Blog posts tagged with 'palladium'

Gold retreats from a fresh record high. Silver fails to sustain gains above $33 again.

OUTSIDE MARKET DEVELOPMENTS: U.S. and Russian delegations met in Riyadh to discuss ending the war in Ukraine. Ending sanctions on Russia was reportedly discussed as part of a peace deal. Kyev and Europe are angry that they do not have seats at the table.

"They've had a seat for three years and a long time before that. This could have been settled very easily," said President Trump. Suggesting Ukraine carries some of the blame for the conflict is a sharp departure from the unequivocal support from the previous administration.

Tensions between the U.S. and Europe are on the rise due to Trump's unilateral action on Ukraine and threats to withdraw from NATO. Vice President Vance also berated European leaders in Munich last week, emphasizing the erosion of free speech rights. "What I worry about is the threat from within — the retreat of Europe from some of its most fundamental values, values shared with the United States of America," he said.

While China is likely cheered by the discord, one of the goals of Trump's foreign policy is to fracture the tighter bond that developed between Russia and China in recent years. However, Trump's method of making blustering statements before walking back to more moderate positions has strained long-standing alliances.

After shifting focus to matching reciprocal tariffs last week, President Trump floated 25% tariffs on cars, chips, and pharmaceuticals on Tuesday. The constantly changing landscape is keeping trade tensions elevated.

FOMC minutes from the January meeting come out later today. I expect the minutes to be consistent with recent FedSpeak, including Chair Powell's testimony before Congress: The Fed has more work to do on inflation and is hence in no hurry to cut rates further.

Fed funds futures continue to suggest there will only be one 25 bps rate cut this year. That move isn't fully priced in until September.

MBA Mortgage Applications fell 6.6% in the week ended 14-Feb, versus +2.3% in the previous week. Purchases notched a fourth straight weekly decline. Refinancings slumped after two weekly gains. 30-year mortgage rates edged lower to 6.93% from 6.95%.

Housing Starts tumbled 9.8% to 1.366M in January, below expectations of 1.394M, versus an upward revised  1.515M in December (was 1.499M). Permits rose a scant 0.07%, but completions jumped 7.6%. Affordability remains a headwind amid high mortgage rates and building material cost uncertainties.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.32 (-0.01%)
5-Day Change: +$24.12 (+0.83%)
YTD Range: $2,607.16 - $2,946.39
52-Week Range: $2,015.17 - $2,9446.39
Weighted Alpha: +42.29

Gold edged to a new all-time high in overseas trading, buoyed by persistently high trade angst, heightened geopolitical tensions, and a soft dollar. It was the first new record high in six sessions.



Albeit modest, the recent setback relieved the overbought condition somewhat, allowing for the latest round of gains. However, upside follow-through has been limited thus far and I suppose we can't rule out a potential double top just yet. I'm also keeping an eye on a potential bearish RSI divergence.

That being said, today's breach of the $2,943.10 Fibonacci level (161.8% retracement of the decline from $2,789.68 to $2,541.42) bodes well for attainment of the long-standing $3,000 objective. Above the latter, the next Fibonacci level comes in at $3,037.94 (200% retrace).

Goldman Sachs has raised its year-end target to $3,100, citing central bank buying as a key driver. They mentioned $3,300 has a more bullish target if economic and trade uncertainty escalates.

Gold shipments from Singapore to the U.S. surged 27% in December, the highest level in nearly three years. This is further confirming evidence of the massive flows of gold from global centers to the U.S. since the November election.

Yesterday's low at $2,894.21 marks initial support. More significant support is found at $2,880.05/$2,878.68.

Downticks are likely to continue to attract buying interest.

Silver probed briefly back above $33 helped by another new record high in gold and a soft dollar. However, gains could not be sustained, leaving last week's four-month high at $33.340 well protected.



A breach of chart/Fibonacci resistance at $33.340/$33.554 is needed to perpetuate the two-month uptrend and confirm potential back to last year's high at $34.853. I'd settle for a close above $33 to bolster my confidence.

Trade uncertainty continues to stoke global inflation and growth worries, weighing on demand prospects for silver. 

Today's Asian low at $32.562 has been slightly exceeded. A breach of the midpoint of this week's range at $32.537 would suggest additional downside potential back to $32.414/400.

