Blog posts tagged with 'gold'

11/1/2024

Gold starts November on defense, but ongoing haven demand should limit the downside

OUTSIDE MARKET DEVELOPMENTS: Iran's Supreme Leader Khamenei has ordered his military to strike back at Israel for last week's retaliatory attack on Iranian military targets by Israel. While the Iranians initially downplayed last Friday's attack, Khamenei has now deemed it too big to ignore.

Iranian officials indicated to the NYT that their next move is unlikely to happen before the U.S. election. They reportedly don't want to do anything that might benefit Donald Trump.

Despite renewed U.S. efforts to negotiate a cease-fire, the retaliatory cycle between Israel and Iran seems destined to continue. The risk of an all-out regional war between the two nations remains elevated.

According to Nikkei Asia reporting, four Toyota group companies cut guidance for the current fiscal year due to concerns about the Chinese economy. "Sluggish sales in China had a major impact," said Denso Executive Vice President Yasushi Matsui. "This will likely continue for a long time."

The potential that the economic woes of the world's second-largest economy will continue for a "long time,"  despite expectations for additional stimulus, will continue to have a significant impact on global markets.

The UN has warned that current demographic trends portend a halving of China's population by 2100. No amount of stimulus the CCP could muster can offset that potential reality. China needs to increase birth rates.

U.S. Nonfarm Payrolls rose 12k in in October, below expectations of +125k, versus a negative revised +223k in September (was +254k). That's the weakest print since December 2020.

The unemployment rate held steady at 4.1%.

August NFPs were revised down to +78k from +159k previously. That makes total back-month revisions  -112k.

Private nonfarm payrolls plummeted to -82k on expectations of +105k. That's the first negative print since December 2020.

Manufacturing jobs fell by 46k, notching a third straight month of declines.

Hourly earnings rose 0.4%, above expectations of +0.3%, versus a negative revised +0.3% in September. The average workweek ticked up to 34.3 hours.

Overall this was a fairly grim jobs report with the recent hurricanes and strikes certainly playing a roll. In a note appended to the jobs report, the BLS warned that the establishment survey is not designed to isolate effects from extreme weather events and therefore "it is not possible to quantify the net effect" on changes in employment, hours, or earnings.

U.S. S&P Manufacturing PMI rose 0.7 points to 48.5 in October from 47.9 in September.

U.S. Manufacturing ISM fell to a 15-month low of 46.5, below expectations of 47.6, versus 47.2 in September. It was the seventh consecutive month in contraction territory and the 23rd time in the last 24 months. Prices paid rebounded 6.5 points to 54.8 from 48.3 in September.

According to one respondent from the transportation equipment sector: “Market demand has significantly decreased in the second half of 2024 and is expected to be soft through the first quarter of 2025. Although inflation has stabilized and returned to historical levels, and interest rates are decreasing, there appears to be a general pessimism in the economy that is driving customers to be more restrictive in their capital expenditures, including investment in commercial vehicles."

U.S. Construction Spending rose 0.1% in September, in line with expectations.

U.S. auto and light-truck sales for October come out this afternoon. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.61 (+0.20%)
5-Day Change: -$4.54 (-0.17%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +40.07

Gold notched a ninth consecutive higher monthly close in October but begins November on its back foot. The yellow metal appears poised for its first lower weekly close in four. Beware of the reversal week (higher high, lower close).



Today's U.S. economic data are suggestive of heightened growth risks, dimming the prospects for a Fed-orchestrated soft landing. A 25 bps Fed rate cut is fully priced in for next week, but bets on a December hold have been reduced.

Indian festival demand was muted this week due to near-record-high prices. While sales volume was down, the value of those sales was up significantly due to the sharply higher price. Reuters reported that the price of gold in rupees was up nearly 33% since last Diwali.

This evidence of price sensitivity is perhaps raising demand concerns as we move deeper into the Indian wedding season. While still several months away, price sensitivity could also impact Lunar New Year demand in Asia. Call that a potential near-term headwind.

