Blog posts tagged with 'palladium'

Gold and silver extend losses before recovering somewhat intraday

OUTSIDE MARKET DEVELOPMENTS: The two-day FOMC meeting is underway. A 25 bps rate cut is widely anticipated when policy is announced on Wednesday.

The trade will be paying close attention to the policy statement and Powell's responses to the financial press's questions for clues about the Fed's intentions for the remainder of the year. Fed funds futures currently put the probability of another 25 bps cut in December at about 87%.

The U.S. and China have reached a preliminary framework agreement on key issues, including tariffs, rare earth exports, soybeans, and fentanyl controls. This sets the stage for a potential trade deal to be finalized by Presidents Trump and Xi Jinping at their summit in South Korea on Thursday. Market optimism has stoked risk appetite.

The U.S. government shutdown has entered its 28th day, with federal workers missing paychecks and millions at risk of losing SNAP benefits on November 1 due to depleted funding. The Senate is set to attempt a 13th vote on a clean funding bill to reopen the government through November 21, but it remains unlikely that the GOP majority will be able to sway enough Democrats to break the filibuster.

S&P/Case-Shiller Home Price Index (20-cities) fell 1.9 points to 340.0 in August, from 341.9 in July. "August's data shows U.S. home prices continuing to slow, with the National Index up just 1.5% year-over-year," said Nicholas Godec of S&P Dow Jones Indices.

FHFA Home Price Index rose 0.4% to 435.3 in August, above expectations of +0.1%, versus unch in July; +2.3% y/y, down from +2.4% in July.

Consumer Confidence ebbed to 94.6 in October, above expectations of 93.6, versus a revised 95.6 in September (was 94.2). 

Richmond Fed Index rebounded to -4 in October, above expectations of -14, versus -17 in September. All three of its component indexes increased, but it was the eighth consecutive negative print.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$54.59 (-1.37%)
5-Day Change: -$157.13 (-3.81%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,541.42 - $4,381.21
Weighted Alpha: +48.88

Gold extended losses to trade below $3,900 for the first time since 6-Oct as optimism about a U.S./China trade deal weighs on the yellow metal's haven appeal. Gold was overdue for a correction, notching nine consecutive higher weekly closes before last week.



In Friday's newsletter, I worried that "stops below $4,000 could still be a short-term attraction." That was indeed the case, and secondary support at $3,947.99/45.87 was also negated, leading to a test of the $3,900 zone.

From last week's record high at $4,381.21 to today's low at $3,887.03, the magnitude of the correction is just over 11% thus far. I feel like the weak longs have been knocked out at this point, and are probably looking for a spot to get back in.

Perhaps not surprisingly, there were significant outflows of 12.5 tonnes from gold ETFs last week, ending the string of net inflows at eight weeks. While European investors headed to the exit to the tune of 28.1 tonnes, Asian ETFs saw inflows of 17.3 tonnes. North American investors displayed resilience, with outflows of just 1.9 tonnes.

I imagine next week's data will show more outflows in North America as investors are probably rotating out of haven assets like gold to pile back into shares. However, the magnitude of such outflows will tell us a lot. 

I continue to believe that recent losses are corrective within the long-term uptrend. November is typically another strong seasonal month for gold, but I'd like to see some more upside performance to start returning some credence to the underlying uptrend.

A short-term close back above $4,000 would offer some encouragement to the bull camp, but the convergence of the 20-day moving average and Fibonacci resistance at $4,068.82/$4,075.81 is the more important level to watch. Today's overseas high at $4,019.39 provides an additional intervening barrier.

Today's intraday low at $3,887.03 fortifies the 06-Oct weekly low at $3,884.61. Penetration of this level would leave the market vulnerable to the rising 50-day moving average, currently at $3,783.16. 


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.659 (-1.40%)
5-Day Change: -$1.509 (-3.10%)
YTD Range: $28.565 - $54.465
52-Week Range: $28.565 - $54.465
Weighted Alpha: +55.98

Silver is trading higher on the day after trading at five-week lows below $46. While it's premature to suggest the corrective low is in place, calmed trade tensions seem to be providing some support.



The gold/silver ratio appears to have met some resistance around 86, suggesting this period of silver underperformance may be coming to an end. However, investors and haven buyers are likely feeling stung by the 16% plunge and may be slow to return.

A short-term close above $48 would ease pressure on the downside, but chart/Fibonacci resistance around $49 and the 20-day MA at 49.543 are the more important levels to watch. The halfway back point of the entire corrective decline comes in at $50.014.

A lower close today would indicate the potential for further tests of the downside. Today's U.S. low at $46.135 marks initial support, protecting the low for the day at $45.563. Penetration of the latter would suggest scope for a test of the rising 50-day MA at $44.813.


