Blog posts tagged with 'palladium'

7/19/2024

Gold and silver lower on the week as yields and the dollar correct

OUTSIDE MARKET DEVELOPMENTS: Donald Trump accepted the Republican Party's presidential nomination last night in Milwaukee. Trump talked about last weekend's assassination attempt and his speech had a softer tone that resonated with some voters.

The former president promised to secure the border, defeat inflation, and boost fossil fuel production. Trump also pledged to protect U.S. manufacturing jobs by imposing tariffs on trading partners. He hit all the talking points, but the speech was short on policy details.

Trump also warned that "our planet is teetering on the edge of World War III," pointing to the war in Ukraine, the Israel/Hamas conflict, and tensions with China regarding Taiwan. He implied that his strong leadership could calm global tensions.

Meanwhile, it seems increasingly likely that President Biden will step aside and not seek reelection. The burning question is will his unpopular VP Kamala Harris be elevated to the top of the ticket, or will Democrats try to bring in someone else?

China's economy slowed to a 4.7% annualized pace in Q2, down from 5.3% in Q1. This was below expectations and weighed heavily on commodities.

The ongoing property crisis is adversely impacting household wealth and confidence, causing consumers to reduce spending. Chinese leaders have gathered to discuss reforms and modernization plans that could give the sluggish economy a boost.

The U.S. economic calendar is empty today, save for FedSpeak from Williams (centrist) and Bostic (dove).


GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$32.53 (-1.33%)
5-Day Change: -$15.33 (-0.64%)
YTD Range: $1,986.16 - $2,481.63
52-Week Range: $1,812.39 - $2,481.63
Weighted Alpha: +24.58

Gold came under more intense corrective pressure in overseas trading on Friday as U.S. yields and the dollar rebounded. The yellow metal is at risk of a lower weekly close after setting a record high at $2,481.63 on Wednesday.



A close above $2,411.66 is needed to avert a reversal on the weekly chart. However, sub-$2400 intraday prices could attract buying interest ahead of the weekend.

Initial support is marked by the 12-Jul low at $2,394.20, which should help keep the 50% retracement level of the most recent leg-up at $2,384.64 protected. Today's downside extension also leaves gold oversold intraday.

The market has priced in a September rate cut, so I suspect the rebound in yields and the greenback are corrective in nature. Even after yesterday's strong Philly Fed data, Fed funds futures continue to put the probability of a Sep cut at 98%.

I think investors will continue to view setbacks in the range as buying opportunities. FedSpeak from Williams and Bostic could provide some underpinnings for the market. Next week, focus will be on the latest PCE inflation reading out on Friday.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.649 (-2.18%)
5-Day Change: -$1.664 (-5.40%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +23.06

Silver extended losses on Friday to trade below $29. The white metal is poised for a second consecutive lower weekly close.



Concerns about the Chinese economy have contributed to three consecutive daily declines in silver. However,
given the oversold condition that has developed, important support at $28.618 (26-Jun low) looks to be well protected.

In accepting the Republican presidential nomination last night, Donald Trump pledged to roll back the Biden administration's efforts to combat climate change. He also said he would strive for U.S. energy independence by increasing domestic oil and gas production.

Less federal funds for alternative energy sources such as solar, could dampen industrial demand for silver.  

A rebound above $30 would ease short-term pressure on the downside. Price action since May has the makings of a continuation pattern within the dominant uptrend.

I'm leaning toward a symmetrical triangle if the $28.618 low holds. If that's the case, look for further choppy consolidation within the defined range culminating with an eventual upside breakout.


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.

7/18/2024

Gold consolidates within yesterday's range, as silver trades defensively

OUTSIDE MARKET DEVELOPMENTS: The ECB held steady on rates today, in line with expectations. The policy statement noted that "domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year."

The ECB is prepared to keep policy sufficiently restrictive to "ensure that inflation returns to its 2% medium-term target in a timely manner." They went on to say that the Governing Council is not pre-committing to a particular rate path, but will remain data-dependent.