More important supports are marked by Tuesday's low at $32.102 and Monday's low at $32.004. A retreat below $32.00 would put the 20-day moving average at $31.702 in play.


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.

2/14/2025

Gold and silver retreat on retail sales miss, but higher weekly closes still seem likely 

OUTSIDE MARKET DEVELOPMENTS: Data this week revealed that inflation is back on the rise. However, retail sales plunged 0.9% in January, suggesting growth risks are also on the rise. While industrial production beat expectations, we're already seeing downward revisions to Q1 GDP expectations.

Treasury yields dove on the retail sales miss, dragging the dollar lower as well. The dollar index fell to nine-week lows below 107.00. 

If the economy is weakening, upward pressure on prices should moderate. Fed Chairman Powell told Congress this week that the central bank was in no hurry to ease further as there was more work to do on inflation. Rate cut expectations got pushed out to December, but after the weak retail sales print, the market is now pricing in a September cut.

Trade worries continue to dominate. President Trump is looking to impose reciprocal tariffs as soon as April, arguing that many trading partners treat the U.S. unfairly.

Citing WTO average external tariffs rates, a BBC article suggests he has a point. At 3.3%, the U.S. has one of the lowest average external tariff rates. The countries that have initially been in Trump's crosshairs have the following average tariff rates: China 7.5%, Mexico 6.8%, EU 5.0%, Canada 3.8%.

Retail Sales tumbled 0.9% in January, well below expectations of -0.1%, versus a positive revised +0.7% in December (was +0.4%). Ex-auto fell 0.4% on expectations of +0.3, versus a positive revised +0.7% in December (was +0.4%).

Import Price Index rose 0.3% in January, below expectations of +0.4%, versus a revised +0.2% in December (was +0.1%).

Export Price Index surged 1.3% in January, well above expectations of +0.3%, versus an upward revised +0.5% in December (was +0.3%).

Industrial Production +0.5%, above expectations of +0.3%, versus a positive revised 1.0% in December. Cap use rose to a five-month high of 77.8% from 77.5% in December.

Business Inventories fell 0.2% in December, below expectations of UNCH, versus +0.1% in November.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$2.63 (+0.09%)
5-Day Change: +$64.73 (+2.26%)
YTD Range: $2,607.16 - $2,940.10
52-Week Range: $1,990.62 - $2,940.10
Weighted Alpha: +43.85

Gold approached the record high at $2,940.10 in London trading on Friday, but was unable to break through leaving a potential double top. Nonetheless, the yellow metal appears poised for a seventh straight higher weekly close.



This week's U.S. data was highlighted by revived inflation and then today's retail sales miss stoked worries about faltering growth as well. While Q1 GDP expectations have been trimmed modestly, expect to hear more mentions of 'stagflation' in the week ahead.

Growth risks, trade tensions, lower yields, and a weaker dollar should all foster continued haven demand. I suspect the downside is limited and this setback will attract buying interest.

Wednesday's low at $2,869.08 is the confirmation point for the small double top. A breach of this level would open up potential to secondary supports at $2,860.70/$2,855.32 and $2,840.60/$2,839.69.

As noted in recent commentary, the market had also become quite overbought. A period of corrective/consolidative action would relieve that condition and bode well for the still-expected attainment of the $3,000 objective.

Silver surged to a fifteen-week high of $33.340 in London trading, but gains above $33 could not be sustained as U.S. retail sales disappointed. A close above $32.343 is needed to secure a third straight higher daily close, although the white metal does appear poised for a fourth consecutive higher weekly close.

 

While dislocation in the gold market has been a hot topic in recent weeks, similar conditions also emerged in the much smaller and more thinly traded silver market. Moves tend to be amplified in silver.

Spread traders have been short silver against gold and that started to unwind this week and accelerated during today's Asian session. The gold/silver ratio reached nearly a two-year high above 92 on Tuesday. The ratio was off more than 3% at the intraday low of 87.757.

Silver's breach of last week's high at $32.590 in Asia also confirmed the violation of an important Fibonacci level. That move targeted the next retracement level at $33.554 (78.6% retrace of the decline from $34.853 to $28.783).

