Blog posts tagged with 'gold'

Gold firms on heightened haven interest and a weak dollar

OUTSIDE MARKET DEVELOPMENTS: The UN's nuclear watchdog organization has ruled that Iran is, in fact, in violation of its non-proliferation obligations. Iran responded angrily, threatening to escalate its enrichment activity.

The UN finding raises the risk of Israeli attacks on Iran's nuclear facilities. Iran has threatened to target U.S. bases in the Middle East if it is attacked, and would most certainly retaliate against Israel.

Market sentiment has swung to risk-off, and oil prices rose. Acknowledging the heightened risks, President Trump said the U.S. was moving personnel out of the Middle East because it "could be a dangerous place." More talks between the U.S. and Iran are slated for this weekend in Oman, but hopes for a deal are fading.

A day after trade tensions cooled between the U.S. and China, President Trump reminded the world that the pause on reciprocal tariffs is mere weeks away. "At a certain point, we're just going to send letters out ... saying, 'This is the deal. You can take it, or you can leave it,'" Trump said.

The PPI report confirmed that inflation remained subdued in May, a day after CPI data revealed the same. Rate cut expectations for the remainder of the year edged back above 50 bps, with the first 25 bps cut priced 

Looking ahead to next week's FOMC meeting, cooler inflation allows the Fed to lean more dovish, but the central bank will stay on hold amid ongoing tariff and growth uncertainty. Nonetheless, any move on rates next week seems highly unlikely.

The tilt toward dovishness, along with heightened geopolitical and trade tensions, has weighed on the dollar. The dollar index fell to a more than three-year low of 97.60.

PPI rose a scant 0.1% in May, below expectations of +0.2%, versus -0.5% in April; 2.6% y/y, up from 2.4% in April. Core +0.1%, below expectations of +0.3%, versus -0.4% in April; 3.0% y/y, versus 3.1% in April.

Initial Jobless Claims were steady at 248k in the week ended 6-Jun, above expectations of 241k. Continuing claims surged 54k to 1,956k in the 31-May week, the highest since November 2021.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$9.30 (+0.28%)
5-Day Change: +$32.97 (+0.98%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,295.86 - $3,495.89
Weighted Alpha: +46.91

Gold reached a new high for the week, buoyed by heightened haven interest and three-year lows in the dollar. While the yellow metal remains confined to the range within the range, a more bullish short-term bias is emerging.



A breach of last week's high at $3,401.81 is needed to put the record high back in play. A Fibonacci level at  $3,416.97, as well as the May highs at $3,431.46/63 provide additional intervening barriers.

A convincing push above $3,400 would bode well for an upside extension to the $3,596.20 Fibonacci objective, and bolster confidence in the scenario that calls for an eventual challenge of $4,000.

The ECB reports that gold has overtaken the euro as the second-largest reserve asset. According to the ECB's annual currency assessment, as of the end of 2024, gold accounts for nearly 20% of official global reserves, while euro reserves stand at 16%.

The dollar remains the dominant reserve asset at 46%. However, a trend toward de-dollarization accelerated in recent years amid concerns about U.S. weaponization of the greenback.

Today's Asian low at $3,344.27 marks first support. The 20-day moving average bolsters Wednesday's low at $3,320.62 and protects Monday's low at $3,297.69. The 50-day MA has risen to $3,282.15, providing additional support in this zone. The 29-May low at $3,251.28 is considered key short-term support and appears to be well protected at this point.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.046 (-0.13%)
5-Day Change: +$0.600 (+1.68%)
YTD Range: $28.565 - $36.875
52-Week Range: $26.524 - $36.875
Weighted Alpha: +26.76

Silver traded back below $36 as the gold/silver ratio continued to rebound from the 90 support zone. However, the white metal recovered intraday with help from increased haven interest, strength in gold, and a weak dollar.



I offered some words of caution in yesterday's commentary, noting that Friday's low at $35.654 was the "more significant level to watch." Today's low is $35.656 and the short-term significance of this support level has been reinforced.

Last week's major range breakout is the dominant technical feature on the silver chart. Sights are set on the February 2012 high at $37.430, with intervening barriers noted at 36.632 and 36.820/875.

An eventual push to 13-year highs above $37.430 would lend credence to a Fibonacci projection at $38.750, and make $40 increasingly attractive.