With geopolitical tensions still very high, most central banks in easing mode, and the U.S. election looming, I see downside potential in gold as limited. Good support is noted at $2,715.51/$2,711.17, and the rising 20-day moving average ($2,700.51 today) should correspond with this level early next week.

A rebound above resistance at $2,757.95/$2,762.22 would ease short-term pressure on the downside and favor a retest of Wednesday's record high at $2,789.68. Beyond that, the $2,810.38 Fibonacci objective remains valid.

Silver remains on the defensive having established fresh two-week lows and trading lower for a third straight day. The white metal seems destined to notch a second consecutive lower weekly close.  



Silver is being weighed by ongoing concerns about the Chinese economy and today's evidence of a faltering U.S. economy. A firmer dollar and continued pressure on gold also weigh.

Concerns that Donald Trump will increase trade barriers if he becomes President again are also providing some headwinds. Silver is used in consumer electronics, solar panels, and automobiles that the U.S. imports.

Today's convincing violation of the $32.700/$32.542 support zone suggests further downside potential to $31.995 (61.8% retracement of the leg-up from $30.229 to last week's 12-year high at $34.853).  Secondary support is noted at $31.645 (18-Oct low), which should closely correspond with the 50-day moving average next week.

The midpoint of the recent decline now comes in at $33.617 with today's overseas high at $33.066 providing an intervening barrier. A rebound above the former would favor renewed tests above $34 and another run at the cycle high at $34.853.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/31/2024

Gold and silver turn corrective ahead of month-end

OUTSIDE MARKET DEVELOPMENTS: Senior White House negotiators are in Israel today in a new push to broker cease-fires in both Lebanon and Gaza. A deal with Hamas would include at least a partial hostage release.

The Times of Israel reports that Prime Minister Netanyahu believes a "ceasefire in Lebanon is appropriate so long as it fulfills the objective of returning northern residents safely to their homes." A deal with Hamas seems less likely.

U.S. stocks are under pressure after warnings from tech companies about rising AI costs and election uncertainty stoked risk aversion. 

The BoJ held steady on policy, which was widely expected, particularly given the political turmoil ignited by last weekend's snap election. Moderating growth risks leave the door open for more rate hikes and Governor Ueda took a less-dovish tone in his comments. Ueda also noted receding risks in the U.S.

The yen rallied to new highs for the week against the dollar based on expectations that the BoJ would continue its tightening campaign. I do expect the upside in the yen to remain limited, at least until a new government is formed.

U.S. Challenger Layoffs fell 17k to 55.6k in October, versus 72.8k in September. Announced hirings plunged -137.2k to 266.7k. “Job openings have fallen and hiring is pretty flat at the moment. Companies appear to be in a holding pattern as we await election results and the potential regulatory and market environment that follows,” said Andrew Challenger, Senior Vice President and workplace expert for Challenger, Gray & Christmas, Inc.

U.S. Initial Jobless Claims fell 12k to 216k in the week ended 26-Oct, below expectations of 233k, versus a revised 228k in the previous week. Continuing jobless claims dropped 26k to 1,862k.

U.S. Q3 Civilian ECI rose 0.8%, above expectations of +0.9%, versus +0.9% in Q2. Annualized ECI moderated to a 3.9% pace from 4.1% in Q2.

U.S. Personal Income rose 0.3% in September, below expectations of +0.4%, versus +0.2% in August.

U.S. PCE rose 0.5% in September, above expectations of +0.4%, versus an upward revised +0.3% in August. The chain price inflation gauge rose 0.2% on expectations of +0.1%; 2.1% y/y. Core inflation +0.3%; 2.7% y/y.

Chicago PMI tumbled 5.0 points to a 5-month low of 41.6 in October, well below expectations of 46.2, versus 46.6 in September. Of the five subcomponents, only Supplier Deliveries rose. Nearly 40% of respondents reported lower production.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$6.25 (-0.22%)
5-Day Change: +$16.57 (+0.61%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +40.76

Gold has turned corrective after successive record highs on Tuesday and Wednesday. A new push for a cease-fire in the Middle East and perhaps some month-end profit-taking weigh.



