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Gold and silver are poised for monthly gains, despite recent corrective action

OUTSIDE MARKET DEVELOPMENTS: The trade continues to digest Powell's hawkish tilt at the end of this week's FOMC meeting. Rate cut expectations were trimmed significantly after Powell said, "A rate cut in December is not a foregone conclusion, far from it."

Fed funds futures put the probability of another 25 bps cut in December at 63%. That's down from 72.8% yesterday and  91.7% a week ago.

Speaking today, Atlanta Fed President Raphael Bostic, a swing voter, explained that he "eventually" supported the recent 25 bps rate cut but emphasized caution amid economic turbulence, structural changes like immigration and tariffs, and widespread housing affordability complaints, underscoring the challenges of proactive policy in uncertain times. Cleveland Fed President Beth Hammack, a hawkish non-voter, stated she would not have voted for the cut, aligning with a more restrained approach to future easing given persistent inflation risks and the need for clear evidence of cooling before December.

The U.S. tech market shrugged off the prospect of a pause in the Fed's easing campaign, getting a boost from blockbuster Q3 earnings from Amazon and Apple. The NASDAQ hit fresh record highs, while the broader indexes remain within striking distance of all-time highs.

The U.S. government shutdown drags on, now in its 31st day. The Senate adjourned Thursday without a breakthrough and won't reconvene until Monday, potentially tying the record for the longest funding lapse in history at 34 days.

President Trump is urging Republicans to eliminate the Senate filibuster via the "Nuclear Option" to override Democratic opposition, amid escalating impacts like the impending suspension of SNAP food benefits on November 1 and delayed paychecks for federal workers. Meanwhile, unions are dialing up pressure on Senate Democrats to end their filibuster and vote to reopen the government.

The American Federation of Government Employees (AFGE), the largest federal employee union, sent a letter to Senate Democrats on October 29 pleading for passage of a clean CR, warning of "catastrophic" impacts on workers and families. Teamsters President Sean O'Brien demanded Democrats "stop playing politics" and reopen the government immediately.

The Wall Street Journal reports that the Trump administration has decided to launch strikes on Venezuelan military installations, including ports, airfields, and naval bases allegedly used by drug cartels tied to President Nicolás Maduro.
The White House has dismissed the reports as unreliable, and President Trump himself denied the claim aboard Air Force One.

Chicago PMI rose 3.2 points to a three-month high of 43.8 in October, above expectations of 42.0, versus 40.6 in September. "The increase was mainly driven by a rebound in New Orders, alongside rises in Production and Order Backlogs," according to the report.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$17.01 (-0.42%)
5-Day Change: -$86.89 (-2.11%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,541.42 - $4,381.21
Weighted Alpha: +51.97

Gold is trading in a choppy manner on both sides of $4,000. The yellow metal is poised for its second straight lower weekly close, but will notch a third consecutive higher monthly close.



AI momentum has stocks on the bid, which is weighing on gold's safe-haven interest. Diminished hopes for a December rate cut pushed the dollar index to 13-week highs, providing an additional headwind for gold.

While further tests of the downside can not be ruled out, I continue to view recent losses as corrective within the long-term uptrend. UBS concurs, saying the "decline will prove a pause that resumes later, as demand for gold remains strong."

While gold registered a close above $4,000 on Thursday, another to end the week is needed to bolster the confidence of the bull camp for next week. More important resistance is well defined by the convergence of the 20-day moving average and Fibonacci resistance at $4,075.81/$4,086.53. Today's earlier high at $4,045.01 provides an intervening barrier.

A close below $4,000 would put the intraday low at $3,973.68 in jeopardy. A breach of the latter would highlight chart support at $3,923.46/15.82, with potential back to Tuesday's low at $3,887.03. If these levels give way, potential for a test of the rising 50-day MA at $3,820.94.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.015 (+0.03%)
5-Day Change: +$0.511 (+1.05%)
YTD Range: $28.565 - $54.465
52-Week Range: $28.565 - $54.465
Weighted Alpha: +64.86

Silver needs to close above $48.582 to record a higher weekly close. While the short-term tone is defensive, the nearly 7% rally from Tuesday's low at $45.563 has eased pressure on the downside. The white metal is on track for a more than 4% gain in October, which would be its sixth straight winning month.



Silver is an important component in AI infrastructure, so optimism in that sector is helping to underpin the white metal. However, less dovish Fed expectations and a firmer dollar pose headwinds.

More than 38.2% of the total decline has already been retraced. That's encouraging, but intraday gains faltered ahead of the 20-day moving average at $49.683. A breach of the 20-day would shift focus to the halfway back point of the decline at $50.014.