Silver nearly got there before sellers stepped in and drove the market back below $33. While today's move returns additional credence to the longer-term uptrend, the sharp intraday retreat is going to give the bulls some pause.

A move back below $32 from here would put the important 20-day ($31.427), 100-day ($31.208), and 20-week ($31.199) moving averages back in play.

Today's high at $33.340 now provides an intervening barrier ahead of the $33.554 Fibonacci level. A short-term breach of the latter would bode well for a retest of October's high at $34.853.


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 within sight of record highs helping underpin silver above $32

OUTSIDE MARKET DEVELOPMENTS: Incoming data continue to show that inflation accelerated in January. Both CPI and PPI came in hotter than expected this week.

Testifying on The Hill earlier in the week, Fed Chairman Powell acknowledged that there was more work to do on the inflation front but didn't seem too worried. "We don't get excited about one or two good readings, and we don't get excited about one or two bad readings," he said.

Powell went on to say that the Fed wants to keep policy "restrictive for now." That drove Treasury yields higher and stocks fell. Fed funds futures are now predicting a single 25 bps rate cut this year, which likely won't happen until October or December.

The dollar has had a muted response to the recent rise in yields as trade war fears stoke growth risks and outweigh the normal support higher interest rates would provide. The dollar index slipped to a new low for the week, but the lows from the last two weeks at 107.30 and 106.97 remain protected.

Exporters of steel and aluminum to the U.S. are formulating their responses to the latest tariffs that could further inflame trade war worries. Several countries are lobbying for exemptions, but President Trump has vowed "no exceptions."

Hamas has capitulated and will release additional Israeli hostages on Saturday as originally planned following threats from Israel and President Trump. Hamas had said they were indefinitely delaying further hostage releases after accusing Israel of ceasefire violations.

President Trump announced yesterday that he and Russian President Putin discussed ending the war in Ukraine, generating cautious optimism on the geopolitical front. President Zelensky of Ukraine confirmed Trump had shared details of the conversation with him. 

"No one wants peace more than Ukraine. Together with the U.S., we are charting our next steps to stop Russian aggression and ensure a lasting, reliable peace. As President Trump said, let’s get it done,” said Zelensky.

 PPI rose 0.4% in January, above expectations of +0.3%, versus an upward revised +0.5 in December (was +0.2%); +3.5% y/y, steady from December, although last month was revised higher from 3.3%. Core +0.3% in line with expectations, although December was revised sharply higher to +0.5% from UNCH; 3.6% y/y, above expectations of 3.2%, versus an upward revised 3.7% in December (was 3.5%).

Initial Jobless Claims fell 7k to 213k in the week ended 8-Feb, below expectations of 220k, versus a revised 220k in the previous week. Continuing claims fell 36k to 1,850k in the 1-Feb week, below expectations of 1,880k, versus 1,886k in the previous week.  


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$13.83 (+0.48%)
5-Day Change: +$57.37 (+2.01%)
YTD Range: $2,607.16 - $2,940.10
52-Week Range: $1,986.16 - $2,940.10
Weighted Alpha: +43.03

Gold remains generally well bid within sight of the all-time high set on Tuesday at $2,940.10, underpinned by rising trade tensions. The softer dollar is helping the yellow metal's cause as well.



Downticks from Tuesday's high attracted buying interest and gold has only notched nine lower closes since the beginning of the year. That's a pretty impressive record and suggests the uptrend is healthy and likely to continue.

A breach of chart/Fibonacci resistance at $2,940.10/$2,943.10 would clear the way for the much-anticipated challenge of $3,000. Beyond the latter, the next Fibonacci level comes in at $3,037.94 (200% retracement of the decline from $2,789.68 to $2,541.42).

India overtook China as the world's largest consumer of gold in 2024. However, record-high prices are putting a serious damper ahead of the Indian wedding season.

"Right now, jewellery demand has taken a big hit — it's down by 70-80%. Jewellers all over the country are seeing slow sales," said Surendra Mehta, secretary at the India Bullion and Jewellers Association in a Reuters article.

The market dislocation stemming from massive physical gold flows to the U.S. in a move to avoid potential tariffs and to capitalize on the outsized contango on Comex is also impacting the Indian market. Indian gold production averages a minuscule two tonnes per year, while demand last year was 800 tonnes.

