today bodes well for a test of $49, followed by attacks on record highs around $50. Beyond $50, we'll start looking at the next big round numbers, but potential at that point would be toward $60.417 (127.2% retracement of the decline from $50.000 to 11.703).

Former resistance at $48.000/$47.962 now provides initial support. Below that, there's not much in terms of support of consequence until Friday's low at $46.654. 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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.

Good morning. The precious metals are higher in early U.S. trading.

The U.S. calendar has #FedSpeak from Schmid.

Gold and silver set for seventh straight higher weekly closes

OUTSIDE MARKET DEVELOPMENTS: Today's release of the September jobs report and August factory orders were delayed as a result of the government shutdown. The data that was released was mixed, with services PMI revised up and services ISM falling.

That leaves the trade to focus on the shutdown itself and attempting to glean hints about the likely Fed policy path from FedSpeak and the limited data that are being released. The market seems inclined to continue tilting toward risk-on, amid expectations of further easing.

The market is confident that another 25 bps rate cut is in the offing this month and reasonably sure the Fed will ease again in December. The Senate is expected to vote on the GOP CR again today, but the potential for passage remains remote. Senate Majority Leader John Thune plans to keep the chamber in session over the weekend for repeated votes if needed to pressure Democrats.

President Trump has given Hamas until Sunday to agree to his proposed peace plan or "all HELL, like no one has ever seen before, will break out against Hamas." He went on to post on TruthSocial, "THERE WILL BE PEACE IN THE MIDDLE EAST ONE WAY OR THE OTHER." One might infer from that statement that if Hamas rejects the peace deal, Israel would proceed with military operations in Gaza to wipe out the terrorist organization. 

S&P Global Services PMI was revised up to 54.2 for September, versus a preliminary print of 53.9 and 54.5 in August.

Services ISM fell 2 points to a four-month low of 50.0 in September, below expectations of 51.9, versus 52.0 in August. Prices edged up to 69.4 from 69.2 in August.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$9.48 (+0.25%)
5-Day Change: +$122.77 (+3.27%)
YTD Range: $2,607.16 - $3,896.48
52-Week Range: $2,541.42 - $3,896.48
Weighted Alpha: +51.37

Gold is consolidating within yesterday's range, but within striking distance of the $3,896.48 record high set on Thursday. The yellow metal is poised for its seventh consecutive higher weekly close, buoyed by haven demand, expectations of further Fed easing, and a softer dollar.



The $4,000 psychological barrier is the next significant upside attraction. A push above $3,896.48/$3,900.00 would lend additional credence to the scenario that calls for a test of $4,000, and a continuation of the long-term multi-decade uptrend.

As I said earlier this week, it's hard not to remain bullish with all the fundamental factors driving the rally still largely in place. Persistent geoplitical, trade, and fiscal risks, sticky inflation, de-dollarization, central bank easing, and gold buying are all underpinning the bull market.

Following a July pause, central banks were buying again in August, adding a net 15 tonnes to global reserves. "[T]he recent slowdown in buying does not necessarily signal that central banks as a whole are losing interest in gold," wrote Krishan Gopaul of the World Gold Council in a blog post.

All that being said, the market remains quite overbought, creating risk for a corrective pullback. However, any such setback is likely to be viewed as a buying opportunity. 

Today's Asian low at $3,838.64 marks initial support. Thursday's low at $3,820.24 and the $3,800.00/$3,793.53 zone are the more important short-term levels to watch. Penetration of the latter would clear the way for a challenge of the low for the week at $3,760.05, which should correspond closely with the rising 20-day MA early next week.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.554 (+1.18%)
5-Day Change: +$1.675 (+3.64%)
YTD Range: $28.565 - $48.046
52-Week Range: $28.565 - $48.046
Weighted Alpha: +64.04

Silver continues to outperform, helped by strength in gold and copper, easing expectations, and a soft dollar. Like gold, the white metal is poised for a seventh straight higher weekly close.

 

The breach of the May 2011 high at $48.105 leaves little in terms of chart resistance ahead of the key $50 zone. Call $49 the next psychological barrier on the upside.

Floods and mudslides in Indonesia last month caused the world's second-largest copper mine to shut down, creating a major supply disruption. The company declared force majeure, and full production is not expected to be restored until sometime in 2027. A large copper operation in Peru also shut down due to political unrest, adding to expectations of significant supply deficits. 

Silver is frequently a byproduct of copper mining, so the shutdown of some large copper mines will also impact silver supply. The Grasberg mine in Indonesia, for example, produced 6.1 Moz of silver in 2023.

According to the Silver Institute, the cumulative supply shortfall reached approximately 678 million ounces through 2024, and projections indicate another deficit of 117.7 million ounces in 2025, marking the fifth straight year of imbalance. More demand than available supply bodes well for new all-time highs in silver.

A convincing breach of $50 would shift focus to a major Fibonacci objective at $60.417 (127.2% retracement of the decline from $50.000 to 11.703). I'll come up with some intervening targets once we've cleared $50.

