Blog posts tagged with 'gold'

Gold reaches another new record high, as silver consolidates recent gains

OUTSIDE MARKET DEVELOPMENTS: Dovish FedSpeak on Tuesday from Chairman Powell sparked a rally in Fed funds futures. "We are well positioned to continue easing policy as needed to support employment, even as we remain alert to the possibility that inflation could move back up," said Powell at the National Association for Business Economics annual conference.

While a 25 bps rate cut this month was already baked into the cake, the probability of further easing in December to a 3.50-3.75% target range has risen to 93.9%. The more dovish tilt has helped to underpin risk appetite.

Powell also indicated that the Fed's quantitative tightening campaign could wind down "in coming months" to avoid liquidity stress. “Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” he said.

The Fed has reduced the size of its balance sheet by $1.8  trillion since it reached a post-COVID high of nearly $9 trillion in May 2022. Powell acknowledged that the central bank "prolonged the expansion of our balance sheet for too long," which stoked inflation.

The shutdown continues, now in its third week. Tuesday's Senate vote (the 8th) on the CR to fund the government through 21-Nov once again failed to clear the 60-vote hurdle needed to break the Democrats' filibuster. The vote was 55-45, largely along party lines.

While the White House has directed that the military be paid today via redirected funds, civilian employees will not be receiving paychecks. Over 4,000 federal employees were laid off last week, and OMB Director Russell Vought warned of additional "substantial" mass firings in the coming days.

The U.S.-brokered ceasefire between Israel and Hamas appears to be holding after the release of the 20 living Israeli hostages and nearly 2,000 Palestinian prisoners/detainees earlier in the week. However, the ceasefire remains fragile with each side accusing the other of violations.

Trade tensions between the U.S. and China have escalated sharply over the past week with tit-for-tat measures on rare earth export controls, tariffs, and port fees. The actions shattered a fragile six-month truce, risking a full-blown trade war ahead of a potential Trump-Xi summit in South Korea later this month.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$60.18 (+1.45%)
5-Day Change: +$155.29 (+3.84%)
YTD Range: $2,607.16 - $4,218.09
52-Week Range: $2,541.42 - $4,218.09
Weighted Alpha: +63.67

Gold rose to another record high above $4,200 in European trading. Elevated trade tensions between the world's two largest economies, persistent fiscal and geoplitical worries, political unrest, heightened expectations for further Fed easing, and a softer dollar are all contributing to the bid.



While the market remains quite overbought, the yellow metal has set all-time highs every day this week and appears to be on track for its fourth straight higher daily close. Over the past month, there have only been five lower daily closes, and just one instance of back-to-back lower closes. Sellers step in front of this freight train at their own peril, and that risk helps perpetuate the uptrend.

The next target is $4,300, with today's intraday high at $4,218.09 providing an intervening barrier. Further out, $5,000 is an increasingly compelling attraction.

Today's early U.S. low at $4,177.60 marks initial support. The low for the day at $4,141.06 is the more important level to watch.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$1.085 (+2.10%)
5-Day Change: +$3.671 (+7.51%)
YTD Range: $28.565 - $53.586
52-Week Range: $28.565 - $53.586
Weighted Alpha: +78.93

Silver is consolidating recent gains after setting a new record high at $53.586 on Tuesday. While the white metal is trading higher today, price action remains confined to yesterday's range.



The backwardation with Dec futures was more than $4 at one point last week, but has since moderated to less than $1. Lease and roll rates have also moderated, suggesting that the worst days of the London short-squeeze may be behind us.

For what it's worth, I also fielded a press inquiry from Vanity Fair yesterday. There is nothing scientific about this, but when Vanity Fair is asking about the silver market, I feel we're close to at least a short-term top. That being said, silver is another freight train I'd be disinclined to step in front of as supply/demand dynamics remain broadly supportive.

The U.S. Geological Survey added silver to a draft list of critical minerals earlier in the year. Upon approval, which seems likely before the end of the year, it would mandate the federal government to secure domestic supply chains via enhanced permitting, subsidies, and strategic stockpiling.

Additionally, in a Bloomberg interview last week, the CEO of Wheaton Precious Metals said he's heard talk that some central banks are considering adding silver to their balance sheets. Central bank buying and strategic stockpiling would be considerable sources of additional demand in a market that is currently in its fifth year of a supply deficit.

My next upside targets are at $54.427 and $55.496 based on Fibonacci projections off of Tuesday's pullback. Further out, I have a major Fibonacci objective at $60.417 (127.2% retracement of the decline from $50.000 to $11.703).

Minor intraday support at $52.308 protects the low for the day at $51.402. Tuesday's low at $50.495 is well protected at this point, but penetration would suggest scope for a more sustained corrective retreat.


