Blog posts of '2025' 'January'

Gold eases from record high, while silver consolidates within Thursday's range

OUTSIDE MARKET DEVELOPMENTS: Global trade worries have increased after President Trump said he would impose tariffs on Canada and Mexico on Saturday. The President cited the trade deficits with those countries, along with the flow of illegal immigrants and drugs across the borders as the reasons for the tariffs.

"If the president does choose to implement any tariffs against Canada, we’re ready with a response – a purposeful, forceful but reasonable, immediate response," responded Canadian PM Justin Trudeau.

"We will wait, as I have always said, with a cool head, when taking decisions. We are prepared and we maintain this dialogue," said Mexican President Claudia Sheinbaum.

As the world's largest consumer market, the U.S. carries trade deficits with nearly all of its trading partners. If a deficit makes you a potential target for U.S. tariffs maybe everyone is rightfully worried.

In making imported goods less attractive to U.S. consumers by raising prices through tariffs, perhaps domestic products become more appealing and provide a boost to GDP. However, it's a very complex system and there will be unintended consequences. Some level of heightened inflation is likely one of them.

That may make it difficult for Trump to honor his pledge to reduce inflation. Maybe reduced energy and regulatory costs will offset price increases elsewhere, but that's a big maybe.

Increased price risks will also make it difficult for the Fed to continue on its easing path, which is also one of Trump's desires. Further rate cuts could stoke inflation even more. The Fed may actually have to consider tightening to check a rise in prices.

Bottom line, Trump's economic team has its work cut out for it. This has raised uncertainty and sapped risk appetite.

The Fed's favored gauge of inflation rose in December in line with expectations. The annualized rate of PCE inflation increased to 2.6% from 2.4% in November. Core PCE inflation was steady at 2.8%.

Warmer inflation caused rate cut expectations through July to moderate slightly. How the new administration's fiscal policies play out is of interest to Fed Governor Bowen (centrist/hawk). "It will be very important to have a better sense of the actual policies and how they will be implemented, in addition to greater confidence about how the economy will respond," she said.

Q4 Civilian ECI rose in line with expectations at a 0.9% pace, versus +0.8% in Q3. Employment costs continue to gradually, if somewhat erratically, moderate from pandemic-era highs.

Personal Income rose 0.4% in December, in line with expectations, versus +0.3% in November.

PCE rose 0.7% in December, above expectations of +0.5%, versus a positive revised +0.6% in November (was +0.4%). The jump in consumption was supported by the rise in wages, but it was also supported by a decline in the savings rate.

PCE Chain Price Index rose 0.3% in line with the consensus, versus +0.1% in November; +2.6% y/y, up from 2.4% in November. Core chain prices rose 0.2% which was also in line with expectations, versus +0.1% in November; +2.8% y/y, unchanged from November.

Chicago Fed PMI rebounded to 39.5 in January, above expectations of 39.0, versus a seven-month low of 36.9 in December. It was the first increase since September as Boeing continues to weigh on the index, even post-strike.

Ag Prices come out this afternoon. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$6.99 (+0.25%)
5-Day Change: +$32.30 (+1.17%)
YTD Range: $2,607.16 - $2,815.25
52-Week Range: $1,986.16 - $2,815.25
Weighted Alpha: +35.60

Gold extended to new all-time highs on Friday above $2,800. The yellow metal is poised for a fifth straight higher weekly close as global trade uncertainties stoke haven interest.

 

The ongoing easing bias of major central banks continues to offer support as well. This is true even though the Fed appears to be on hold for the time being and the BoJ is cautiously raising rates from sub-zero levels.

Market dislocation associated with the transfer of physical gold from London to Comex to front-run tariff risks is also providing a tailwind. Diminished liquidity in London, the global center of the gold trade, is buoying the price. “People can’t get their hands on gold because so much has been shipped to New York, and the rest is stuck in the queue,” said one expert in an FT article this week.

In addition, 64.2 tonnes of gold was exported from Switzerland to the U.S. in December. That's the highest monthly gold flow since March 2022, in the wake of Russia's invasion of Ukraine.

While it's not abundantly clear to me why gold would be targeted for tariffs, Trump's threats have been rather sweeping. It's therefore understandable that those involved in the gold trade would take steps to limit their exposure.

If a trade deficit with the U.S. makes you a general target for tariffs, it's worth noting that we frequently have a trade surplus with the UK. That's not the case with the Swiss.