PLATINUM

I wrote much of the following in response to a request for comment on platinum from Reuters this morning. Platinum surged above $1,200 this week, a level last seen in June of 2021. 

The supply side of the platinum market is in turmoil, and a third straight year of deficit is expected. Infrastructure in South Africa – the world’s largest source of platinum – is a hot mess. That, along with labor strife, has adversely impacted mining operations.

This seems unlikely to resolve anytime soon amid weak growth, high unemployment, and plunging foreign investment stemming from political instability and policy uncertainty. The U.S. has already cut aid to South Africa, and sanctions are reportedly being considered.

Tensions between Russia and the West are rising as the war in Ukraine drags on, increasing the likelihood of more sanctions against the world’s second-largest producer of platinum. Russian platinum production has not been included in sanctions thus far, but that could change if new punitive measures are deployed.

Meanwhile, adoption of electric vehicles has slowed significantly, implying heightened demand for conventional vehicles with the added possibility of higher catalyst loading to reduce emissions. Catalytic converters for ICE vehicles are the biggest source of platinum demand. Additionally, record-high gold prices have shifted some jewelry demand to platinum.  

I see potential to the 2021 high at $1339.35 initially. A breach of this level would establish 11-year highs and shift focus to $1,500, supported by the aforementioned supply/demand fundamentals.

We’ll see technical corrections as platinum is a very small and thinly traded market. However, the South African problems are going to persist for some time, perhaps resolved only with political upheaval. Meaningfully increasing output in Zimbabwe, Canada, and the U.S. would take years, if not decades.

A peace deal between Russia and Ukraine would reduce tensions and instability in the market, but wouldn’t materially move the needle on supply.

It seems supply is destined to remain constrained for the foreseeable future. Any tempering of the price rise will likely have to come from the demand side. Palladium is the obvious substitute, but Russia and SA are the biggest suppliers of that metal as well.

Revived EV interest is perhaps the best bet for reducing PGM demand. Technological improvements might do that, but the quicker path would be higher government subsidies. I'm not sure there's much appetite for that right now. In fact, the pendulum seems to be swinging the other way.

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 catches a modest bid as yields and dollar slip

OUTSIDE MARKET DEVELOPMENTS: The U.S. and China have reportedly agreed on the framework to reinstate the Geneva trade truce from May. "Our deal with China is done, subject to final approval with President Xi and me," posted the President on TruthSocial. That's arguably an overstatement, and the market's tepid response suggests investors are aware it's a baby step despite the all-caps post.

The Geneva trade truce unravelled shortly after it was struck on May 12, when the U.S. restricted chip exports to 
China and Beijing imposed export controls on rare earths. Getting the relationship back to where it was less than a month ago is a positive step, but there's a long way to go before a comprehensive trade deal is struck between the world's two largest economies.

Nonetheless, the trade is maintaining some level of optimism as evidenced by elevated risk appetite. Deals with the UK, Japan, India, and South Korea are apparently in the works, but the market is keen to see some agreements inked. The White House is doing a good job of managing market expectations, pointing out that major trade deals typically take years to negotiate, and Trump has been President for less than five months.

Headline and core consumer inflation rose just 0.1% in May, below expectations. The annualized CPI rate ticked up to 2.4%, while core was steady at 2.8%.

So far, anyway, concerns that President Trump's trade agenda would stoke inflation are overblown. May PPI is out tomorrow and is also expected to be benign. Despite a slight uptick in easing expectations, persistent uncertainty keeps the Fed on hold.

The dollar index remains defensive below 99. CNBC reports that Asia’s shift away from the U.S. dollar is picking up pace. “Trump’s erratic trade policy decisions and the dollar’s sharp depreciation are probably encouraging a more rapid shift towards other currencies,” said Francesco Pesole, FX strategist at ING.

Tensions remain high in Los Angeles as rioting and looting continued on Tuesday night. Los Angeles Mayor Karen Bass declared a local emergency and had police enforce a downtown curfew. Meanwhile, protests against immigration enforcement are spreading across the country.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$6.47 (+0.19%)
5-Day Change: -$30.89 (-0.92%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,295.86 - $3,495.89
Weighted Alpha: +44.27

Gold is trading modestly higher but remains within the recent range. Today's soft CPI data have weighed on yields and the dollar, providing some support to the yellow metal.