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 reaches another new record high, as silver consolidates recent gains

OUTSIDE MARKET DEVELOPMENTS: Dovish FedSpeak on Tuesday from Chairman Powell sparked a rally in Fed funds futures. "We are well positioned to continue easing policy as needed to support employment, even as we remain alert to the possibility that inflation could move back up," said Powell at the National Association for Business Economics annual conference.

While a 25 bps rate cut this month was already baked into the cake, the probability of further easing in December to a 3.50-3.75% target range has risen to 93.9%. The more dovish tilt has helped to underpin risk appetite.

Powell also indicated that the Fed's quantitative tightening campaign could wind down "in coming months" to avoid liquidity stress. “Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” he said.

The Fed has reduced the size of its balance sheet by $1.8  trillion since it reached a post-COVID high of nearly $9 trillion in May 2022. Powell acknowledged that the central bank "prolonged the expansion of our balance sheet for too long," which stoked inflation.

The shutdown continues, now in its third week. Tuesday's Senate vote (the 8th) on the CR to fund the government through 21-Nov once again failed to clear the 60-vote hurdle needed to break the Democrats' filibuster. The vote was 55-45, largely along party lines.

While the White House has directed that the military be paid today via redirected funds, civilian employees will not be receiving paychecks. Over 4,000 federal employees were laid off last week, and OMB Director Russell Vought warned of additional "substantial" mass firings in the coming days.

The U.S.-brokered ceasefire between Israel and Hamas appears to be holding after the release of the 20 living Israeli hostages and nearly 2,000 Palestinian prisoners/detainees earlier in the week. However, the ceasefire remains fragile with each side accusing the other of violations.

Trade tensions between the U.S. and China have escalated sharply over the past week with tit-for-tat measures on rare earth export controls, tariffs, and port fees. The actions shattered a fragile six-month truce, risking a full-blown trade war ahead of a potential Trump-Xi summit in South Korea later this month.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$60.18 (+1.45%)
5-Day Change: +$155.29 (+3.84%)
YTD Range: $2,607.16 - $4,218.09
52-Week Range: $2,541.42 - $4,218.09
Weighted Alpha: +63.67

Gold rose to another record high above $4,200 in European trading. Elevated trade tensions between the world's two largest economies, persistent fiscal and geoplitical worries, political unrest, heightened expectations for further Fed easing, and a softer dollar are all contributing to the bid.



While the market remains quite overbought, the yellow metal has set all-time highs every day this week and appears to be on track for its fourth straight higher daily close. Over the past month, there have only been five lower daily closes, and just one instance of back-to-back lower closes. Sellers step in front of this freight train at their own peril, and that risk helps perpetuate the uptrend.

The next target is $4,300, with today's intraday high at $4,218.09 providing an intervening barrier. Further out, $5,000 is an increasingly compelling attraction.

Today's early U.S. low at $4,177.60 marks initial support. The low for the day at $4,141.06 is the more important level to watch.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$1.085 (+2.10%)
5-Day Change: +$3.671 (+7.51%)
YTD Range: $28.565 - $53.586
52-Week Range: $28.565 - $53.586
Weighted Alpha: +78.93

Silver is consolidating recent gains after setting a new record high at $53.586 on Tuesday. While the white metal is trading higher today, price action remains confined to yesterday's range.



The backwardation with Dec futures was more than $4 at one point last week, but has since moderated to less than $1. Lease and roll rates have also moderated, suggesting that the worst days of the London short-squeeze may be behind us.

For what it's worth, I also fielded a press inquiry from Vanity Fair yesterday. There is nothing scientific about this, but when Vanity Fair is asking about the silver market, I feel we're close to at least a short-term top. That being said, silver is another freight train I'd be disinclined to step in front of as supply/demand dynamics remain broadly supportive.

The U.S. Geological Survey added silver to a draft list of critical minerals earlier in the year. Upon approval, which seems likely before the end of the year, it would mandate the federal government to secure domestic supply chains via enhanced permitting, subsidies, and strategic stockpiling.

Additionally, in a Bloomberg interview last week, the CEO of Wheaton Precious Metals said he's heard talk that some central banks are considering adding silver to their balance sheets. Central bank buying and strategic stockpiling would be considerable sources of additional demand in a market that is currently in its fifth year of a supply deficit.

My next upside targets are at $54.427 and $55.496 based on Fibonacci projections off of Tuesday's pullback. Further out, I have a major Fibonacci objective at $60.417 (127.2% retracement of the decline from $50.000 to $11.703).

Minor intraday support at $52.308 protects the low for the day at $51.402. Tuesday's low at $50.495 is well protected at this point, but penetration would suggest scope for a more sustained corrective retreat.


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 consolidate this week's record-setting gains

Outside Market Developments: Congressional Democrats and Republicans both remain recalcitrant regarding a CR, so the partial government shutdown will extend into next week. Bets on Polymarket favor a belief that the shutdown will end on or after October 15.