Indian banks borrow gold in global market centers and lend it to local jewelers. Skyrocketing lease rates in London caused lease rates in India to double putting additional upward pressure on jewelry costs.

According to the WGC, global jewelry demand accounts for about 40% of total demand. Weaker jewelry demand could provide a headwind for gold if not offset by stronger investment demand.

Initial support is at $2,901.83/$2,900.00 and a minor level at $2,884.96 protect yesterday's low at $2,869.08. More significant supports are noted at $2,860.70/$2,855.32 and $2,840.60/$2,839.69. 

Silver edged to a new high for the week before retreating into the range as tariff and growth risks continue to limit the upside. Ongoing strength in gold and a soft dollar are providing support.

 

With important moving averages at $31.320/201/191 intact, I remain cautiously bullish. New highs for the year above $32.590 would favor a push above $33.

The next Fibonacci level is at $33.554 (78.6% retrace of the decline from $34.853 to $28.783) and must be exceeded to bolster confidence in the longer-term uptrend.

A retreat below $32 would favor further consolidation with scope for another run at the moving averages. Tuesday's low at $31.334 further bolsters this support zone.


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 rebounds to trade higher after inflation beat as silver straddles $32

OUTSIDE MARKET DEVELOPMENTS: President Trump reports he had a "highly productive" phone call with Vladimir Putin. "We each talked about the strengths of our respective Nations, and the great benefit that we will someday have in working together. But first, as we both agreed, we want to stop the millions of deaths taking place in the War with Russia/Ukraine," wrote Trump.

"We have also agreed to have our respective teams start negotiations immediately." Trump indicated his next step was to call Ukrainian President Zelenskyy.

The prospect of meaningful negotiations to end the war in Ukraine dials down global geopolitical risks and will likely stoke risk appetite.

Consumer inflation heated up in January, reinforcing the Fed's decision to pause its easing campaign last month. CPI accelerated to 3.0% y/y in January, the highest since June. Core CPI rose to 3.3%.

Fed funds futures pushed expectations for the next rate cut out to December. Chairman Powell will be back on the Hill today, providing testimony before the House Financial Services Committee. Look for Powell to reiterate that the Fed is in "no hurry" to adjust its policy stance.

Dimming easing expectations have pushed Treasury yields higher. The 10-year yield is pressuring four-week highs at 4.664%. However, the dollar remains well contained within its recent range.

Trump 45 appointed Powell as Fed Chair in 2018, but the two have had a contentious relationship. Trump blustered shortly after the last FOMC meeting that he would "demand" lower rates, seemingly in disregard of the inflation implications. He subsequently walked that back, saying that holding rates steady in January "was the right thing to do."

Treasury Secretary Bessent has indicated he and the President are more focused on lowering longer-term borrowing costs. "He and I are focused on the 10-year Treasury," Bessent said during a recent Fox Business interview.

Former Texas Congressman, Fed nemesis, and gold standard advocate Ron Paul has been floated as a potential Powell replacement. Powell has pledged to serve out his term, which ends in May of 2026. Ron Paul would be nearly 91 years old by then.

Paul was awesome at questioning Fed chairs during the semiannual Humphrey-Hawkins testimony. He wrote a book called End the Fed in 2009.

At 89, Paul is still sharp as a tack, but I doubt he is a serious contender for Fed chair. 

Amid simmering trade war concerns, Republican Mitch McConnell has written an op-ed in Louisville’s Courier-Journal critical of the President's trade policies. "Tariffs are bad policy," he unequivocally stated. “Blanket tariffs make it more expensive to do business in America, driving up costs for consumers across the board,” he wrote.

Despite the pushback from within his party, the Trump administration is moving forward with reciprocal tariffs that charge duties on U.S. goods. Markets remain on edge amid concerns that a trade war will drive up prices and sapp growth.

MBA Mortgage Applications rose 2.3% in the week ended 7-Feb, versus +2.2% in the previous week. 30-year mortgaged rates edged lower to 6.95% from 6.97% in the previous week and a 36-week high of 7.09% in the 10-Jan week. 

