Blog posts of '2025' 'August'

Gold rebounds within range as weak jobs data revives hopes for rate cuts, dollar falls

OUTSIDE MARKET DEVELOPMENTS: President Trump signed an executive order Thursday evening that raises tariffs on dozens of countries. Although today is the deadline, the new tariffs will not take effect until August 7, reportedly to allow time to update the tariff schedule.

Trump indicated that he is open to more deals even now that the deadline has passed. "It doesn’t mean that somebody doesn’t come along in four weeks and say we can make some kind of a deal," he said.

Weaker-than-expected U.S. jobs data have raised concerns that cracks in the labor market are starting to form. Nonfarm payrolls came in at 73k, below expectations of 102k. The unemployment rate ticked up to 4.2%.

However, back-month revisions of -258k and weakness in the household survey data were troubling. The survey reflected a decline of 260k workers, with the participation rate slipping to 62.2%, the lowest since November 2022. The reversal in immigration flows was likely a contributing factor.

Some manufacturing sector weakness was also revealed in today's data dump. Manufacturing PMI fell into contraction for the first time this year, and ISM hit a nine-month low. The jobs report showed an 11k contraction in manufacturing jobs.

The trade quickly priced in a 25 bps rate cut for September, and 50 bps of easing by year-end is back in play. The dollar index plunged more than 1.5% from a nine-month high in European trading. Yields and stocks are broadly lower, as risk-off sentiment prevails.

Persistent tariff uncertainty is certainly contributing to risk aversion amid ongoing speculation about retaliation risks and inflation implications as the higher levies get deployed. The market now shifts attention to the August 12 deadline for China to finalize a deal.

Nonfarm Payrolls +73k in July, below expectations of +102k, versus a revised 14k in June (was +147k). The unemployment rate rose to 4.2%, versus 4.1% in June. Hourly earnings +0.3%, in line with expectations, versus +0.2% in June. Workweek ticked up to 34.2 hours.

S&P Manufacturing PMI was revised up to 49.8 for July, versus a 49.5 preliminary read and 52.9 in June.  The update confirms the first move into contraction territory this year.

Manufacturing ISM fell 1 point to a nine-month low of 48.0 in July, below expectations of 49.5, versus 49.0 in June. Prices declined to 64.8 from 69.7 in June.

Construction Spending fell -0.4% in June, below expectations of +0.1%, versus a revised -0.4% in May (was -0.3%).

Michigan Sentiment Final was revised down to 61.7, versus a 61.8 preliminary print and 60.7 in June. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$8.60 (+0.09%)
5-Day Change: -$5.47 (-0.16%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,369.10 - $3,495.89
Weighted Alpha: +34.84

Gold surged back into the upper half of the well-defined range, setting new highs for the week. The yellow metal is being spurred by the NFP miss, revived expectations of rate cuts in H2, and retreats in yields and the dollar. 



An uptick in trade uncertainty contributed to risk-off sentiment, boosting haven interest just a day after gold notched its first lower monthly close (albeit minimal) of the year. A close above $3,337.01 is needed to avoid a third consecutive lower weekly close.

The fact that the 100-day moving average and the $3,256.02 low from 30-Jun successfully contained losses earlier in the week bodes well for the longer-term bullish scenario. Today's rebound back above the midpoint of the range, Monday's high, and the 20- and 50-day moving averages offer further encouragement to the bull camp.

I'd like to see a close above those moving averages at $3,340.51/42.29 to confirm scope for renewed probes above $3,400. Minor intervening chart points are noted at $3,352.57 (midpoint of range-within-the-range), $3,372.59 (25-Jul high), and $3,392.11 (24-Jul high).

If incoming data reinforce the notion that the labor market is weakening, we could see rate cut expectations for year-end build to 75 bps. That would reinvigorate selling interest in the dollar and provide some lift for gold, putting record highs around $3,500 back in play.

Bottom line, gold remains well contained within the range, and the range-within-the-range, just now in the upper half of the former and right at the midpoint of the latter. It doesn't strike me that a breakout in either direction is imminent.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.222 (-0.60%)
5-Day Change: -$1.196 (-3.13%)
YTD Range: $28.565 - $39.517
52-Week Range: $26.524 - $39.517
Weighted Alpha: +30.50

Silver has caught a bit of a bid, helped by new highs for the week in gold and a weaker dollar. However, price action remains confined to yesterday's range, and a third straight lower weekly close appears to be on tap.



Tests below the 50-day moving average at $36.538 have attracted buying interest over the past two sessions, leaving the $36.257 Fibonacci level intact. However, indications of manufacturing sector weakness and this week's copper rout pose headwinds.

A close above $37 today would ease short-term pressure on the downside. However, the 20-day MA at $37.861 and the halfway back point of the recent correction at $37.902, call it $38, must be regained to reinvigorate the bulls. 


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.