Mass firings of federal workers have reportedly started. “RIFs have begun,” OMB Director Russ posted on X.

Risk appetite is tilted toward risk-off heading into the holiday weekend. The U.S. bond market, the Fed, and banks are closed on Monday in observance of Columbus Day; however, the stock market will be open. All Canadian markets are closed for Thanksgiving.

The Israeli cabinet signed off on President Trump's peace deal, signaling the beginning of the ceasefire with Hamas. IDF forces have begun pulling back. The release of Israeli hostages and Palestinian prisoners is expected to happen early next week.

That's good news and dials back geopolitical risks. However, uncertainty prevails with regard to two key elements of the peace plan: Hamas' disarmament and who will govern Gaza.

Komeito, Japan's Liberal Democratic Party's (LDP) junior coalition partner for over 26 years, announced its withdrawal from the ruling coalition, amid disagreements surrounding the LDP's handling of a major political funding scandal. This is a blow to the newly elected LDP leader, Sanae Takaichi.

Takaichi was the presumptive next Prime Minister, but the fracturing of the ruling coalition has raised doubts and stoked political uncertainty. Takaichi was portrayed as being very pro-stimulus, so Japanese stocks soared and the yen tumbled earlier in the week. Some of those moves are now being retraced.

The rebound in the yen has put some pressure on the dollar index. The DX set a 10-week high on Thursday, although the overall trend remains bearish given the more than three-year low reached last week.

Michigan Sentiment (Prelim) ticked down to 55.0 for October, above expectations of 54.4, versus 55.1 in September. Year ahead inflation expectations ticked down to 4.6%, from 4.7% in September. "Overall, consumers perceive very few changes in the outlook for the economy from last month," according to the report.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$17.59 (+0.44%)
5-Day Change: +$121.32 (+3.12%)
YTD Range: $2,607.16 - $4,059.17
52-Week Range: $2,541.42 - $4,059.17
Weighted Alpha: +57.16

Gold is consolidating within Thursday's range and needs to close above $3,976.29 to confirm a higher close. Despite Thursday's correction, the yellow metal is poised for its eighth straight higher weekly close. The record high set on Wednesday at $4,059.17 was the 39th of the year.

 

Uncertainty associated with the government shutdown, the political situation in Japan, and persistent geopolitical risks continues to stoke safe-haven interest. Expectations for further Fed easing, a generally weak dollar, mounting political unrest, and fiscal worries provide additional buoyancy.

The World Gold Council noted that "political tension, US dollar weakness, and a flood of investment pushed gold to new highs" in September. All of those fundamental factors remain in play as we approach the midpoint of October.

From a technical perspective, the surge above $4,000 bodes well for a push to the next Fibonacci objective at $4,103.32, with Wednesday's high at $4,059.17 providing an intervening barrier. Further out, this week's gains lend considerable credence to the longer-term target at $5,000.

I'd like to see a short-term retracement to at least the 20-day moving average, currently at $3,818.36, to relieve the overbought condition and shake out some of the specs that were late to the party. Initial chart support at $3,945.87/41.36 is reinforced by today's intraday low at $3,947.99. Secondary support is marked by the $3,900.00/$3,895.23 zone.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$1.238 (+2.52%)
5-Day Change: +$2.355 (+4.91%)
YTD Range: $28.565 - $51.219
52-Week Range: $28.565 - $51.219
Weighted Alpha: +77.89

Silver is also on track for an eighth straight higher weekly close after finally cracking the $50 barrier on Thursday and extending to a new all-time high of $51.219. Today's price action remains confined to Thursday's range, but a higher daily close seems likely.



While the overbought condition remains extreme, it seems unlikely that a top is in. Like with gold, I'd like to see a pullback at least to the 20-day moving average, but it's nearly $5 away at $45.769!

The price surge comes with high volatility, wide spreads, soaring lease rates, and backwardation in the futures market. The discount to spot in the Dec futures is running around $3 today!

Bullion banks moved large quantities of silver from London to Comex vaults earlier in the year amid worries about tariffs. "The London silver market is experiencing unprecedented stress," according to Jeffrey Christian of CPM Group. 

In America, we seem to be awash in silver, as scrap sellers rush to lock in record-high prices only to be disappointed by weak bids. At least one major refiner has stopped accepting silver scrap less than .999 fine entirely.

While volatility will remain elevated, setbacks are likely to be viewed as buying opportunities driven by an expectation that industrial demand will remain strong, and the supply deficit, now in its fifth year, will persist.

A breach of $51.219 would clear the way for a test of the next psychological barrier at $52. However, this week's gains result in a new longer-term objective at $60.417 (127.2% retracement of the decline from $50.000 to 11.703).

As far as timing, normally, I'd be inclined to say early Q3'26, but silver went from $40 to beyond $50 in just six weeks! In a market like this, projecting price and time becomes really difficult.