CPI rose 0.5% in January, above expectations of +0.3%, versus +0.4% in December; 3.0% y/y, versus 2.9% in December. Core +0.4%, above expectations of +0.3%, versus +0.2%; 3.3% y/y, versus 3.2% in December.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$18.60 (-0.64%)
5-Day Change: +$36.53 (+1.27%)
YTD Range: $2,607.16 - $2,940.10
52-Week Range: $1,986.16 - $2,910.37
Weighted Alpha: +42.34

Gold extended losses in reaction to this morning's CPI beat as the prospects for the next Fed rate cut got pushed further into the future. However, the market seemed to quickly realize that the yellow metal is the classic hedge against inflation and that tariff worries remain prevalent. Buyers stepped in and drove the yellow metal back above $2,900.



Another Fed rate cut is not fully priced in until December at this point. Meanwhile, Fed Chairman Powell was on The Hill this week reiterating to Congress that the central bank is in no hurry to adjust rates further.

U.S. yields have risen, but the dollar remains subdued. The dollar index is consolidating about 2% off the more than two-year high set in mid-January. The soft dollar is counterbalancing the higher yields and helping to limit the downside in gold.

A breach of minor resistance at $2,910.37/$2,912.97 would bode well for a retest of the record high established on Tuesday at $2,940.10. That high is bolstered by a Fibonacci level at $2,943.10. Beyond that, $3,000 and the next Fibonacci level at $3,037.94 would attract.

Noting the moderation of the contango between spot gold and front-month futures, the World Gold Council's John Reade suggests the market dislocation that developed as a result of tariff concerns is "nearing an end." However, as of yesterday, Comex inflows continue to rise parabolically. 

Some worry that lease rates will remain elevated for months. At this point, OTC market carry charges aren't showing signs of returning to more normal levels.

While the unwinding of the pandemic-related surge in Comex gold stocks was fairly orderly, it's anyone's guess how things might unfold this time around.

The retreat from yesterday's record high has done little to relieve the overbought condition, which could be a short-term limiting factor. Today's earlier low at $2,869.08 now provides an intervening barrier ahead of supports mentioned in yesterday's commentary at $2,860.70/$2,855.32 and $2,840.60/$2,839.69. 

Silver continues to straddle the $32 level perhaps getting a boost from heightened risk appetite amid hopes for a negotiated peace in Ukraine. The limited nature of gold's correction thus far, and a soft dollar provide additional underpinning.



A move to new 14-week highs above $32.590 would bode well for a push above $33 and a challenge of the next Fibonacci level at $33.554 (78.6% retrace of the decline from $34.853 to $28.783). Above the latter, the cycle high at $34.853 would look increasingly attractive.

On the downside, yesterday's low at $31.334 reinforces the more important $31.254/201/196 support zone where the 20-day, 100-day, and 20-week moving averages converge. A break and close below those MAs would favor a dive back below $31 and consolidation at the low end of the range.


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 retreats into the range after yet another record high, silver defensive below $32

OUTSIDE MARKET DEVELOPMENTS: Global trade tensions continue to ratchet higher as Europe vowed retaliation against U.S. tariffs announced yesterday against steel and aluminum. “Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures,” said EU President Ursula von der Leyen.

The EU has faced sluggish sub-1% growth for the last two years. Germany is the block's largest economy and its biggest steel exporter. The German economy is already in recession and contracted in 2023 and 2024. The country is also in the midst of a political upheaval with elections slated for later this month.

A trade war with the U.S. does not bode well for an already weakened Germany or the EU as a whole. "Trade wars always cost both sides prosperity,” warned German Chancellor Olaf Scholz. Europe struck a tariff reduction agreement with Trump 45 late in his first term, suggesting that a trade deal between Washington and Brussels is not out of the question.

Fed Chairman Powell testified before the Senate Banking Committee today. He reiterated the message from the last FOMC meeting that the central bank is in no hurry to ease further. “With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said.

Recent FedSpeak has towed that line as well. Citing solid growth last year, a 4% unemployment rate, and above-target inflation Cleveland Fed President Beth Hammack is also inclined to be patient. “It will likely be appropriate to hold the funds rate steady for some time,” she said.

Expectations for the next 25 bps Fed rate cut were pushed out to September late last week after a generally favorable January jobs report. Heightened consumer worries about inflation contributed as well, so the trade will be paying close attention to this week's release of CPI and PPI data.