Trading since the record high was established in April has developed into a symmetrical triangle, recognized by a series of lower highs and higher lows. This chart formation is viewed as a continuation pattern within the long-term uptrend.

The aforementioned de-dollarization trend is a major supporting factor for gold, with central banks leading the charge. "Investors and officials are beginning to recognize that the dollar can and has been used as a leverage — if not overtly weaponized — in trade negotiations," says CNBC.

Data shows that the PBoC bought 1.87 tonnes of gold in May. It was the seventh straight month of purchases. The PBoC has added 17 tonnes of gold to reserves since the beginning of the year.

The National Bank of Poland continues to be an aggressive buyer, adding 12 metric tonnes to reserves in May. The NBP has bought 61 tonnes year-to-date.

Violations of last week's high at $3,401.81 and the $3,416.97 Fibonacci level are needed to clear the way for further attacks on the $3,500 and a resumption of the uptrend. New all-time highs would bode well for an upside extension to the $3,596.20 Fibonacci objective.

The 20-day moving average has essentially contained the downside this week and comes in at $3,311.16 today. This 20-day protects Monday's low at $3,297.69, which in turn stands in front of the 50-day MA at $3,277.26 and the 29-May low at $3,251.28.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.341 (-0.93%)
5-Day Change: +$1.872 (+5.42%)
YTD Range: $28.565 - $36.875
52-Week Range: $26.524 - $36.875
Weighted Alpha: +27.38

Silver is corrective to consolidative for a second straight session after the upside extension stalled ahead of $37 on Monday. While the white metal is nearly 2% off the 12-year high at $36.875, price action remains confined to Monday's range.



In the wake of last week's range breakout, the focus remains squarely on the upside with sights now on the February 2012 high at $37.430. A breach of this level would bode well for a push to the next Fibonacci projection at $38.750, which would bring $40 within striking distance.

The fundamentals for silver have been positively aligned for some time. Now that the technicals are suddenly more in line with the realities of supply and demand, the squeeze crowd is crowing once again.

Be careful!. This is a small and thinly traded market, and we all know, it can be exceedingly volatile.

Support around $36 is highlighted by Monday's low at $35.948. Below that, Friday's low at $35.654 is a more significant level to watch.

Additionally, the gold/silver ratio has found some support ahead of 90, garnering a bit of a bounce as silver underperforms today.


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 remains consolidative above $3,300 as silver takes a breather

OUTSIDE MARKET DEVELOPMENTS: Market sentiment remains tilted toward risk-on with eyes on U.S.-Sino trade talks in London. President Trump said he is prepared to ease export controls on tech and chips if China resumes the export of rare-earth materials.

The World Bank trimmed 2025 global growth expectations to 2.3% from 2.5%. "Global growth is slowing due to a substantial rise in trade barriers and the pervasive effects of an uncertain global policy environment," according to the Global Economic Prospects report. If they're accurate, it "would mark the slowest rate of global growth since 2008, aside from outright global recessions."

The World Bank slashed its 2025 U.S. growth expectations to 1.4%, from its previous forecast of 2.3% in January. U.S. GDP in 2024 was 2.8%, so they are now projecting a halving of U.S. growth. 

Chinese exports rose 4.8% y/y in May, below expectations. Exports to the U.S. specifically plunged 35% y/y, even though the White House walked back Chinese tariffs early in the month. It was the steepest drop in Chinese exports to the U.S. since early 2020 as the COVID crisis was ramping.

Nonetheless, markets continue to display some optimism that trade issues will be resolved, and at least U.S. growth will remain underpinned, despite recent downgrades. That, along with a resilient labor market and cooler inflation, has caused hopes for a rate cut to fade. Recent FedSpeak has reiterated that the central bank is in no hurry to adjust policy amid ongoing uncertainty.

Fed funds futures are no longer fully pricing in a 25 bps cut in October. The implied Fed funds rate for December is 3.9275%, indicating the market expects less than 45 bps in easing by year-end.

This week's U.S. inflation data may provide some impetus for policy expectations. However, the market is anticipating generally benign numbers.

Social unrest in Los Angeles and plans for more demonstrations across the country heading into the Flag Day celebration in DC could elevate risk aversion if they become more violent.

NFIB Small Business Optimism Index rebounded 3 points to 98.8 in May, above expectations of 95.9, versus 95.8 in April. It was the first rise in the index since December.