The arbitrage opportunity presented by high futures premiums on Comex strikes me as a more logical catalyst. Commodities flowing toward the highest available price makes sense to me. That contango bodes well for the newly reestablished uptrend.

However, the current situation is creating issues elsewhere in the market. Lease rates have soared and there's panic in the EFP market. "You currently have to pay to be short gold on the OTC spot market (more typically shorts get paid a yield). This has put a strain on bullion dealers and refiners," said Adam Packard, Vice President of Operations at Zaner Metals. He expects the situation to continue for a while longer.

Gold has backed off from the intraday high at $2,815.25 on profit-taking ahead of the weekend, but short-term setbacks are likely to be viewed as buying opportunities. Sights remain on the the $2,857.21 Fibonacci level (127.2% retracement of the decline from $2,789.68 to $2,541.42), as well as a measuring objective at  $2,936.00 and of course $3,000 as the next "big round number."

Today's low from Europe at $2,791.90 marks first support and protects the previous highs at $2,789.68/$2,784.96. Monday's low at $2,732.23 should correspond closely with the 20-day moving average next week and is a key short-term level to watch.

Silver has been confined to Thursday's range, despite the fresh record highs in gold as the latest uptick in global trade tensions gives the bull camp pause. Nonetheless, the white metal is holding above $31 and is on track to notch a second consecutive higher weekly close.



I have maintained that a rise above $31 would set a more neutral tone, mitigating downside risks somewhat. However, $32 must be cleared to set a more favorable technical tone. I'm still waiting.

A close above all the major moving averages seems likely today. I am also watching the 20-week moving average at $31.128. A close above would offer some additional encouragement to the bulls.

The 100-day moving average at $31.085 bolsters the significance of the $31 level as support. A breach of this level next week would call for further consolidation with a bearish tilt.


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 mixed in early U.S. trading.

U.S. calendar features Q4 ECI, PCE, Personal Income, Chicago PMI, Ag Prices.

Gold sets new record highs, while silver cleared $31 to reach 7-week highs

OUTSIDE MARKET DEVELOPMENTS: The ECB eased by an additional 25 bps today. The decision was unanimous and widely expected. It was the fifth cut since June for a total of 175 bps.

"The disinflation process is well on track," according to the statement and the ECB foresees the 2% target being achieved "in the course of this year." However, there was an acknowledgment that "the economy is still facing headwinds," which suggests more cuts are in the offing.

"The risks to economic growth remain tilted to the downside. Greater friction in global trade could weigh on euro area growth by... weakening the global economy," said ECB President Christine Lagarde during her press conference.

Today's ECB action comes on the heels of yesterday's Fed decision to hold steady on rates. The FOMC noted, "economic activity has continued to expand at a solid pace." The committee continues to see inflation as "somewhat elevated."

The line that said "inflation has made progress toward the Committee's 2 percent objective" was struck from the statement, prompting the market to interpret the Fed's decision as a hawkish pause. Fed funds futures continue to suggest the next cut won't come until midyear. Clearly, this is not what President Trump was hoping for.

Chairman Powell said he has not had any contact with the President thus far and would not comment on Trump's call for rate cuts. “I'm not going to have any response or comment whatsoever on what the president said. It's not appropriate,” Powell said.

President Trump almost immediately took a swipe at Powell and the Fed via TruthSpocial:

The market now looks ahead to next week's Bank of England monetary policy decision. The BoE is widely expected to ease by 25 bps.

The trade will also be paying close attention to tomorrow's PCE data, particularly the chain price index which is the Fed's preferred measure of inflation. Median expectations favor a 0.3% rise.

Q4 GDP (Advance) moderated to a 2.3% pace, below expectations of 2.7%, versus 3.1 in Q3. The imbalance in trade into year-end was a drag on growth, but solid consumption provided a bit of an offset.

Initial Jobless Claims fell 16k to 207k in the week ended 25-Jan, below expectations of 220k, versus 223k in the previous week. Continuing claims tumbled 42k to 1,858k in the 18-Jan week, versus a three-year high of 1,900k in the previous week.

Pending Home Sales Index fell 5.5% to 74.2 in December on expectations of unch, versus a negative revised 78.5 in November. It was the first m/m decline since July. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$18.50 (+0.67%)
5-Day Change: +$27.94 (+1.01%)
YTD Range: $2,607.16 - $2,797.07
52-Week Range: $1,986.16 - $2,789.68
Weighted Alpha: +34.18

Gold has pushed to new all-time highs, helped by a softer dollar and ongoing uncertainty about President Trump's trade policies. The corrective/consolidative phase that has dominated since the previous record high was established at $2,789.68 on 30-Oct is over.