Even if the Fed cuts in September, interest rate differentials will continue to favor the dollar for some time. In more normal times, I might see dollar strength as a headwind for the precious metals. However, geopolitical risks, rising debt-to-GDP ratios, and central bank demand have the potential to continue overriding the historic inverse correlation between gold and the dollar.

Once the Fed does start easing it will give other central banks, including the ECB, more room for cuts. Even in this scenario, dollar yields would remain comparatively attractive.

President Biden is facing reinvigorated calls to step aside. Biden has come down with COVID a day after saying that being diagnosed with a “medical condition” could prompt him to drop out of the race. If that were to happen, an unpopular Vice President Harris would likely move to the top of the Democratic Party ticket.

Former President Trump's popularity surged after he displayed courage and resolve following last weekend's failed assassination attempt but it remains to be seen whether he can carry that momentum through election day. There is still plenty of uncertainty surrounding the U.S. election in November, but this week markets seem to be pricing in a Trump advantage.

U.S. initial jobless claims surged 20k to an 11-month high of 243k in the week ended 13-Jul, above expectations of 230k, versus a revised 223k in the previous week. Continuing claims also jumped 20k to a 31-month high of 1,867k. The uptrend in claims since April creates some downside risk for the next payrolls report.

U.S. Philly Fed Index jumped to 13.9 in July, well above expectations of 2.9, vs 1.3 in June. This is the highest reading since the 15.5 print in April. The 6-month outlook index surged to 38.7, versus 13.8 in June. A strong reading on future employment tempers the bad claims data somewhat.

Leading indicators fell 0.2% in June, inside expectations of -0.3%, versus a revised -0.4% in May. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.79(+0.24%)
5-Day Change: +$50.37 (+2.09%)
YTD Range: $1,986.16 - $2,481.63
52-Week Range: $1,812.39 - $2,481.63
Weighted Alpha: +29.55

Gold is consolidating within yesterday's range with focus still very much on the upside. The yellow metal set a new record high in overseas trading on Wednesday at $2,481.63.



While yesterday's lower close after a new high is perhaps a little troubling for the short term – as is the comparative weakness in silver – the dominant trend remains unquestionably bullish. I'm looking to a Fibonacci objective at $2,511.11 next. Beyond that, $2,530.19 attracts.

First support is marked by yesterday's low at $2,452.34 which is bolstered by the previous record high at $2,449.34.

Focus remains on Fed rate cut expectations. Today's claims data suggest the labor market may be cooling, which should add weight to calls for the central bank will begin easing in September.

Tempered demand in Asia may lead to some short-term volatility as investors and jewelry buyers acclimate to the latest round of record highs. We could see some selling out of Asia but I suspect setbacks will continue to be met with buying interest.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.168 (+0.55%)
5-Day Change: -$1.030 (-3.28%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +30.70

Silver remains defensive in the wake of yesterday's retreat to 2-week lows. It would seem that the silver market is a little less optimistic about growth prospects.



I also suggested yesterday that Trump pledges to "drill baby drill" if he is elected may indicate that aggressive green initiatives and emissions standards could get walked back early in a Trump administration. This could have a detrimental impact on silver demand.

Mounting concerns that the Chinese economy is slowing are certainly a factor as well. Adding to those worries is the fact that the Trump/Vance ticket is very hawkish on trade, perhaps especially with regard to China.

My initial support area at $30.573/509 was taken out yesterday, leaving $30.15/00 vulnerable to a challenge. A dip below $30 would shift focus to $29.777.

A rebound above $30.509/584 is needed to ease short-term pressure on the downside and clear the way for renewed tests above $31. Such a move would return focus to last week's high at $31.652.


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.

7/17/2024

Gold sets record highs as expectations mount that Fed easing will commence in Sep

OUTSIDE MARKET DEVELOPMENTS: The 10-year yield is trading at levels not seen since March, dragging the dollar lower and providing a tailwind for the precious metals. The dollar index has traded as low as 103.66 today, a level last seen on 21-Mar.