"Although optimism recovered slightly in May, uncertainty is still high among small business owners. While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth." – NFIB Chief Economist Bill Dunkelberg

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$9.30 (+0.28%)
5-Day Change: -$23.70 (-0.71%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,295.86 - $3,495.89
Weighted Alpha: +43.56

Gold continues to consolidate above $3,300, underpinned by persistent geopolitical risks, uncertainty on trade, and a soft dollar. However, risk-on sentiment in the broader market continues to limit the upside.

 

With the yellow metal trading right around the midpoint of the $3,495.89/$3,127.12 range, it seems the market needs some new catalyst to either perpetuate the dominant uptrend or trade lower in search of renewed buying interest.

The latter result would be indicative of the 'summer doldrums,' when the market often ratchets lower amid diminished investor interest and lower trading volumes. The seasonal dearth of weddings and festivals in Asia, and fewer major economic events and policy announcements in the June-August period, are contributing factors.

U.S. inflation data this week could provide a spark, but the market is expecting generally benign CPI and PPI prints. Escalations in trade and/or geopolitical tensions could certainly be disruptive. Markets are also keen to see what the "Big Beautiful Bill" looks like when it finally makes it to the President's desk.

Downticks within the range are certainly possible, but I think they would be viewed as buying opportunities. Goldman Sachs believes we can still see $3,700 gold by year-end as central banks continue their years-long buying spree.

JPMorgan forecasts gold prices to reach an average of $3,675 in Q4'25, with potential to exceed $4,000 by Q2'26. As noted in yesterday's comment, $4,000 gold "may be a 2026 story” according to BofA's Francisco Blanch.

JPMorgan believes just a scant 0.5% reallocation of foreign-held U.S. assets to gold could push the market to $6,000 by 2029. That would suggest significant downside risk if reallocation goes the other way.

However, gold has certainly gained traction among central banks as reserve diversification amid increased instances of currency weaponization. I believe institutional and retail investors will increasingly view gold as appropriate and necessary diversification as well.

A breach of last week's high at $3,401.81 would clear the way for tests of more important resistances at  $3,416.97 (78.6% retracement of the corrective decline) and $3,431.63 (08-May high). Above that, the record high at $3,495.89 would be back in play.

The 20-day MA at $3,303.46 has contained the downside so far today, keeping yesterday's low at $3,297.69 at bay. Secondary support is marked by the 02-Jun low at $3,289.46. Penetration of the latter would leave the market vulnerable to $3,273.31 (50-day MA) and $3,251.28 (29-May low) vulnerable to tests. 

Silver is taking a breather after three consecutive sessions of impressive gains. While the white metal is trading lower on the day, action remains confined to yesterday's range.




A little bit of stabilization is not surprising, given the nearly 12% rally seen since the first trading day of the month. The gold/silver ratio corrected nearly 10%, approaching the targeted 90 zone yesterday.

The early U.S. low at $36.376 now provides intervening support ahead of congestion around $36, which is highlighted by Monday's low at $35.948. Friday's low at $35.654 is a more significant level to watch.

An eventual breach of Monday's 12-year high at $36.875 would bode well for the anticipated push to the high from February 2012 at $37.430. Further out, $40 remains a significant attraction, and if the market gets there record highs around $50, suddenly look pretty appealing.


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 remains consolidative while silver and platinum add to gains

OUTSIDE MARKET DEVELOPMENTS: Market optimism surrounding U.S.-Sino trade talks is helping keep risk appetite elevated. A delegation, led by Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, is meeting with Chinese counterparts in London today.

“Our expectation is that... immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters,” said National Economic Council director Kevin Hassett on CNBC.

Citing tariff and policy uncertainty, the OECD downgraded U.S. GDP expectations to 1.6% this year and 1.5% in 2026 from 2.2% and 1.6% previously. Global growth expectations were nudged lower to 2.9% for 2025 and 2026, versus previous forecasts of 3.1% and 3.0%.

"Substantial increases in trade barriers, tighter financial conditions, weakened business and consumer confidence, and elevated policy uncertainty all pose significant risks to growth," according to the OECD's latest economic outlook.

Riots erupted in LA over the weekend amid protests against immigration enforcement. There are expectations that anti-ICE demonstrations will occur in other cities this week, including in the nation's capital during Saturday's Flag Day celebration and military parade.

The trade is watching the situation closely to see what additional measures the White House might take to protect Federal agents in LA and elsewhere. There is some concern that we could see a summer of civil unrest similar to 2020.