This move had been anticipated since the upper boundary of the symmetrical triangle pattern was cleared on 10-Jan. A measuring objective off of that chart pattern now projects to $2,936.00. An intervening target is marked by the $2,857.21 Fibonacci level (127.2% retracement of the decline from $2,789.68 to $2,541.42). The $3,000 level remains an attraction as well.

While the Fed appears to be on hold until June or July and interest rate differentials remain dollar favorable, growth weakness into year-end has given dollar bulls pause. The dollar index remains more than 2% off the 110.18 high set on 13-Jan.

Tariff concerns prompted a massive transfer of physical metal from London to COMEX vaults. "Over the last two months, 12.2 million troy ounces of gold were delivered to COMEX-approved warehouses, raising stocks there by 70% to 29.8 million ounces, the highest since August 2022," according to a Reuters article.

This leaves loco London stocks significantly depleted and the lack of liquidity is contributing to the bid in gold. The market has turned to the BoE as a source of leased supply.

The one-month lease rate remains elevated above 3% and deliveries from the BoE are now taking weeks, when the norm had been less than a week previously. “The key with the BoE is that they are not a commercial vault so not prepared to handle the onslaught of gold borrowing banks are requesting from the central banks,” said an industry expert quoted in the Reuters piece.

While gold seems an unlikely target for tariffs, the bullion banks remain concerned. Market dislocation seems likely to continue for some time.

A minor chart point at $2,765.72/64.78 stands in front of today's intraday low at $2,758.79. The low for the week from Monday at $2,732.23 is considered well-protected.

Weakness in Asian jewelry demand provides a bit of a headwind. Chinese jewelry giant Chow Tai Fook reported a 14.2% y/y drop in Q4 sales. Near-record prices likely tempered demand into yesterday's Lunar New Year.     

Silver led the way higher today, surging to new seven-week highs above $31. I had been anticipating that new record highs in gold would drag silver above $31, but it was the other way around today.

 

Nonetheless, I do see gold's strength on haven interest as helping to underpin the white metal which is still more than 9% off the October cycle high and nearly 37% off the all-time high.

The technical picture has certainly improved today and a close above the 100-day moving average will lend significance to today's move higher. The last time silver closed above the 100-day was on 13-Dec.

My position has been that $32 must be regained to confirm a more bullish near-term tone within the range. With an intraday high of $31.712, the $32 threshold can be considered within striking distance.

A move above $32 would put silver convincingly within the upper half of the $34.853/$28.783 range, shifting focus to the 61.8% retracement level at $32.534.

However, global growth risks – including recent indications of U.S. slowing – and tariff concerns will continue to pose headwinds for industrial metals like silver. Failure to sustain the move above the 100-day MA would call for further consolidation in the lower half of the range.


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.

U.S. calendar features Q4 GDP Advance Report (+2.7% expected), Initial Jobless Claims, Pending Home Sales Index.

Gold consolidates ahead of Fed, silver sets new highs for the week

OUTSIDE MARKET DEVELOPMENTS: The market's focus is on the Fed today. The policy decision itself is deemed to be a foregone conclusion – steady policy is expected – but the statement and Powell's presser could prove interesting.

While the trade seems to have revived hope for less hawkish guidance, apparently there's insufficient confidence to to price those hopes in. Fed funds futures continue to suggest the next 25 bps Fed cut won't happen until midyear.

I suspect that following President Trump's vow to push for lower interest rates, the Federal Open Market Committee (FOMC) and/or Chairman Powell will assert the Fed's independence. In my opinion, it's better to avoid directly challenging the President and focus instead on how monetary policy decisions must be data-driven.

The Bank of Canada cut rates by 25 bps as was widely expected. Forward guidance was more dovish amid heightened tariff uncertainty.

“The economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested,” according to the policy statement.

"A long-lasting and broad-based trade conflict would badly hurt economic activity in Canada," worried Governor Tiff Macklem.

Sweden's Riksbank delivered a 25 bps rate cut, in line with expectations. "Inflation is expected to be close to target in the coming years," according to the policy statement. This suggests the Riksbank is now on hold. 