Minor intraday support is noted at $47.420. Highs from earlier in the week at $47.172/167 protect today's overseas low at $46.654. Better support is found at $45.927/825. The 20-day MA is well protected below $44.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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.

Gold and silver reach new cycle highs, spurred by haven interest

Outside Market Developments: The U.S. government entered a partial shutdown at midnight after a fractious Congress failed to pass funding legislation for the new fiscal year. The impasse stemmed from partisan disputes, with Democrats rejecting a Republican continuing resolution over its lack of extensions for Affordable Care Act subsidies and other health benefits. Meanwhile, the Democrats argue that the GOP's claims that their version of the CR is "clean" are untrue.

AS many as 800,000 non-essential federal workers were furloughed without pay until funding can be restored. However, the Trump administration is seeking to terminate tens of thousands of those workers as a means to reduce the federal workforce and save billions of dollars.

While the shutdown stokes ongoing economic and fiscal uncertainty, these shutdowns tend not to last very long. Since 1990, they have averaged 8-14 days, although the 2018-2019 impasse lasted 35 days amid similar partisan healthcare disputes.

Historically, U.S. stocks on average have posted gains during past shutdowns, so perhaps not surprisingly, the market is tilted toward risk-on today. MarketWatch points out that it will be "business as usual for much of the country, including for federal workers deemed essential, and that any missed paychecks for Uncle Sam’s employees will come through once the shutdown ends." The potential for RIF firings this time around is a bit of a wildcard.

The trade continues to take its cues from rate cut expectations. Today's weak ADP employment survey and the downside risk for nonfarm payrolls (if they get reported) has another 25 bps cut essentially fully priced in for October. Fed funds futures currently imply 68 bps of easing by year-end.

The dollar index is trading lower for a fourth straight session, but price action remains confined to last week's range thus far. The DX set a more than three-year low on 17-Sep and has since been mildly corrective to consolidative.

President Trump's 20-point Gaza peace plan has been warmly received by a number of key stakeholders. While Hamas hasn't officially responded, the terrorist organization is unlikely to agree to the deal, as it would face disarmament and exclusion from governance moving forward.

MBA Mortgage Applications fell 12.7% in the week ended 26-Sep, versus +0.6% in the previous week. The 30-year mortgage rate rebounded to 6.46% from a 12-month low of 6.34% last week.

ADP Employment Survey showed private payrolls fell 32k in September, below expectations of +50k, versus a revised -3k in August (was +54k). "Despite the strong economic growth we saw in the second quarter, this month's release further validates what we've been seeing in the labor market, that U.S. employers have been cautious with hiring," said ADP's Chief Economist, Dr. Nela Richardson.

Construction Spending - DELAYED

S&P Global Manufacturing PMI was 52.0 in September, unchanged from the preliminary print, versus 53.0 in August. 

Manufacturing ISM rose 0.4 points to a seven-month high of 49.1 for September on expectations of 49.0, versus 48.7 in August. Prices eased to 61.9 from 63.7 in August.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$29.10 (+0.75%)
5-Day Change: +$140.38 (+3.76%)
YTD Range: $2,607.16 - $3,895.23
52-Week Range: $2,541.42 - $3,895.23
Weighted Alpha: +51.05

Gold notched a new record high of $3,895.23 in overseas trading before stabilizing somewhat. The government shutdown adds to pervasive uncertainty, stoking the haven bid.



It’s hard not to remain bullish. September saw the biggest monthly percentage gain since August 2011. Gold has posted gains in all but one month (July) so far this year. In fact, there haven’t been more than two consecutive lower monthly closes since late 2022.
 
Gold has also posted gains in seven of the last eight quarters. The yellow metal notched solid double-digit gains in Q1 and Q3 this year.

A move above $3,900 would bode well for the anticipated push to $4,000. Above the latter, the next Fibonacci objective off the last meaningful corrective phase comes in at $4,103.32.
 
While gold is quite overbought at this point, short-term setbacks are likely to be viewed as buying opportunities amid ongoing geopolitical, trade, and fiscal risks, easing expectations, sticky inflation, de-dollarization, and central bank demand.

Today's Asian low at $3,853.62 is being pressured. Fresh intraday lows and a lower close would suggest potential back to $3,800.00/$3,793.52.  More substantial support is marked by Mon day's low at $3,760.05.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.592 (+1.27%)
5-Day Change: +$3.471 (+7.90%)
YTD Range: $28.565 - $47.549
52-Week Range: $28.565 - $47.549
Weighted Alpha: +62.43

Silver has resumed its march higher after a brief pause on Tuesday, establishing a new 14-year high at $47.826. Haven flows seem to be overwhelming any growth risks stemming from the government shutdown. Today's good manufacturing sector data, relentless gold, heightened Fed easing expectations, and a weaker dollar provide additional tailwinds.