While gold is currently trading lower on the week, a ninth consecutive higher monthly close is likely. The yellow metal is up more than 4% in October and +32.6% YTD. The last lower monthly close was in January.

The breach of Tuesday's low at $2,740.53 leaves the low for the week at $2,725.94 vulnerable to a challenge. However, setbacks are still likely to be viewed as buying opportunities.

More substantial support is found at $2,715.51/$2,711.17. The important 20-day moving average comes in at $2,696.05.

A rebound above $2,757.95/$2,762.22 would ease short-term pressure on the downside and bode well for a retest of yesterday's record high at $2,789.68. Beyond that, the $2,810.38 Fibonacci objective remains valid.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.310 (-0.92%)
5-Day Change: -$0.879 (-2.61%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +43.01

Silver inability to sustain recent tests above $34 has led to a corrective plunge below $33 as markets adopted a risk-off posture ahead of month-end and next week's election. Despite today's retreat of more than 3%, the white metal still appears poised for a second straight higher monthly close.



Yesterday's commentary suggested there was scope for a challenge of Monday's low at $33.627. With that level negated in overseas trade, focus shifted to the $32.700/$32.542 zone, where previous chart resistance, the 20-day moving average, and the halfway back point of the most recent leg higher all converge.

This is a pretty substantial support area, so I suspect the downside is limited from here. A rebound above $33.000/109 would take some of the pressure off the downside. 

The midpoint of the decline comes in at $33.708. A climb back above this level would clear the way for renewed tests above $34 and another run at the cycle high at $34.853.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/30/2024

Gold nears $2,800 on strong demand picture 

OUTSIDE MARKET DEVELOPMENTS: Western intelligence sources say there are already a small number of North Korean troops embedded with Russian forces inside Ukraine. According to reports, there are approximately 10,000 North Korean troops training in Russia that will presumably be deployed to fight in Ukraine.

South Korea has thus far refrained from sending weapons to Ukraine, but combat-hardened DPRK troops may be cause for concern. “While we have maintained our principle of not directly supplying lethal weapons, we can also review our stance more flexibly, depending on the level of North Korean military activities,” said South Korean President Yoon Suk Yeol.

The U.S. Q3 GDP report showed an advance print of +2.8%, below expectations of +3.0%, versus 3.0% in Q2. Consumer and government spending remain robust contributors to economic growth.

PCE increased 3.7%, the strongest reading since Q1'23, and accounted for 2.46% of overall growth. That's up from 1.90% in Q2.

According to the Bureau of Economic Analysis report: "Within goods, the leading contributors were other nondurable goods (led by prescription drugs) and motor vehicles and parts. Within services, the leading contributors were health care (led by outpatient services) as well as food services and accommodations."

Government consumption expenditures and gross investment were the second biggest contributors at 0.85%, up from +0.52% in Q2. Defense spending at +0.51% was the biggest subcategory within GCE.

The PCE price index dropped a full percentage point from 2.5% in Q2 to 1.5% in Q3. The core chain price index fell to 2.2%, compared to 2.8% in Q2. September PCE data come out tomorrow and the market expects a scant 0.1% m/m rise in the headline price index.

The U.S. ADP Employment Survey blew away expectations, with a private payrolls gain of 233k in October, more than double the median expectation of +114k, versus an upwardly revised 159k in September (143k). This strong number, despite two hurricanes and several significant strikes, is generating whispers of a potential NFP beat on Friday (expectations +125k).

U.S. Pending Home Sales Index rebounded 7.4% to 75.8 in September, above expectations of 71.9, versus 70.6 in August and a record low of 70.2 in July. Lower mortgage rates in September spurred buying but rates are back on the rise more recently with 30-year fixed rates back above 7%.

Decent economic growth, moderating inflation, and a resilient labor market lend considerable credence to the soft landing scenario. The data support the Fed continuing with the easing cycle into 2025.