The ECB is expected to cut rates by 25 bps tomorrow as growth concerns persist. However, the uptick in inflation into year-end 2024 means the central bank will have to be measured on its forward guidance. Undoubtedly, the threat of U.S. tariffs will be noted.

The U.S. tech sector has stabilized after Monday's rout amid evidence that DeepSeek may achieve its results through distilling. This process allows "developers to obtain better performance on smaller models by using outputs from larger, more capable ones, allowing them to achieve similar results on specific tasks at a much lower cost," according to the FT.

That suggests to me that the large processing and energy-intense models are still needed. I suspect OpenAI and the other big players in the AI sector will find means to prevent distilling, beyond legal recourse. DeepSeek has also raised national security concerns and the Navy has already banned its use.

Trade data released this morning showed the U.S. goods trade deficit surged 18% to a record-wide -$122.1 bln in December as businesses continued to front-load in anticipation of Trump's tariffs. Exports also contracted, adding further to the record deficit.

The trade data resulted in significant negative revisions to GDP estimates. The Atlanta Fed's GDPNow model for Q4'24 plunged nearly a full percentage point to 2.3%, versus 3.2% yesterday. That puts the Atlanta Fed model more in line with the blue chip consensus.

MBA Mortgage Applications fell 2% in the week ended 24-Jan, versus a 0.1% rise in the previous week. Purchases declined 0.4%, while refinancing fell 6.8% as 30-year mortgage rates remained elevated above 7%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$4.20 (-0.15%)
5-Day Change: +$1.55 (+0.06%)
YTD Range: $2,607.16 - $2,784.96
52-Week Range: $1,986.16 - $2,789.68
Weighted Alpha: +32.54

Gold remains confined to Monday's range as the market awaits today's Fed decision and policy guidance. Ongoing uncertainty as President Trump's policy agenda unfolds is stoking safe-haven interest and should continue to limit the downside.



If the FOMC's guidance is suggestive of a less hawkish bias moving forward, gold could push to new record highs. Today's downward revisions to GDP may give them the cover they need, but I think they will be keen to avoid the appearance of kowtowing to the President's desire for lower rates.

Less hawkish guidance would likely perpetuate the dollar's slightly easier tone, providing an additional tailwind for gold. However, in the wake of today's BoC and Riksbank cuts and tomorrow's anticipated ECB cut, interest rate differentials remain broadly dollar-supportive.

A breach of Monday's high at $2,771.52 would clear the way for another run at the $2,784.96/$2,789.68 highs. Penetration of the latter would bolster the bullish scenario that targets the $2,857.21 Fibonacci level initially, with potential to a measuring objective at $2,936 and the $3,000 psychological barrier.

Today's intraday low at $2,750.09 protects the lows from earlier in the week at $2,735.55/32.23. A retreat below the $2,700 zone would favor further consolidation and raise concerns about the potential double top at $2,784.96/$2,789.68.

Silver jumped to new highs for the week, even though gold remains well contained.  However, price action remains generally confined between the 100-day and 200-day moving averages awaiting the Fed.



A close above the 100-day or below the 200-day is likely to set the near-term tone. Uncertainty about global growth risks and tariff worries are seen as a headwind. However, the softer dollar and persistent haven interest in gold provide some underpinning.


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 recover from Monday's DeepSeek-inspired deleveraging

OUTSIDE MARKET DEVELOPMENTS: Markets have stabilized somewhat after yesterday's DeepSeek-related turmoil. The Chinese startup challenges the dominance of U.S. AI companies by providing similar results at a substantially lower cost.

DeepSeek calls into question the current paradigm of building huge data centers, producing ever more high-end chips, and generating massive amounts of power. This disruption comes just days after the Trump administration announced a multi-billion dollar joint venture to build out U.S. AI infrastructure.

The President said DeepSeek's advancement “should be a wake-up call” for the U.S. tech industry. He remains committed to U.S. dominance in the AI space and views the ability to do it at a lower cost as broadly positive.

The FOMC begins its two-day meeting today. The committee is widely expected to announce steady policy tomorrow. President Trump's pledge to demand lower interest rates notwithstanding, Fed funds futures suggest the next rate cut won't happen until midyear.

While the market continues to lean toward two Fed rate cuts this year, a CNBC survey suggests conviction toward that view is waning. “I just don’t see (the Fed) having any confidence right now on how to proceed with rate cuts from here, especially as we await Trump’s tariff and tax policy,” said Peter Boockvar, chief investment officer at Bleakley Financial Group.