Intraday support at $49.739 protects the low for the day at $48.769. Below the latter, $48.480 (Thursday low) and the $48 zone stand in front of the low for the week at $47.343.


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.

Silver surged to new record highs above $51 before retreating into the range

OUTSIDE MARKET DEVELOPMENTS: The government shutdown has entered its ninth day with no signs of an imminent resolution. Senate votes failed again on Wednesday, with no progress expected before next week. Prediction market Polymarket heavily favors the shutdown lasting until October 15 or beyond (84%).

The 15th is the next payday for military personnel and many furloughed government workers. The White House continues to threaten layoffs via reductions-in-force (RIF) for non-essential workers. 

The absence of fresh U.S. economic data due to the shutdown leaves markets to focus on broad-based uncertainty and expectations of further Fed easing. The minutes from the last FOMC meeting revealed that, "Most judged that it likely would be appropriate to ease policy further over the remainder of this year." FedSpeak is due from Powell, Bowman, Barr, Kashkari, and Daly.

The dollar index has rebounded to eight-week highs from a more than three-year low set last week. Political unrest in Japan that brought a very stimulus-oriented PM to power has driven the yen to an eight-month low against the greenback. 

Strength in the U.S. stock market and a sense that the U.S. economy remains resilient – despite the lack of data to support that contention – are helping to underpin dollar demand.

Israel and Hamas have agreed to the first phase of President Trump's peace deal. A ceasefire will commence within 24 hours of the Israeli cabinet signing off on the deal. Hamas will release 20 living hostages and the bodies of deceased hostages within 72 hours of the ceasefire start. Israel will free up to 1,700 Palestinian prisoners in return.

This marks the most significant breakthrough since the war began two years ago, although the peace process remains fragile. Later stages of the peace deal require Hamas to disarm and give up governance of Gaza, and there are doubts that the terror organization will acquiesce to those demands.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$2.61 (+0.06%)
5-Day Change: +$200.33 (+5.19%)
YTD Range: $2,607.16 - $4,059.17
52-Week Range: $2,541.42 - $4,059.17
Weighted Alpha: +59.75

Gold remains generally well bid, within striking distance of the $4,059.17 all-time high set on Wednesday. Sticky inflation, combined with expectations of ongoing Fed easing, continue to provide a tailwind for the yellow metal. High-flying silver provides additional underpinning today, while a stronger dollar this week is a headwind.



Factor in persistent geopolitical risks, social unrest, the worsening fiscal situation, a government shutdown, the global de-dollarization trend that has led to robust central bank demand for gold, and you have a recipe for a protracted rally. Gold is on track for an eighth straight higher weekly close, and there haven't been more than two consecutive down days since late July.

My next upside target is a Fibonacci projection at $4,103.32, although the push above $4,000 lends additional credence to the longer-term objective at $5,000. Intervening upside targets will be revealed as the market continues to trade.

All that bullishness aside, the market remains extremely overbought. While the trade is likely to jump on corrective setbacks, things could get spicy without warning.

Initial support marked by the $4000.00/$3,990.91 zone protects Wednesday's low at $3,983.65. Penetration of the latter would shift focus to Tuesday's low at $3,941.36. The low for the week is well protected below $3,900.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.789 (+1.61%)
5-Day Change: +$3.793 (+8.07%)
YTD Range: $28.565 - $51.219
52-Week Range: $28.565 - $51.219
Weighted Alpha: +80.00

Silver surged to satisfy and exceeded the $50 objective. Follow-on buying spurred the rally to a new all-time high at $51.219, before profit-taking prompted a retreat into the range.



Demand for silver has surged as the world continues to electrify, with much of the world focused on clean energy initiatives. Silver is also a key component of AI hardware and infrastructure, a sector that is expanding at breakneck speed.

Silver is also seeing strong investment demand amid sticky inflation, expectations for further Fed easing, and record-high gold prices. Silver is often seen as a less expensive safe-haven alternative to gold. This week's gains notwithstanding, a generally weak dollar provides additional lift to the precious metals.

Meanwhile, the silver market is in its fifth consecutive year of a structural supply deficit, due to stagnant mining output that has failed to keep up with demand. The closure of large copper mines in Indonesia and South America also weighs on supply, as silver is a byproduct of copper mining. The Silver Institute projects the deficit will grow to a record 187.6 Moz this year.

Strong and growing demand for silver, combined with a persistent supply deficit, is a recipe for higher prices. The next psychological barrier is at $52, with today's high at $51.219 providing an intervening barrier. However, the move to that record high suggests longer-term potential to a major Fibonacci objective at $60.417 (127.2% retracement of the decline from $50.000 to 11.703).

I'm watching support at $49.00, which protects today's overseas high at $48.509. Fresh intraday lows after setting a record high would be troubling for the bull camp.


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.