NFIB Small Business Optimism Index fell 2.3 points to 102.8 in January, below expectations of 104.6, versus 105.1 in December. "Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise." said NFIB Chief Economist Bill Dunkelberg.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$3.54 (-0.12%)
5-Day Change: +$64.63 (+2.27%)
YTD Range: $2,607.16 - $2,940.10
52-Week Range: $1,986.16 - $2,940.10
Weighted Alpha: +42.54

Gold set another new record high at $2,940.10 in overseas trading before retreating into the range. The yellow metal has now set all-time highs in eight out of the last nine sessions as global trade tensions continue to percolate.



The move into the targeted $2,936.00/$2,943.10 zone prompted some profit-taking. While the intraday setback was more than  $50, much of that has already been retraced. Gold is currently trading just below the midpoint of today's range.

As noted in recent commentary, the gold market has become overbought. I remain decisively bullish, but a multi-session corrective/consolidative phase can not ruled out. Fresh intraday lows below $2,884.96 would shift focus to the lows from the previous two sessions at $2,860.70/$2,855.32. Beyond the latter, $2,840.60/$2,839.69 would be in play.

I expect haven interest to perpetuate the dominant uptrend. Voracious central bank gold buying is likely to continue this year as well. The WGC noted an acceleration in official sector demand in Q4'24 suggesting another year of 1,000+ tonne demand may be in the offing.

Despite dollar-favorable interest rate differentials, the greenback remains fairly well contained off the multi-year highs set in January. While I would still categorize the dollar as relatively strong, recent range trading has diminished the headwind for gold.

Our friends at Sprott Money wonder if the U.S. is getting ready to monetize its gold reserves. In discussing President Trump's plan to create a U.S. sovereign wealth fund, Treasury Secretary Bessent said, "We're going to monetize the asset side of the U.S. balance sheet for the American people."

Our 8,134 metric tons of gold reserves are a pretty significant chunk of that balance sheet. Interestingly, our gold reserves are currently valued at a mere $42.22 per ounce.

That price is the fixed statutory price from 1973 and is used for official accounting purposes, resulting in a book value of just over $11 bln. It has never been clear to me why that price hasn't been adjusted periodically over the last 52 years. 

If Treasury were to revalue U.S. gold holdings by marking them to the current market price, instantly that asset would have a book value of $758 bln. But to what end?

Any indication that the U.S. was contemplating selling reserves would be an extraordinarily bearish turn of events. That seems unlikely as even revalued gold reserves would only equate to 2% of the total national debt $36.5 trillion. It wouldn't even make a dent.

Other countries would probably be eager to snap up U.S. gold, particularly if prices fell dramatically. This could hasten ongoing dedollarization efforts and would not be in the best interest of the United States.

Again this is all speculation, but a more likely scenario might be movement toward a new gold standard. "Some think it will be an issuance of the sort of gold-backed treasuries that are favored by Trump's onetime Fed Governor nominee Judy Shelton," according to the Sprott post.

Could this have something to do with the massive movement of gold to the U.S.? Interesting fodder for conversation to be sure!

A rebound above that midpoint of today's range at $2,912.53 would bode well for further tests of the upside. A breach of $2,940.10/43.10 would clear the way for the much-anticipated challenge of $3,000. Above that, $3,037.94 (200% retracement of the decline from $2,789.68 to $2,541.42) would attract.

Silver didn't get much help from the latest round of record highs in gold. Rising trade war concerns are stoking global growth risks and worries about industrial demand destruction. This outweighs the haven appeal of the white metal as a less expensive alternative to gold.



Silver dropped to a six-session low of $31.334. However, the important support zone highlighted by the 20-day, 100-day, and 20-week moving averages at $31.186/178 was left unmolested.

A close back above $32 today would keep hope alive for the bull camp, favoring tests of the highs from the last two sessions at $32.212  and $32.320. A breach of last week's high at $32,590 is needed to return focus to $33.000/066 and the next Fibonacci level at $33.554.

If silver closes below the important moving averages, a deeper retreat below $31 would be likely, with potential to the 3-Feb low at $30.763. While I don't think the lows from December at $28.802/783 are in jeopardy, more consolidation in the lower half of the well-defined $34.853/$28.783 range could be in the offing. 


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.