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 poised for first weekly losses in ten

Outside Market Developments: This morning's delayed release of September CPI was fairly benign. Headline consumer inflation ticked up to a 3.0% annualized pace, while core CPI edged down to 3.0% y/y.

S&P Global flash manufacturing and services PMIs suggested improvement in October.  The final Michigan sentiment reading for October was revised down to a five-month low of 53.6, from a preliminary print of 55.0 and 55.1 in September.

With inflation in check but still above target, the economy continuing to display resilience, and dovish FedSpeak prevailing, the trade continues to anticipate a 25 bps rate cut out of next week's FOMC meeting. Fed funds futures imply 43 bps of total easing into year-end, little changed over the past week.

Today is the 24th day of the government shutdown. Democrats have blocked a Senate vote on the House-passed CR eleven times as they continue their filibuster. Despite ongoing informal talks, there are no indications that a bipartisan breakthrough is imminent.

U.S.-China trade tensions ebbed this week as the market looks ahead optimistically to the 30-Oct meeting between President Trump and China's Xi in South Korea. However, the Trump administration terminated trade negotiations with Canada after Ontario Premier Doug Ford ran anti-tariff ads in the U.S. that Trump characterized as fraudulent and designed to interfere with upcoming U.S. Supreme Court rulings on his tariff policies.

The U.S. and EU piled additional sanctions on Russia this week after the Kremlin refused to commit to a ceasefire in Ukraine. The measures include threats of secondary sanctions on foreign financial institutions facilitating oil sales to buyers in China, India, and Turkey, aiming to degrade war funding and force Russia back to the bargaining table.

CPI rose 0.3% in September, below expectations of +0.4%, versus +0.4% in August; 3.0% y/y, up from 2.9% in August. Core rose 0.2%, below expectations of +0.3%, versus +0.3% in August; 3.0% y/y, down from 3.1% in August.

S&P Global Flash Manufacturing PMI ticked up 0.2 points to 52.2 in October, above expectations of 52.0, versus 52.0 in September. 

S&P Global Flash Services PMI rose 1.0 point to 55.2 in October, above expectations of 53.5, versus 54.2 in September. 

Michigan Sentiment was revised down to a five-month low of 53.6 for October, versus a preliminary print of 55.0 and 55.1 in September.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$71.08 (-1.72%)
5-Day Change: -$134.61 (-3.17%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,541.42 - $4,381.21
Weighted Alpha: +57.12

Gold continues to consolidate the losses from earlier in the week, with price action confined to Wednesday's range for a second session. The yellow metal is poised for its first lower weekly close in ten weeks.



This week's sharp drop is largely being seen as a technical correction. Fed easing expectations, along with ongoing trade and geopolitical uncertainties, continue to underpin the market. While it's premature to rule out further tests of the downside, I do like that last week's low has contained the downside thus far.

JP Morgan is maintaining its bullish outlook, expecting gold to average $5,055 by Q4 '26. "Gold remains our highest conviction long for the year, and we see further upside as the market enters a Fed rate-cutting cycle," said Natasha Kaneva, Head of Global Commodities Strategy.

A breach of resistance at $4,161.10 is needed to ease pressure on the downside somewhat and shift focus to the halfway back point of the decline at $4,193.38. The 61.8% retracement level comes in at $4,237.71.

On the downside, the 20-day moving average has been attracting some buying interest. I continue to monitor this indicator closely, as a close below the 20-day would be troubling to the bull camp. The weaker technical picture for silver is also a concern.

Friday's early U.S. low at $4,045.78 protects the more important $4,005.55/$4,000.00 zone. I am worried that stops below $4,000 could still be a short-term attraction. Penetration of $4,000 would favor a quick drop to $3,947.99/45.87, but cascading stops could lead to a challenge of $3,900.

I expect volatile conditions to persist into next week.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.908 (-1.86%)
5-Day Change: -$3.327 (-6.40%)
YTD Range: $28.565 - $54.465
52-Week Range: $28.565 - $54.465
Weighted Alpha: +59.49

Silver continues to consolidate at the low end of this week's range, below the 20-day moving average. Like gold, the white metal will notch its first lower weekly close in ten weeks.



While dislocation in the silver market persists, there was some sense of normalization toward the end of the week as spreads narrowed, and lease rates and the backwardation with futures moderated. Bob Gottlieb told Kitco News that 29 Moz of silver were removed from COMEX warehouses in the last two weeks, much of which was probably destined for London. However, Gottlieb believes “we need another 100 to 150 million ounces physically in London for the market to normalize.”

Record volumes have been seen in CME metals contracts. "Demand for safe-haven assets is surging as market participants work to navigate ongoing economic uncertainty," said Jin Hennig, Managing Director and Global Head of Metals at CME Group.