Signs of softer inflation and dovish Fedspeak this week have heightened the prospect of a September rate hike. Fed funds futures put the likelihood at 98%. There is also a strong probability for a second cut in November and a third in December. Chances that the target rate could be as low as 4.50-4.75% by year-end currently stand at 50.3%.

We'll hear FedSpeak from Barkin and Waller today. Both tend to lean hawkish so they may take the opportunity to temper some of the recent enthusiasm.

Broader markets continue to be buoyed by rising expectations that Donald Trump will win the presidential election in November. The theory is that tax cuts and deregulation will boost economic growth in the short term, even as the longer-term fiscal picture continues to deteriorate.

U.S. housing starts rose 3% in June to 1.353M. Permits rose to 1.446M and completions rose to 1.71M. However, Q2 starts were down 15.7% in Q2, following an 18.7% decline in Q1. High mortgage rates have been a millstone around the housing market's neck, but perhaps there's some hope that rates are coming down.

U.S. industrial production came in at +0.6%, above expectations of +-.3%, versus +0.9% in May. Capacity utilization jumped to 78.8% on expectations of 78.4%.


GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.76 (-0.03%)
5-Day Change: +$102.44 (+4.32%)
YTD Range: $1,986.16 - $2,481.63
52-Week Range: $1,812.39 - $2,481.63
Weighted Alpha: +30.17

Gold reached a new all-time high of $2,481.63 in overseas trading on rising optimism that the Fed will begin easing in September. Lower yields and 4-month lows in the dollar index are helping to boost the yellow metal.



Heightened geopolitical risks, ETF inflows, and ongoing central bank demand are all contributing to gold's buoyancy. In a Reuters article this morning, Alex Ebkarian, chief operating officer at Allegiance Gold projected gold to reach $2,600-$2,700 in the second half of the year.

The World Gold Council reports that the Reserve Bank of India (RBI) acquired 9.3 tonnes of gold in June, well above the recent monthly average of 5.6 tonnes. Total H1 buying was 37.1 tonnes, the highest in over 10 years. Gold now comprises 8.7% of the RBIs total foreign reserves, up from 7.4% a year ago.

RBI’s monthly net purchases and reserves, tonnes*

Source: RBI, World Gold Council
*Data as of 28 June 2024

India is still seeing steady ETF inflows and gold imports remain steady. However, record-high prices are expected to sap jewelry demand which is a huge component in the overall demand picture.

My next technical objective on the upside is $2,511.11 based on a Fibonacci projection. Today's earlier low at $2,463.69 marks initial support ahead of the previous record high at $2,449.34.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.341 (-1.09%)
5-Day Change: +$0.198 (+0.64%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +34.35

Silver is consolidating with price action largely contained by yesterday's range. A more serious challenge of the upside has been thwarted thus far despite fresh record highs in gold.



Prospects for a Trump win in November may be leading some investors to scale back their expectations of aggressive green initiatives and zero-emission deadlines. That may have a material impact on demand as silver is featured in much of this technology, particularly solar.

Nonetheless, I would argue that the supply/demand dynamics continue to favor the upside. A lower interest rate environment would also help stoke broad-based demand for electronics, cars, housing, and more.

A breach of last week's high at $31.652 is needed to clear the way for renewed tests above $32 and a challenge of the cycle high from May at $32.379.

I'm watching support marked by Friday's low at $30.509. This level is reinforced by the lows from earlier this week at 30.573/572.


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.

7/5/2024

Gold and silver surge to 4-week highs on Fed rate cut expectations
 
OUTSIDE MARKET DEVELOPMENTS: The Labour Party scored a historic victory in UK elections, ending a 14-year Tory Party reign. Incoming Prime Minister Keir Starmer says "change begins now."