Russia launched another massive drone and missile barrage against Ukraine on Monday. The attacks from each side have intensified in recent weeks, even as ceasefire talks continue.

Market focus will be on U.S. inflation data this week. Expectations tilt toward the ongoing moderation of price risks, helped by lower oil and gas prices. Tepid inflation readings could increase the likelihood of rate cuts. By that same token, hotter-than-expected inflation would solidify that the Fed is on hold.

Wholesale Sales rose 0.1% in April, below expectations of +0.2%, versus a revised +0.3% in March (was +0.4%). Inventories rose 0.2% on expectations of UNCH, versus a revised +0.3% in March (was +0.4%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$2.02 (+0.06%)
5-Day Change: -$62.56 (-1.85%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,289.43 - $3,495.89
Weighted Alpha: +42.93

Gold is maintaining a consolidative tone to start the week, as trade and growth optimism weigh on haven interest. At the same time, a weak dollar, persistent geopolitical risks, silver and platinum strength, and mounting concerns about U.S. social unrest offer support.



This week's U.S. inflation data could provide some impetus to at least move out of the range within the range. Both hotter inflation and prospects for lower rates are generally supportive for gold, although the latter tends to stoke risk appetite.

The first range is defined as $3,401.81/$3,203.52. The broader range is $3,495.89/$3,127.12. The midpoint of that primary range is at $3,311.51, and we've traded on both sides of that today.

"We need to see a real shock for prices to break away," BofA's Francisco Blanch told Bloomberg Surveillance this morning. Blanch still likes $4,000 as a target, although that now "may be a 2026 story.”

A breach of last week's high at $3,401.81 would bode well for tests of more important resistances at  $3,416.97 (78.6% retracement of the corrective decline) and $3,431.63 (08-May high). Above that, the record high at $3,495.89 would be back in play.

Global ETFs saw a modest inflow of 8.8 tonnes last week, led by North American investors. It was the third straight week of net inflows, suggesting investors remain interested despite a month and a half of price consolidation.

The COT report for last week revealed that net speculative long positions increased by 13.7k to a seven-week high of 187.9k contracts, versus 174.2k in the previous week. It was the third straight weekly increase.

The 02-Jun low at $3,289.46 marks the low for the month thus far and has contained the downside today. The 20-day moving average is at $3,300.10 and is significant on a close basis.

A close below the 20-day and new lows for the month would leave secondary supports at $3,269.21 (50-day MA) and $3,251.28 (29-May low) vulnerable to tests. Below the latter, the low of the first range at $3,203.52 would be in play.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.263 (+0.73%)
5-Day Change: +$1.547 (+4.45%)
YTD Range: $28.565 - $36.399
52-Week Range: $26.524 - $36.399
Weighted Alpha: +26.97

Silver continues its march higher, spurred by last week's major range breakout. The white metal begins the week with a round of fresh 12-year highs that brings the next psychological barrier at $37 within striking distance.



With the $36.568 Fibonacci objective exceeded, confidence in the scenario that calls for a test of the peak from February 2012 at $37.430 has been bolstered. Beyond that, $40 is looking increasingly appealing.

With gold stuck in its range, the gold/silver ratio has plunged to 10-week lows to pressure congestive support around 90. The next tiers of significant support are at 88.858, and a series of lows from early in the year at 87.706, down to 87.192.

Not surprisingly, SLV saw large inflows of 13.05Moz last week as silver took off to the races. Net assets of the fund are now more than $17 bln. The number of ounces in trust stands at 472,914,657.40 as of 06-Jun.

Net speculative long positions surged 7.8k to a 10-week high of 60.8k according to the latest COT report, versus 53.0k in the previous week. It was the third consecutive weekly inflow.

With Investors jumping back on board, this rally may have legs. However, be wary of silver's high volatility and the propensity for institutional investors to punish retail investors when they least expect it.

“With no one in the market able to pinpoint as yet what’s driven the move to 13-year highs…silver has confirmed its reputation as the ‘Devil’s metal,’ leaping without warning and leaving the technical picture very bullish for further gains,” said BullionVault's Adrian Ash.

I believe this was indeed a technical breakout, with bullish supply/demand fundamentals as the backdrop. Demand is expected to outstrip supply for a fifth straight year, according to the Silver Institute. More demand than supply equates with higher prices.