The Fed is widely expected to cut rates by 25 bps on 07-Nov. While the market still favors an additional 25 bps cut in December, chances for a hold persist and actually rose today. Fed funds futures now put the probability of steady policy in December at 28.7%, compared to 25.5% yesterday.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$6.27 (+0.23%)
5-Day Change: +$71.44 (+2.63%)
YTD Range: $1,986.16 - $2,788.53
52-Week Range: $1,812.39 - $2,788.53
Weighted Alpha: +43.21

Gold continues its march higher, establishing new record highs and baring down on $2,800. The yellow metal is up nearly 1.5% this week and it has been three weeks since consecutive lower closes have been seen. The uptrend continues to look very strong.



The World Gold Council reports Q3 gold demand rose 5% y/y to 1,313 tonnes, a record for a third quarter. The corresponding rise in the price drove the value of this demand beyond $100 bln for the first time ever. "Falling interest rates, geopolitical uncertainty, portfolio diversification and momentum buying were among the key drivers," according to the WGC.

While bar and coin demand and central bank buying moderated, investors finally jumped on board in Q3 leading to 94.6 tonnes of ETF inflows. That's a marked shift from nine consecutive quarters of outflows. "Q3 was the first positive quarter since Q1’22, with a y/y swing from hefty (-139t) Q3’23 outflows," said the WGC.

The WGC is optimistic about the remainder of the year saying, "resurgent professional flows combined with solid bar and coin investment will offset weaker consumer demand and slower central bank buying."

On the supply side, mine production rose 5.8% to 989.8 tonnes. With diminished adds from net producer hedging and recycling, total supply was exactly in balance with total demand at 1,313 tonnes.

The next resistance level is at $2,800.00/$,2,804.73 based on a range extension target. However, scope remains for a test of the $2,810.38 Fibonacci objective.

The overseas low at $2,773.20 protects former resistance at $2,757.95. Additional support levels are noted at  $2,748.17/$2,747.38 and $2,740.53 (29-Oct low).

Silver slipped back below $34, weighted by a slightly weaker-than-expected initial read on Q3 GDP. However, fresh record highs in gold and hopes for more Chinese stimulus should continue to limit the downside.



Support marked by yesterday's low at $33.627 was slightly exceeded but the white metal subsequently rebounded back into the range. While silver remains lower on the day, a close above $34 would be encouraging for the bull camp.

If a close above $34 can not be generated, Monday's low at $33.268 might be the short-term attraction before renewed buying interest surfaces. More substantial support is at $33.109/$33.000.

The PGMs have corrected sharply on diminished expectations for additional Russian sanctions.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/29/2024

Gold sets new record highs after brief and limited correction

OUTSIDE MARKET DEVELOPMENTS: With just one week until the U.S. election, most polls remain within the margin of error. Many believe the stakes are extraordinarily high, and the likely results remain uncertain.  

The recent Japanese election heightened political uncertainty with the LDP party losing its majority for the first time since 2009. "Voters have handed us a harsh verdict and we have to humbly accept this result," said PM Shigeru Ishiba.

While Ishiba has pledged he will remain PM, he'll need to secure enough votes in a special session of the Diet slated for 11-Nov. Ishiba will attempt to build a coalition over the next couple of weeks.

The yen remains on the offer amid concerns that the BoJ's tightening campaign is on hold until the political situation is sorted out. The BoJ will announce policy on Thursday and is widely expected to leave its benchmark rate unchanged at 0.25%. 

China is considering adding C¥ 10 trillion ($1.4 trillion) in new debt over the next three years to juice its flagging economy. The new fiscal plan could be approved as soon as next week. Commodities appear hopeful.

U.S. JOLTS Job Openings declined -418k to 7,443k in September, below expectations of 8,000k, versus 7,861k (was 8,040k). There are now just 1.1 job openings for each job seeker.

U.S. Advance Economic Indicators revealed a $14.0 bln widening of the international trade deficit to $108.2 bln in September, outside expectations of -$95.5 bln, versus -$94.2 bln in August. Advance wholesale inventories contracted by 0.1%, while retail inventories grew by 0.8%. 

The Q3 GDP contribution from net exports fell from +0.04% to -0.38%. The Atlanta Fed's GDPNow forecast tumbled to 2.8%, down from 3.3% on Friday.