He is likely referring to the homefront, where he plans to tackle the cost-of-living crisis, illegal immigration, crime, and long NHS wait times. Foreign policy is expected to remain largely unchanged, including continued robust military support for Ukraine.

Labour views Russia as a threat to Europe and their manifesto favors NATO membership for Ukraine. NATO on its border is a red line for Russia and that threat arguably played a significant role in Putin's decision to invade.

The latest polling in France suggests Marine Le Pen's National Rally party which made strong gains in the first round of voting may still fall short of a majority in the National Assembly. There has been increased violence in France during the election process including attacks on candidates. Prime Minister Gabriel Attal called on the French people to "reject the climate of violence and hatred that's taking hold."

Iranians voted between hardliner Saeed Jalili and reformist Masoud Pezeshkian in a runoff presidential election. Regardless of the winner, Supreme Leader Ayatollah Ali Khamenei will still have the final say on just about everything of consequence.

Widespread apathy and calls for a boycott to protest the regime led to low voter turnout in the first round. A Jalili win would likely bend policy toward closer ties with Russia and China and a push forward in nuclear weapons development. It's doubtful that Pezeshkian has the wherewithal to develop a more moderate tone toward the West.

The Nikkei 225 continued to set record highs on Thursday, led by heavy buying in tech and automaker shares. The breakout above the previous record high set in 1989 initially occurred in March and gains have been mounting since, driven largely by the AI frenzy that is also lifting U.S. equities.

U.S. nonfarm payrolls rose 206k in June, above expectations of +200k, versus a negative revised +218k in May (was +272k). While the headline number was good, private payrolls were just +136k, below expectations of +175k, versus a negative revised +193k (was +229k).

The unemployment rate ticked up to 4.1% on back-month revisions, weak civilian employment, and an uptick in the labor force participation rate to 62.6%. Hourly earnings were up 0.3% in line with expectations. The average workweek was steady at 34.3 hours.

Hints of weakness in the jobs report give further confidence to the sooner-than-later-rate-cut camp. The prospects for a September rate cut have jumped to 71.8% based on Fed funds futures. Additionally, the FOMC minutes released on Wednesday revealed that policymakers saw "modest further progress toward the 2% inflation goal," a gradually cooling economy, and policy as restrictive.

Nonetheless, the FOMC is still displaying enough uncertainty as to the appropriateness of current policy and the tack of incoming data to cast doubt on a September rate cut. Proximity to the November election may be a Fed consideration as well.

Fed Chairman Powell's monetary policy testimony before the House and Senate next week may provide additional clues to the Fed's intentions. I expect him to maintain his cautious tone and maybe even come off a little hawkish to temper the recent market reactions.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$7.86(+0.33%)
5-Day Change: +$38.05 (+1.64%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +24.65

Gold has surged to 4-week highs on mounting expectations that the Fed will cut rates twice this year, despite persistent words of caution from Fed policymakers. The yellow metal is poised for a second consecutive higher weekly close.



An upside breakout of the symmetrical triangle pattern that formed since the record high was set on 20-May at $2,449.34 bodes well for a continuation of the dominant uptrend. However, sustained gains above $2400 may be difficult initially due to the current overbought condition.

Former resistances at $2,367.22 and  $2,364.17/$2,361.88 now define initial support levels.

Ole Hansen, Head of Commodity Strategy at Saxo Bank remains bullish on gold based on persistent geopolitical risks, strong retail demand in China, ongoing central bank demand, rising debt-to-GDP ratios among major economies (most notably the U.S.), and higher rate cut expectations. Hanson's year-end gold forecast is $2500.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.212 (+0.70%)
5-Day Change: +$1.455 (+4.99%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +38.93

Silver is adding to gains having broken out above channel resistance earlier in the week. Heightened expectations of a September rate cut are helping the cause. 



The white metal is up more than 6% this week and is currently trading at 4-week highs. The 61.8% retracement level of the corrective decline from $32.379 has been negated at $30.942 lending considerable credence to the notion that the corrective low is in place at $28.618.