A short-term close back above the 20-day MA ($49.524) would ease pressure on the downside, favoring additional retracement to the $50 zone. A rebound above the halfway back point of the decline at $51.008 is needed to return a measure of confidence to the underlying uptrend.

On the downside, today's intraday low at $47.844 protects Wednesday's two-week low at $47.551. Below the latter, the 7-Oct low at $47.343 would be in play, with potential to $46.

Be prepared for further volatility in the week ahead.


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 extended losses on Wednesday before stabilizing somewhat

Apologies for the radio silence during this volatile time. I've been at an IPMI conference at the Colorado School of Mines. This morning, we toured the CSM experimental mine in Idaho Springs, CO.

OUTSIDE MARKET DEVELOPMENTS: The government shutdown, now in its 22nd day, has become the second-longest in history. The Senate has failed eleven times to reach the 60-vote threshold to break the Democrat filibuster. Sen. Jeff Merkley (D-OR) has been filibustering for more than 20 hours, preventing a twelfth vote.

The absence of U.S. economic data due to the shutdown leaves the market to focus on corporate earnings, the shutdown itself, next week's FOMC meeting, and the ebb and flow of trade and geopolitical tensions.

The BLS will reportedly release September CPI data on Friday, as a special exception during the shutdown to support Social Security cost-of-living adjustments. This report was originally slated for release on 15-Oct, and there are some concerns about the veracity of the data.

A 25 bps rate cut is priced in for the October FOMC meeting. An additional 25 bps of easing is widely expected in December as well. 

U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will reportedly meet next week in Malaysia to defuse trade tensions ahead of a Trump-Xi summit in South Korea at the end of the month.  The WTO is urging de-escalation to avert a 7% hit to global output.

The fragile ceasefire in Gaza continues to hold, despite reports of violations on both sides. Vice President JD Vance is in Jerusalem to advance the return of the bodies of deceased hostages and the resumption of aid.

The planned summit between Trump and Putin to discuss an immediate Ukraine ceasefire was put on hold after Moscow rejected the proposal without Ukraine ceding additional territory. Ukrainian President Zelenskyy reiterated his refusal to surrender land during a recent White House meeting.

The U.S. is considering providing Tomahawk cruise missiles to Ukraine to pressure Russia toward ceasefire talks. Moscow has warned that such a move would represent a "new level of escalation" and severely damage U.S.-Russia relations.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$89.78 (-2.18%)
5-Day Change: -$134.28 (-3.19%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,541.42 - $4,381.21
Weighted Alpha: +54.91

Gold is trading lower for a second straight session, weighed by ongoing profit-taking, this week's uptick in the dollar, and spec selling on the heels of Tuesday's dramatic losses.



On Friday, after warning of the worsening overbought condition, I suggested a retreat to the rising 20-day moving average would be welcomed and good for the underlying uptrend. Mission accomplished, but I would have preferred a more orderly decline.

It's worth noting that last week's low at $4,004.86 has successfully contained the downside thus far. Let's call the $4,000 zone important short-term support.

A potential double bottom has formed on the hourly chart. A breach of an intraday high at $4,161.10 is needed to confirm that pattern, and re-embolden the bull camp. Such a move would shift focus to the halfway back point of the decline at $4,193.38. At that point, I'll reevaluate the technical picture, but some period of choppy consolidation seems likely.

There are likely stops below $4,000 that may still be an attraction. If the $4,000 support zone gives way, look for a quick test of $3,947.99/45.87.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.628 (-1.29%)
5-Day Change: -$4.843 (-9.14%)
YTD Range: $28.565 - $54.465
52-Week Range: $28.565 - $54.465
Weighted Alpha: +57.18

Silver remains defensive and extended losses after recording a more than 7% decline on Tuesday. It was the largest single-day decline since February 2021.



Despite the volatility this week, today's low is only a two-week low, reflecting a market that rose too quickly to be sustainable. Silver is a small, thinly traded market. When you see rapid gains like we have in recent weeks, you have to be prepared for an even steeper retracement.

I don't want to make light of the current market conditions, because I know some were stung badly by the volatility, but on 15-Oct I wrote the following:

"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."

The Vanity Fair article was published on 16-Oct, and the high point of the move thus far was reached on 17-Oct. Vanity Fair chose not to include any of my words of caution.

That being said, I stand by the quotes they did use. I still believe in the underlying fundamentals and the uptrend. I'm viewing this week's losses as corrective.

The next support level to watch is $47.343 (7-Oct low). Wednesday's intraday low at $47.551 provides an intervening barrier. If the former gives way, the $46 zone would be the likely attraction.

A short-term close back above the 20-day MA ($49.209) would ease pressure on the downside somewhat, favoring additional retracement to the $50 zone. A rebound above the halfway back point of the decline at $51.008 is needed to return a measure of confidence to the underlying uptrend.


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.