On the other hand, the Bank of Canada and the ECB are expected to deliver 25 bps rate cuts on Wednesday and Thursday respectively. The Bank of England will likely cut rates by 25 bps on 6-Feb. Weak growth is seen as the greater risk, versus stubborn inflation.

With these key central banks in easing mode and the Fed on hold, interest rate differentials seem destined to remain dollar-supportive. The dollar index extended to a six-week low on Monday but appears to be on sounder footing today.

Durable Goods Orders tumbled 2.2% in December, well below expectations of +1.0%, versus a negative revised -2.0% in November (was -1.1%). The drop is attributable to a large drop in transportation orders. Ex-trans rose 0.3% on expectations of +0.4%, versus a negative revised -0.2% in November.

Case-Shiller Home Price Index eased 0.1% to 332.6 in November, versus 333.0 in October. It was the fourth consecutive monthly drop, although each has been modest.

FHFA Home Price Index rose 0.3% to 433.4 in January, versus 432.3 in December. It was the eleventh straight monthly rise, although the annualized pace decelerated to 4.2% from 4.5% in December.

Consumer Confidence fell to a four-month low of 104.1 in January, below expectations of 106.0, versus a positive revised 109.5 in December (was 104.7). The 1-year ahead inflation index rose to a seven-month high of 5.3%. Some of the post-election surge in confidence is being retraced.

Richmond Fed Manufacturing Index rose to -4 in January, above expectations of -8, versus -10 in December. While the index showed improvement for a second straight month, it has been in negative territory for 15 consecutive months.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$2.07 (+0.08%)
5-Day Change: +$1.37 (+0.05%)
YTD Range: $2,607.16 - $2,782.51
52-Week Range: $1,986.16 - $2,789.68
Weighted Alpha: +31.75

Gold has retraced more than half of yesterday's sell-off as tech stocks stabilized, relieving deleveraging pressure. The retreat from Friday's 12-week high to yesterday's low was less than 2%.



Monday's losses did somewhat relieve the developing overbought condition, which should ultimately help gold move into record territory. While there is some risk of a large double-top forming, I'm not terribly concerned about the bullish scenario as long the market remains above $2,700.

In yesterday's comment, I noted the plunge in China's net gold imports through Hong Kong in December. Gold market expert Jan Nieuwenhuijs writing for Money Metals believes Beijing continues to stockpile at a "frenetic rate," albeit covertly via direct gold exports from the U.K. to China.

Nieuwenhuijs says the PBoC bought 600 tonnes of gold in 2024. Ongoing central bank demand has bullish price implications. "Gold could more than double in price this decade," he said.

Gold rose 25.5% in 2024, its best performance in 14 years and the ninth-best annual performance since 1971. According to the World Gold Council, "market consensus expectations suggest a more modest performance for gold in 2025, but with the potential for upside catalysts as the year unfolds."

A breach of yesterday's high at $2,771.52 would clear the way for another run at the $2,784.96/$2,789.68 highs. New record highs would bode well for attainment of the $2,857.21 Fibonacci objective. Above that, a measuring objective at $2,936 and the $3,000 psychological barrier attract.

This week's lows at $2,735.55/32.23 protect the more important $2,700 zone. The rising 20-day moving average bolsters the latter.

Silver is consolidating within yesterday's range and between the 50- and 200-day moving averages. The white metal continues to be weighed by global growth risks and trade uncertainties.



If gold can move into uncharted territory, silver should get pulled above $31. Such a move would put silver above the 100-day moving average for the first time since mid-December and set a more neutral tone with potential back to the $32 zone.

Penetration of the December highs at $32.255/306 would constitute a more than 50% retracement of the three-month downtrend and return a measure of credence to the longer-term uptrend. 

While the 20-day and 200-day moving averages are holding on a close basis, the downside remains vulnerable. A breach of chart support at $29.553 (13-Jan low) would put the $28.802/783 double-bottom back in play.


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.

1/27/2025

Gold and silver retreat as risk-off sentiment drives deleveraging pressures

OUTSIDE MARKET DEVELOPMENTS: Chinese AI startup DeepSeek's app supplanted ChatGPT as the most downloaded free app. The news rattled markets amid speculation that DeepSeek's reasoning capabilities and lower learning costs are a leap forward in the AI arms race. 