The next level to watch on the upside is $31.516 (07-Jun high) which corresponds closely with the 78.6% retracement level at $31.574. A push through this level may prove difficult initially given the developing overbought condition, but short-term setbacks are likely to be viewed as buying opportunities.

Former resistances at $30.78/82 and $30.622/56 now mark the first two tiers of support.

Saxo Bank's Hansen is sticking with his year-end target of $35.


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.

7/3/2024

Gold and silver jump on rising Fed rate cut expectations

OUTSIDE MARKET DEVELOPMENTS: Markets seem to be reading yesterday's comments by Fed Chairman Powell at the Central Banking Forum in Portugal as dovish. U.S. yields and the dollar have weakened, providing a lift for the precious metals.

In my view, Powell didn't say anything new or exciting. The market however has latched on to his statement that "we are getting back on the disinflationary path.” That's just another way of saying we've made progress on inflation, but Powell added that more data are needed before the Fed can start easing policy.

Nonetheless, the prospects for a September rate cut have edged higher. Fed funds futures put the probability at 62% this morning. Attention now turns to this afternoon's release of the minutes from the June FOMC meeting to see if any additional clues are revealed.

ECBSpeak out of Portugal suggests the European Central Bank is on hold for July due to "sticky inflation." However, mounting growth risks likely warrant additional rate cuts later in H2.

The U.S. ADP Employment Survey saw private payrolls increase by 150k in June, below expectations of +165k, versus an upward revised +157k in May.

Initial jobless claims were 238k in the week ended 29-Jun, above expectations of 235k, versus an upward revised 234k in the previous week.

Challenger layoffs declined to 48.8k in June, versus 63.8k in May. That's the lowest print since December.

The U.S. trade deficit widened to -$75.1 bln in May, inside expectations of -$76.4 bln, versus a revised -$74.5 bln in April. Both imports and exports dropped. The deficit remains well off the historic wide of -$101.9 bln from March 2022.

Factory orders fell 0.5% in May, below expectations of +0.3%, versus a negative revised +0.4% in April (was +0.7%).

Services PMI rose modestly to 55.3 in June from 55.1 in May. However, services ISM tumbled to 48.8 in June, well below expectations of 52.5, versus 53.8 in May.

Today's generally weak U.S. economic data – and neutral jobs data – may give the Fed room to make their first rate cut sooner than later.  


GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$16.63 (+0.71%)
5-Day Change: +47.66 (+2.07%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +23.29

Gold jumped in overseas trading helped by an easier dollar. Gains extended in early U.S. trading and the yellow metal has reached a 2-week high of $2,354.41.


With resistances at $2,337.90/$2,338.03 and $2,339.36 negated, the 21-Jun high at $2,367.22 is the next attraction. While short-term price action has been rather choppy, June's range is intact and June's range was within May's.

Taking all that into consideration, trading since the all-time high was set at $2,449.34 on 20-May sure looks like a continuation pattern within the dominant uptrend. A breach of the June high at $2,386.90 would offer additional encouragement to the bull camp. However, such a move may prove difficult ahead of tomorrow's holiday session given the developing overbought condition.

The World Gold Council's mid-year outlook notes that gold has benefitted this year from "continued central bank buying, Asian investment flows, resilient consumer demand, and a steady drumbeat of geopolitical uncertainty."

The WGC sees gold garnering support in H2 from falling yields along with, "investors looking to hedge bubbling risks amid a complacent equity market and persistent geopolitical tensions."


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.648 (+2.19%)
5-Day Change: +1.471 (+5.11%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +36.72

Silver surged back above $30 overseas and added to those gains in early U.S. trading. The white metal is up over 3% on the day, buoyed by growing confidence that the Fed will cut rates twice this year.