U.S. S&P/Case-Shiller home price index for 20 cities dipped -0.3% to 334.7 in August, down from the all-time high set in July at 335.8. The annualized pace of home price appreciation slowed to a 10-month low of 5.2%, versus 5.9% in July.

U.S. FHFA Home Price Index rose 0.3% to 427.0 in August, versus an upward revised 425.8 in July. With mortgage rates back on the rise, expect supply to remain tight and prices near record highs.

U.S. Consumer Sentiment surged to 108.7 in October, above expectations of 99.1, versus a revised 99.2 in September (was 98.7). “Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$2.04 (+0.07%)
5-Day Change: +$20.49 (+0.75%)
YTD Range: $1,986.16 - $2,769.89
52-Week Range: $1,812.39 - $2,769.89
Weighted Alpha: +41.93

Gold has extended to new record highs, buoyed by haven bids associated with geopolitical tensions, and political uncertainty. The recent corrective phase was short-lived and limited in terms of magnitude, suggesting the dominant uptrend remains strong.



Revived hopes of additional Chinese stimulus provide an additional tailwind, even though Q3 gold demand in China was pretty dismal according to Bloomberg. The weak economy, ongoing concerns stemming from the property crisis, and record-high prices led to a 22% plunge in demand. 

Jewelry demand was particularly hard hit, falling 29% to 130 tons. Demand for bars and coins fell 9% to 69 tons.

With the world's largest buyer of gold largely sidelined, again you have to be impressed by the market's resilience. I imagine there's some pent-up demand just waiting to be unleashed, particularly with monetary and fiscal stimulus targeting disinflation.

Reuters reports that Indian buyers "brushed off record high prices" ahead of this week's Dhanteras and Diwali festivals. "People are still into gold big time, even with prices at record highs during Dhanteras. With gold giving better returns than the stock market, there's been solid demand for coins and bars," said Saurabh Gadgil, chairman of PNG Jewellers.
 
Today's move to new all-time highs lends credence to the bullish scenario targeting $2,810.38 based on a Fibonacci objective. The $2,800.00/$,2,804.73 level marks a minor intervening attraction.

Former resistance at $2,757.95 now marks initial support. Secondary support at $2,748.17/$2,747.38 protects the intraday low at $2,740.53.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.466 (+1.38%)
5-Day Change: -$0.549 (-1.58%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +52.20

Silver surged back above $34 on hopes that additional Chinese stimulus will boost industrial demand. While the recent cycle high at $34.853 remains intact, fresh record highs in gold are helping to underpin the white metal.



More than 61.8% of the recent corrective losses have now been retraced, favoring a retest of last week's high at $34.853. An eventual penetration would bode well for the anticipated test of the $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703).

First support is now $34.000/$33.988. A minor level at 33.893 stands in front of today's overseas low at $33.627.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.

10/28/2024

Gold and silver continue to consolidate ahead of next week's election

OUTSIDE MARKET DEVELOPMENTS: Israel conducted precision strikes against military targets within Iran over the weekend. The strikes were retaliation for Iran's 01-Oct missile barrage against Israel, which was retaliation for the killing of Iranian Republican Guard, Hezbollah, and Hamas leaders.

Arguably Israel showed restraint. Iran said the damage was limited. Is this the opportunity to end the retaliatory cycle and dial down regional tensions? The market seems hopeful.

“It looks like they didn't hit anything other than the military targets. My hope is this is the end,” said President Biden.

Already elevated political uncertainty was further stoked by Sunday's snap election in Japan. The long-ruling Liberal Democratic Party was severely rebuked by voters and lost control of the lower house for the first time in 15 years.

Recently elected Prime Minister Shigeru Ishiba's gamble to consolidate power and form a government backfired. While Ishiba has pledged to remain PM, gains by the LDP's main rival CDPJ party are going to make the formation of a coalition government challenging.

Japan's political uncertainty may force the BoJ to pause its tightening campaign. The yen tumbled in reaction to set a 13-week low against the dollar before rebounding in later trading. The Nikkei 225 closed up nearly 2% on hopes of slower monetary tightening.

