Blog posts of '2024' 'December'

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.

12/5/2024

Gold and silver remain generally consolidative ahead of tomorrow's NFP report

OUTSIDE MARKET DEVELOPMENTS: While South Korea's period of martial law was short-lived, the repercussions are still being felt. Calls for President Yoon Suk Yeol to resign continue to echo even as lawmakers prepare for impeachment amid rumblings of treason charges.

The Korean won has rebounded somewhat after plunging to a more than a two-year low against the dollar on Tuesday. Korean stocks remain under pressure due to the ongoing political instability.

Finance Minister Choi Sang-mok attempted to reassure investors by pledging to do whatever was necessary to stabilize financial markets and the currency. That included a vow to provide "unlimited liquidity" if necessary.

French President Macron will address the nation this evening presumably to address the political turmoil stemming from the collapse of the government. Prime Minister Barnier resigned following Wednesday's vote of no confidence. His three-month tenure as PM was the shortest in modern history.

Bitcoin extended gains after topping $100,000 on Wednesday. The cryptocurrency is being boosted by President-elect Trump's promises of a lighter regulatory approach and a pledge to make America “the crypto capital of the planet.” Trump also tapped crypto-friendly Paul Atkins to be the next chairman of the SEC.

Meanwhile, Fed Chairman Powell said the central bank's role in regulating cryptocurrencies is limited. He also made some comments about Bitcoin that may have stoked the legitimacy of the asset (see the gold comment below).

Powell expressed some optimism about the U.S. economy, stating it's in "remarkably good shape." This allows the Fed to be "a little more cautious" moving forward.

The Fed's Beige Book showed economic activity "rose slightly" in most districts, providing some backing for Powell's statement. According to the report, "expectations for growth rose moderately across most geographies and sectors. Business contacts expressed optimism that demand will rise in coming months."

Fed funds futures continue to reflect a 70%+ probability of a 25 bps rate cut this month, while the likelihood of a January hold is currently 58.9%. Incoming data and the policies enacted by the incoming Trump administration will impact the policy path in the new year.

ECB President Christine Lagarde told the European Parliament that the central bank would continue with rate cuts. A 25 bps cut is widely expected next week, although a more aggressive 50 bps cut will likely be considered.

U.S. Challenger Layoffs rose 2.1k to 57.7k in November, versus 55.6k in October. “November saw downstream cuts to Automotive suppliers and parts manufacturers, as well as ongoing cuts in Consumer and Industrial Manufacturing. Technology also saw a high number of layoff announcements, as that sector continues to undergo significant changes,” according to Andrew Challenger.

U.S. Initial Jobless Claims rose 9k to 224k in the week ended 30-Nov, above expectations of 215k, versus a revised 215k in the previous week. Continuing jobless claims gell 25k to 1,871k in the 23-Nov week from 1,896k in the previous week.

U.S. Trade Deficit narrowed 11.9% to -$73.8 bln in October, inside expectations of -$75.2 bln, versus a revised -$83.8 bln in September.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$5.05 (+0.19%)
5-Day Change: +$9.39 (+0.34%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +30.07

Gold continues to trade in a consolidative manner in the lower half of last week's range. Upticks above $2,650.00 have once again attracted selling interest even though the dollar is trading lower today.

 

This week's highs at $2,650.65/$2,655.48 have turned into a formidable barrier ahead of last Friday's high at $2,665.16 and the 50-day moving average at $2,668.12.

Upticks since the 25-Nov drop have lacked momentum, suggesting that another run at the downside may be in the offing, although I don't expect the market to press the issue ahead of tomorrow's payrolls report. 

Fresh weekly lows below $2,623.31 would clear the way for a retest of last week's low at $2,609.76. Below the latter, the 100-day moving average at $2,580.90 would attract.

Fed Chairman Powell speaking at the DealBook Summit in New York said Bitcoin is "just like gold, only it’s virtual, it’s digital. People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold.”

However, he also said, “People use Bitcoin as a speculative asset.” That's clearly true, but he loses me when he makes the comparative statement about gold and Bitcoin.

First, gold is substantially less volatile than Bitcoin, and even less so than stocks. Second, I don't think most people see gold as a speculative asset, but rather as a hedge and a complimentary asset within a well-diversified portfolio.

That being said, I do think Powell inadvertently bestowed some legitimacy on Bitcoin by comparing it to an asset with over 4,000 years of history. That could pull some investment demand away from gold.

However, I think many of the new investors rushing into crypto will be equally quick to rush to the exits if Bitcoin's legendary volatility rears its ugly head again. You may recall that on March 12, 2020, Bitcoin plunged nearly 40% in a single day, from $7,935 to $4,826. On that same day, gold fell just 3.5% during a bout of pandemic-related deleveraging.

 

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.052 (+0.17%)
5-Day Change: +$1.067 (+3.53%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +32.40

Silver is consolidating at the upper end of yesterday's range after failing to clear resistance marked by the 19-Nov high at $31.465. Today's weakness in gold is likely limiting the upside in the white metal and preventing confirmation of the potential double bottom at $29.736/$29.703.



While silver set a two-week high on Wednesday, buoyed by more favorable global growth prospects, further gains are needed to restore confidence in the longer-term uptrend. A breach of $31.465 would highlight $31.691/709(Fibonacci/50-day MA) initially and set up renewed probes above $32. 

A retreat below the downtrending 20-day moving average at $30.740 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.

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

U.S. calendar features Challenger Layoffs, Trade: Goods & Services, Initial Jobless Claims, FedSpeak from Barkin.

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.