Today's gains constitute an upside breakout of the bear channel that developed over the 6 weeks since silver established an 11-year high at $32.379 on 21-May. As noted in yesterday's commentary, I like it when silver leads on rallies. I really like it when there's buy-in from the gold market.

The $30.824 high from 21-Jun is the next resistance level I'm watching. Given the intraday overbought condition that has developed and tomorrow's holiday, look for the upside to be somewhat limited ahead of Friday's jobs data. However, the underlying uptrend has regained some credence with today's gains.

Today's FOMC minutes remain a potential wild card.

Maria Smirnova, chief investment officer for Sprott Asset Management said, "We expect silver prices to continue to improve, driven by low interest rates, more robust physical, ETF purchases and increased industrial demand.”


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.

7/2/2024

Gold choppy within recent ranges while silver sets 7-session highs
 
OUTSIDE MARKET DEVELOPMENTS: Markets are reacting to comments coming out of the Central Banking Forum in Sintra, Portugal. Fed Chairman Jerome Powell acknowledged that the Fed has made considerable progress, but wants to be sure inflation is indeed headed toward the 2% goal before starting to cut rates. 

Powell sees risks as being more two-sided now but was disinclined to provide any hints on a timeline. "I am not going to land on any specific date," said Powell.

Chicago Fed President Austan Goolsbee warned that holding rates where they are as inflation comes down is tantamount to tightening. "You should do that by decision, not by default," said Goolsbee. The implication is that rates should be coming down with inflation so policy doesn't become too restrictive and amplify growth risks.

While Powell's comments didn't break any new ground, the markets seemed to like what Goolsbee had to say. Yields and the dollar eased in reaction providing an intraday lift for the metals. That lift was temporary for gold, but silver is holding onto gains.

Eurozone CPI ticked down to 2.5% y/y in June, versus 2.6% in May. ECB Governing Council member Vasle suggested rates could be cut further but wants to see more data to confirm the downward trajectory of inflation.

ECB President Lagarde apparently concurs. "It will take time for us to gather sufficient data to be certain that the risks of above-target inflation have passed," she said.

U.S. JOLTS job openings rose to  8,140k in May, versus a downward revised 7,919k in Apr.

RCM/TIPP Economic Optimism Index rose to 44.2 in Jul, up from 40.5 in Jun.

Domestic auto and light truck sales for Jun come out later today. The market is expecting 2.1M and 10.2M respectively.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$7.50 (-0.32%)
5-Day Change: +$8.91 (+0.38%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +22.02

Gold is trading in a choppy manner today, but price action remains confined to yesterday's range thus far. It is in fact the second consecutive inside day. 



Comments out of the Central Banking Forum in Portugal are driving the trade. The central bankers seem to like the trajectory of inflation but are reluctant to declare victory over price risks. More data are needed.

Short-term resistance is clearly defined by the highs from the previous two sessions at $2,337.90/$2,338.03. This level is bolstered by a Fibonacci level at $2,339.36. Penetration of the latter would shift focus to the 21-Jun high at $2,367.22.

Support is marked by the lows for the previous two sessions at $2,319.98/85. Below that, the 26-Jun low at 2,295.86 protects the more important cycle low at $2,287.64 from 07-Jun.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.110 (-0.37%)
5-Day Change: +$0.481 (+1.66%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +31.50

Silver is trading higher for a fourth consecutive session. The white metal has set a 7-session high of $29.748. Generally speaking, I like it when silver leads on rallies.




Despite all the words of caution coming out of Portugal, Fed funds futures continue to price in two rate cuts this year. If the Fed can orchestrate a soft landing, the fundamental picture for silver remains broadly supportive.

More than 50% of the leg-down from $30.824 (21-Jun high) to $28.618 (26-Jun low) has now been retraced. The upper limits of the bearish channel have also been challenged. Additional upside follow-through would bode well for a test of the 61.8% retracement level at $29.981.

Trades with a 30-handle would go a long way toward convincing me the corrective low is now in place. I'd like to see some better performance on the upside out of gold 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.