Today's intraday low at $48.396 marks the first tier of support. Secondary levels are noted at $47.278 (30-Oct low) and $46.873 (29-Oct low). Another minor level at $46.097 stands in front of the cycle low (thus far) at $45.563.


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 retreat into their ranges as Powell's hawkish tilt boosts the dollar 

Outside Market Developments: As expected, the Fed cuts rates by 25 bps today, noting that "uncertainty about the economic outlook remains elevated." There were two dissents, one favoring a 50 bps cut (Marin) and one favoring steady policy (Schmid).

"In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," according to the statement. This implies that the Fed remains data-dependent regarding further cuts.

Chairman Powell still sees the economy expanding moderately, but he expressed concerns during the presser about the government shutdown weighing on economic activity, the rise in near-term inflation expectations, and the significant slowdown in job gains. "A rate cut in December is not a foregone conclusion, far from it," Powell stressed.

While there are risks on both sides of the dual mandate, Powell seems to be intentionally trying to tamp down December rate cut expectations. The market is obliging and Fed funds futures now put the probability at 67%, down from 88% earlier today, 90.5% yesterday, and 95.5% a week ago.

The dollar index has rallied to two-week highs. A breach of the October high of 99.56 would favor a challenge of more important resistance at 100.00/100.26. Some of the stock market exuberance has also been tempered.

The Bank of Canada also trimmed rates by 25 bps today, in line with expectations. It was the fourth rate cut this year
amid mounting growth risks and persistent trade tensions with the U.S. The Governing Council views the current rate of 2.25% as appropriate to maintain inflation near 2% while supporting the economy through structural adjustments, signaling a potential pause unless the outlook deteriorates further.

Tomorrow's Trump/Xi summit in South Korea looms large. News earlier in the week that a trade deal framework had been agreed to tamped trade war worries and stoked risk appetite.

Democrat senators continue to block a vote on the House-passed continuing resolution, pushing the government shutdown into its 29th day. Senate Minority Leader Chuck Schumer warned the impasse could drag into November, as millions risk losing SNAP food benefits and federal workers face missed paychecks.

Israel accused Hamas of ceasefire violations, prompting airstrikes across Gaza that targeted militants. The IDF said it will abide by the truce after striking dozens of terror targets, while Hamas denies responsibility for attacks on IDF troops and reaffirms its commitment to the deal.

MBA Mortgage Applications jumped 7.1% in the week ended 24-Oct as 30-year mortgage rates fell to a 13-month low of 6.30%.

Pending Home Sales Index held steady at 74.8 in September, below expectations of +1.6%, versus +4.2% in August.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$71.22 (+1.80%)
5-Day Change: -$101.31 (-2.47%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,541.42 - $4,381.21
Weighted Alpha: +50.42

Gold rebounded above $4,000 in advance of today's FOMC decision as traders squared positions ahead of the news. However, the yellow metal has retreated into today's range as Fed Chairman Powell's comments weigh on December rate cut expectations.



Today's Asian low at $3,923.46 protects yesterday's low at $3,887.03. Penetration of the latter would suggest potential to the rising 50-day moving average around $3,800.

In yesterday's comment, I suggested a close back above $4,000 was needed to provide some encouragement to the bull camp. That now seems unlikely today. More important resistance is well defined by the convergence of the 20-day moving average and Fibonacci resistance at $4,074.08/$4,075.81. Today's earlier high at $4,029.92 provides an intervening barrier.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$1.132 (+2.41%)
5-Day Change: -$0.381 (-0.79%)
YTD Range: $28.565 - $54.465
52-Week Range: $28.565 - $54.465
Weighted Alpha: +60.21

Silver is holding onto intraday gains in the wake of yesterday's reversal day. The white metal retreated along with gold as Powell's hawkish tilt boosted the dollar.



Optimism about a potential U.S./China trade deal seems to be offsetting the implications of dimmed December rate cut prospects and a firmer dollar. The gold/silver ratio is probing back below 83, suggesting modest overperformance.

I'm now watching intraday support at $47.269 and today's low at $46.873. An additional minor level is noted at $46.097, protecting yesterday's low at $45.563.

A short-term close above $48 (still possible) would ease pressure on the downside, but chart/Fibonacci resistance around $49 and the 20-day MA at 49.560 are the more important levels that must be cleared to return some confidence to the underlying uptrend. The halfway back point of the entire corrective decline comes in at $50.014.


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 extend losses before recovering somewhat intraday

OUTSIDE MARKET DEVELOPMENTS: The two-day FOMC meeting is underway. A 25 bps rate cut is widely anticipated when policy is announced on Wednesday.