 

Silver rose more than 17% in September, its fifth consecutive monthly gain and the biggest since July 2020. The Q3 gain was 29.2%, the biggest since Q4 2010. 

Silver moved within striking distance of the targeted $47.973/$48.105 zone before moderating intraday. A short-term violation of this area would lend further confidence to the bullish scenario that calls for a challenge of record highs around $50. Weakness in the gold/silver spread suggests potential for ongoing silver outperformance.

Intraday support at $47.108 protects the low for the day at $46.631. Tuesday's low at $45.825 is the more important level to watch.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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.

Good morning. The precious metals are lower in early U.S. trading.

U.S. calendar features Case-Shiller Home Price Index, FHFA Home Price Index, Chicago PMI, Consumer Confidence, JOLTS Job Openings, Ag Prices.

FedSpeak due from Jefferson, Collins, Goolsbee, and Logan.

Gold and silver start the week with new record and 14-year highs, respectively

OUTSIDE MARKET DEVELOPMENTS: The U.S. federal government is on the brink of a partial shutdown starting October 1, with Congress deadlocked on a funding deal. The White House has directed agencies to prepare for permanent mass firings of federal workers in non-essential programs. Both parties seem more concerned about ensuring the other side gets the blame rather than striking a deal to fund the government.

Even if a CR is agreed upon, it would likely only fund the government for about seven weeks as negotiations on full-year appropriations continue. Any relief provided by a CR would be short-lived.

The focus at the end of the week will be on the September jobs report. However, BLS data processing and publication are deemed non-essential operations, so a government shutdown could delay the report.

Median expectations are +50k jobs, a continuation of recent weakness. The unemployment rate is expected to remain unchanged at 4.3%.

President Trump has proffered a 21-point peace plan for Gaza. Key elements reportedly include the surrender and disarmament of Hamas, the release of the remaining hostages, deployment of an international security force, and hints at a process that could lead to a Palestinian state. 

Israeli Prime Minister Netanyahu is meeting with Trump at the White House today to discuss the proposal. The plan includes some non-starters for both Israel and Hamas. 

Pending Home Sales Index rose 4% to 74.7 in August, well above expectations of +0.3%, versus -0.3% in July. "Lower mortgage rates are enabling more homebuyers to go under contract," said NAR Chief Economist Lawrence Yun.

Dallas Fed Index fell 6.9 points to a three-month low of -8.7 in September, versus -1.8 in August. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$58.06 (+1.54%)
5-Day Change: +$83.86 (+2.24%)
YTD Range: $2,607.16 - $3,833.43
52-Week Range: $2,541.42 - $3,833.43
Weighted Alpha: +48.60

GOLD

Gold begins the week on the bid, establishing fresh record highs. The yellow metal is being buoyed by haven interest associated with the risks of a government shutdown and a weaker dollar.



Geopolitical and trade tensions remain elevated. The market remains worried about inflation, but is also anticipating further rate cuts that could stoke that inflation, creating a bit of a perfect storm for gold.

Bloomberg reports that Switzerland has offered to invest in the U.S. gold-refining industry, in hopes of persuading the Trump administration to lower the recently imposed 39% import tariff. The plan could include building a new refinery and/or expanding existing processing capacity as a means to reduce the Swiss trade surplus with the United States.

Global gold ETFs saw net inflows of 27.2 tonnes last week, led once again by North American investors. It was the fifth straight week of inflows.

Today's convincing breach of the targeted $3,800 level lends credence to longer-term objectives at $4,000 and $5,000. The next big round number at $3,900 marks an intervening barrier.

The first tier of support is $3,807.12/$3,800.00. Below that, the previous high at $3,790.90 protects today's intraday low at $3,760.05.

While gold is quite overbought at this point and vulnerable to setbacks, the trade is likely to continue viewing downticks as buying opportunities. If Congress passes a CR before the government shuts down, corrective potential could be to the rising 20-day moving average at $3,667.51.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.903 (+1.96%)
5-Day Change: +$2.971 (+6.74%)
YTD Range: $28.565 - $47.172
52-Week Range: $28.565 - $47.172
Weighted Alpha: +60.83

Silver extended to the upside, reaching new 14-year highs. The white metal is now up more than 17% for September, spurred by solidly bullish supply/demand dynamics, a resilient U.S. economy, above-target inflation, dovish Fed expectations, a weaker dollar, and safe-haven spillover from record-high gold.



Based on all these factors, and a very bullish technical picture, record highs in silver above $50 are looking increasingly likely. The $47.973/$48.000 zone is the next upside target.

The gold/silver ratio has fallen to an 11-month low of 80.468, suggesting ongoing silver outperformance. The 78.6% retracement level comes in at 80.065. If that level is negated, potential would be back to last year's low at 72.675.

However, like gold, the silver market is very overbought at this point, having notched just six down days so far this month. Be cautious, because silver can be quite volatile when the bulls start booking profits.

The early U.S. low at $46.486 marks first support. Today's low was set in Asia at $45.955 is the more important level to watch. 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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.