Silver is being helped by strength in copper, amid an uptick in global growth optimism (last week's OECD report notwithstanding), and ongoing worries that copper could still be hit by tariffs. Four-year highs in platinum provide another layer to the story.

On the downside, congestion around $36 and the Asian low at $35.948 mark initial support. Friday's low at $35.654 is a more significant level to watch.


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 poised for higher weekly close, but silver steals the show

OUTSIDE MARKET DEVELOPMENTS: The headline NFP print for May beat expectations, but negative back-month revisions totalling 95k curbed the market's enthusiasm somewhat. With the labor market still on a modestly positive trajectory, and in light of President Trump's "very good" call with China's Xi on Thursday, the trade heads into the weekend with some appetite for risk.

The decent NFP report offsets some of the growth worries that emerged earlier in the week. Rate cut expectations have been dialed back once again.

Trump said his call with Xi focused exclusively on trade and had "resulted in a very positive conclusion for both countries". Trump indicated that trade talks between the world's two largest economies would resume shortly.

"He invited me to China and I invited him here," Trump said. "We both accepted," he added, perhaps signalling a significant easing of tensions between the two superpowers.

Geopolitical tensions remain elevated. Russia launched a massive drone and missile strike against Ukraine, apparently as retribution for Kyiv's recent drone attacks on Russian airbases. Meanwhile, Israel struck Hezbollah drone production sites in Lebanon.

The escalating feud between President Trump and Elon Musk is drawing additional attention to U.S. fiscal concerns. Musk's attacks on the so-called "Big, Beautiful Bill" could give Republican deficit hawks in the Senate the cover they need to break ranks amid conflicting stories on the long-term debt implications of the BBB. Trump's hope to have the legislation on his desk for signing by Independence Day is at risk.

Nonfarm Payrolls rose 139k in May, above expectations of +125k, versus a negative revised 147k in April (was +177k). The jobless rate was steady at 4.2%. Hourly earnings rose 0.4% on expectations of +0.3%. The average workweek was steady at 34.3 hours.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$7.45 (+0.22%)
5-Day Change: +$66.72 (+2.03%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +47.57

Gold ends the week under modest pressure as risk-on sentiment saps haven demand. However, geopolitical risks and fiscal worries continue to underpin the market, with silver providing some help as well. Despite the inability to sustain the brief foray back above $3,400, the yellow metal still appears poised for a higher weekly close.



While gold is consolidative just above the midpoint of the range that has been in place since 15-May, I continue to view price action since the all-time high was set on 22-Apr as a continuation pattern within the long-term uptrend.

A more convincing move above $3,400 would clear the way for tests of Fibonacci resistance at $3,416.97 and the 07-May high at $3,431.63. Above the latter, $3,495.89 would be back in play with potential to $3,596.20 and beyond.

Global gold ETFs saw net outflows in May (19.1 tonnes), the first since November. As the White House backed away from its most punitive tariff threats, risk appetite improved, safe-haven bets were pared, and investors were drawn back into the stock market.

All-in-all, it was a very modest retracement of the solid inflows seen earlier in the year. Ongoing uncertainty on trade, heightened geopolitical and growth risks, and a general global bias toward easier monetary policy should underpin demand.

The 20-day moving average bolsters congestive support around $3,300. The rising 50-day moving average should move into this area in the week ahead and help to keep last week's low at $3,251.28 at bay.

Silver has had quite a week, clearing numerous key resistances. The white metal traded above $36 for the first time since February 2012 and is on track for a weekly gain of more than 9%. The white metal is up more than 24% YTD.



I attribute much of this week's action to technical activity. As key resistances were negated, buy stops were triggered, and the bull camp was encouraged to pile in. With gold basically holding steady, we finally got the much-needed correction in the ratio.

The gold/silver ratio peaked above 107 in April and remained elevated around 100 throughout May. The ratio plunged nearly 8% this week to a nine-week low of 92.31. Congestive support around 90 is a likely attraction.

The $36.169 Fibonacci objective in silver was satisfied and exceeded, shifting focus to $36.568. However, the range breakout builds a compelling technical case for $40 silver. The high from February 2012 at $37.430 provides a solid intervening barrier.

Friday's Asian low at $35.654 marks first support. Thursday's U.S. low at $35.391 protects $35 and former resistance, now support, at $34.853/543.


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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