The uncertainty sapped risk appetite, calling into question the demand dynamics for high-end chips from the likes of Nvidia and AMD.  The news comes just days after President Trump announced a joint venture that would funnel billions of dollars into the buildout of U.S. AI infrastructure.

Nonetheless, President Trump begins his second full week in office with wind in his sails as a result of his pro-growth agenda. His approval rating after his first week in office is higher than at any point during his first term. Some pollsters say this has never happened before.

It is also becoming increasingly apparent that tough talk on tariffs may have indeed been a negotiating ploy. The administration doesn't appear to be overly eager to impose harsh tariffs on trading partners...at least thus far.

The Fed is widely expected to hold steady on rates this week, despite Trump's demand for lower interest rates. Fed funds futures continue to suggest the central bank is on hold until midyear.

Chicago Fed National Activity Index rebounded to 0.15 in December, above expectations of 0.1, versus a positive revised -0.01 in November (was -0.12). Production and employment-related indicators contributed positively to the net increase.

New Home Sales rose 3.6% to 698k in December, above expectations of 670k, versus 664k in November. That's the best print since September, despite the ongoing headwind of high mortgage rates.

Dallas Fed Index surged to a more than three-year high of 14.1 in January, versus a positive revised 4.5 in December. The Dallas Fed noted that "Upward pressure on prices and wages increased this month."


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.70 (-0.03%)
5-Day Change: +$43.77 (+1.62%)
YTD Range: $2,607.16 - $2,784.96
52-Week Range: $1,986.16 - $2,789.68
Weighted Alpha: +32.11

Gold has come under deleveraging pressure as stock markets are roiled by DeepSeek uncertainty. The yellow metal has approached the midpoint of last week's range, but weakness in yields and the dollar should help limit the downside.



The initial failure to crack the $2,789.68/$2,541.42 range is partially attributable to the overbought condition that was developing after four consecutive weekly gains. The 14-day RSI reached its highest point since late October.

If DeepSeek is ultimately determined to be a black swan for the AI sector, some of the risk-off flows are likely to find their way into gold. If today's stock market volatility ends up being all hype, the previously prevailing fundamentals should lead to an upside breakout of the $2,789.68/$2,541.42 range.

The technicals remain broadly supportive. Uncertainty about U.S. trade policy intentions continues to provide haven interest. Additionally, there seems to be some level of market hope for a slightly less hawkish tilt from the Fed this week. I'm not so sure...

The lower gold price and a weaker dollar should make the yellow metal more appealing ahead of Wednesday's Lunar New Year. The gift of gold is considered an auspicious New Year's gift across Asia.

However, China's net gold imports through Hong Kong plunged 84% m/m to 5.26 tonnes in December, versus 33.1 tonnes in November. The near-record price of gold and persistent growth risks continue to weigh on Chinese consumer demand.

North American investors aggressively sold ETF positions last week to the tune of 20.9 tonnes. It was the biggest North American outflow since October 2022. However, European investors continued to buy resulting in a more modest net outflow of 7.7 tonnes.

The COT report for last week showed net speculative long positions expanded by 21.4k to 300.8k contracts in the week ended 24-Jan. It was the third straight weekly increase and the highest net spec reading since 27-Sep'24.

A rebound above $2,750.00/$2,751.04 would ease short-term pressure on the downside, favoring renewed attacks on the upside. Last week's high at $2,784.96 reinforced the high end of the range.

The breach of minor chart support at $2.738.11 (Thursday's low), suggests gold is vulnerable to the $2,700 zone before renewed buying interest surfaces. More substantial chart support is noted at $2,691.47/$2,690.08.

Silver has tumbled back into the range after failing to convincingly clear the $31 threshold last week. Uncertainty about tariffs, ongoing worries about China's growth prospects, and today's risk-off sentiment keep the white metal well contained.



I have maintained that new record highs in gold were needed to pull silver above $31 and unlock the more important $32 zone. With the 100-day MA intact on the upside and silver testing back below the 200-day, the downside remains vulnerable. 

The next tier of support I'm watching is defined by the mid-January lows at $29.573/553. Penetration of this level would clear the way for another run at the $28.802/783 double bottom.

The COT report for the 24-Jan week revealed that net speculative long positioning rose 1.4k to a ten-week high of 47.5k contracts from 46.1k in the previous week. It was the third consecutive weekly increase.

CFTC Silver speculative net positions

Today's intraday high at $30.651 now protects the more important $30.977/$31.004 level, where the 100-day MA corresponds with last week's high.


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

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