The U.S. Dallas Fed General Business Activity Index rose six points to a 30-month high of -3 in October. While the index has been in contraction territory for more than two years.

Prices paid for raw materials declined 1.9 points to 16.3. It was the second straight monthly decline.

Market focus this week is on PCE inflation on Thursday and October jobs data out on Friday. The chain price index is expected to rise 0.1% m/m, while the market is forecasting a 125k rise in nonfarm payrolls.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -15.17 (-0.55%)
5-Day Change: +$22.04 (+0.81%)
YTD Range: $1,986.16 - $2,757.95
52-Week Range: $1,812.39 - $2,757.95
Weighted Alpha: +39.99

Gold remains within the range that was established last Wednesday. Corrective activity since the $2,757.95 record high was set that day has been very limited, leaving focus on the dominant uptrend.



Israel's limited retaliatory strikes against Iran have not led to renewed Iranian saber-rattling (at least not yet), suggesting regional tensions may have moderated somewhat. Broadly speaking however geopolitical tensions and political uncertainty remain elevated and supportive to gold.

As I noted in commentary last week, gold is agnostically bullish when it comes to next week's election results. Regardless of the winner, half of the country is going to disappointed and perhaps angry.

I expect rhetoric in the media and on social media to be hyperbolic. There are radical fringe elements on both sides that may be incited to political unrest and violence.

A push to new all-time highs would lend credence to the bullish scenario that calls for a challenge of $2,810.38 based on a Fibonacci objective. Beyond that, the $3,000 level looks increasingly attractive.

Citi Bank has raised its three-month projection for gold to $2,800 from $2,700 previously. Citi sees $3,000 gold in the 6 to 12-month timeframe.

“We note that gold and silver have performed extremely well despite weakening China retail physical demand and rising US interest rates since the Fed cut 50 (basis points) and payrolls beat last month,” according to Citi analysts.

Investment demand remains a bullish driver with a net inflow into global ETFs of 14.7 tonnes. It was the second consecutive weekly inflow. 

There have only been five weekly outflows out of the last 24 weeks. The last time there were two straight weekly outflows was in early May. 

The COT report for last week showed the net speculative long position in gold rose by 9.8k to 296.2k contracts from 286.4k in the previous week. It was the second straight weekly increase.

Support marked by Wednesday's low at $2,711.17 has increased in importance. Minor intervening barriers are noted at $2,725.94, $2,717.88 and $2,715.51.

Silver is trading modestly higher within the confines of Friday's range. Recent corrective downticks have attracted buying interest ahead of $33, keeping focus on the dominant uptrend.



A climb back above $34 would bode well for a retest of last week's high at $34.853. Intervening resistance is marked by Thursday's high at $34.285.

The net speculative long position in silver surged 12.4k to 66.4k contracts last week according to the CFTC's COT report. That's the largest net spec long position since 28-Feb'20.

CFTC Silver speculative net positions

This year's rally to 12-year highs has got to be putting considerable pressure on the large commercial short potion in silver. If those commercial shorts start covering, it would be a substantial tailwind for the market.

An eventual violation of the $35.217 Fibonacci level (61.8% retracement of the decline from $49.752 to $11.703), could be the trigger for that short covering as it would be suggestive of potential back to the $50 zone.

In the report referenced above, Citi raised its 6 to 12-month forecast for silver from $38 to $40. That makes a good intermediate objective ahead of $50.

Last week's low at $33.109 now protects $33.00 and previous resistance at $32.700/657. Buying strategies remain highlighted.

Palladium continues to charge higher after the U.S. lobbied the G7 to impose additional sanctions on Russian exports of the precious metal. Spot palladium is up nearly 15% since the middle of last week and is trading at new highs for the year. Palladium gains are providing some support for platinum as well. 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
[email protected]
www.ZanerPreciousMetals.com
www.TornadoBullion.com
X: @GrantOnGold
X: @ZanerMetals
Facebook: @ZanerPreciousMetals

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.