The trade will be paying close attention to the policy statement and Powell's responses to the financial press's questions for clues about the Fed's intentions for the remainder of the year. Fed funds futures currently put the probability of another 25 bps cut in December at about 87%.

The U.S. and China have reached a preliminary framework agreement on key issues, including tariffs, rare earth exports, soybeans, and fentanyl controls. This sets the stage for a potential trade deal to be finalized by Presidents Trump and Xi Jinping at their summit in South Korea on Thursday. Market optimism has stoked risk appetite.

The U.S. government shutdown has entered its 28th day, with federal workers missing paychecks and millions at risk of losing SNAP benefits on November 1 due to depleted funding. The Senate is set to attempt a 13th vote on a clean funding bill to reopen the government through November 21, but it remains unlikely that the GOP majority will be able to sway enough Democrats to break the filibuster.

S&P/Case-Shiller Home Price Index (20-cities) fell 1.9 points to 340.0 in August, from 341.9 in July. "August's data shows U.S. home prices continuing to slow, with the National Index up just 1.5% year-over-year," said Nicholas Godec of S&P Dow Jones Indices.

FHFA Home Price Index rose 0.4% to 435.3 in August, above expectations of +0.1%, versus unch in July; +2.3% y/y, down from +2.4% in July.

Consumer Confidence ebbed to 94.6 in October, above expectations of 93.6, versus a revised 95.6 in September (was 94.2). 

Richmond Fed Index rebounded to -4 in October, above expectations of -14, versus -17 in September. All three of its component indexes increased, but it was the eighth consecutive negative print.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$54.59 (-1.37%)
5-Day Change: -$157.13 (-3.81%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,541.42 - $4,381.21
Weighted Alpha: +48.88

Gold extended losses to trade below $3,900 for the first time since 6-Oct as optimism about a U.S./China trade deal weighs on the yellow metal's haven appeal. Gold was overdue for a correction, notching nine consecutive higher weekly closes before last week.



In Friday's newsletter, I worried that "stops below $4,000 could still be a short-term attraction." That was indeed the case, and secondary support at $3,947.99/45.87 was also negated, leading to a test of the $3,900 zone.

From last week's record high at $4,381.21 to today's low at $3,887.03, the magnitude of the correction is just over 11% thus far. I feel like the weak longs have been knocked out at this point, and are probably looking for a spot to get back in.

Perhaps not surprisingly, there were significant outflows of 12.5 tonnes from gold ETFs last week, ending the string of net inflows at eight weeks. While European investors headed to the exit to the tune of 28.1 tonnes, Asian ETFs saw inflows of 17.3 tonnes. North American investors displayed resilience, with outflows of just 1.9 tonnes.

I imagine next week's data will show more outflows in North America as investors are probably rotating out of haven assets like gold to pile back into shares. However, the magnitude of such outflows will tell us a lot. 

I continue to believe that recent losses are corrective within the long-term uptrend. November is typically another strong seasonal month for gold, but I'd like to see some more upside performance to start returning some credence to the underlying uptrend.

A short-term close back above $4,000 would offer some encouragement to the bull camp, but the convergence of the 20-day moving average and Fibonacci resistance at $4,068.82/$4,075.81 is the more important level to watch. Today's overseas high at $4,019.39 provides an additional intervening barrier.

Today's intraday low at $3,887.03 fortifies the 06-Oct weekly low at $3,884.61. Penetration of this level would leave the market vulnerable to the rising 50-day moving average, currently at $3,783.16. 


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.659 (-1.40%)
5-Day Change: -$1.509 (-3.10%)
YTD Range: $28.565 - $54.465
52-Week Range: $28.565 - $54.465
Weighted Alpha: +55.98

Silver is trading higher on the day after trading at five-week lows below $46. While it's premature to suggest the corrective low is in place, calmed trade tensions seem to be providing some support.



The gold/silver ratio appears to have met some resistance around 86, suggesting this period of silver underperformance may be coming to an end. However, investors and haven buyers are likely feeling stung by the 16% plunge and may be slow to return.

A short-term close above $48 would ease pressure on the downside, but chart/Fibonacci resistance around $49 and the 20-day MA at 49.543 are the more important levels to watch. The halfway back point of the entire corrective decline comes in at $50.014.

A lower close today would indicate the potential for further tests of the downside. Today's U.S. low at $46.135 marks initial support, protecting the low for the day at $45.563. Penetration of the latter would suggest scope for a test of the rising 50-day MA at $44.813.


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.