Blog posts tagged with 'palladium'

7/1/2024

Gold and silver consolidate within Friday's ranges with focus still on Fed intentions

OUTSIDE MARKET DEVELOPMENTS: The year's second half begins with heightened political uncertainties. The top of the ticket for the Democratic Party is suddenly in doubt for the U.S. election in November after incumbent Joe Biden's dismal debate performance on Thursday.

Post-debate polling is perpetuating the angst among Democrats, having swung in favor of former President Donald Trump. A CBS News/YouGov poll showed that 72% of registered voters surveyed do not believe Biden has the “mental and cognitive health necessary to serve as president.” Nonetheless, at this point, Biden remains the presumptive nominee.

It appears that French President Macron's gamble to call snap elections following the swing to the right in European Parliamentary elections in June has failed. In the first round, Marine Le Pen's National Rally party received over 33% of the vote, while the far-left Popular Front got 28%. Macron's centrist alliance came in third at 20.8%.

The PBoC has announced they will intervene in the bond market "in the near future." The goal is undoubtedly to halt the bond rally that has driven China's 10-year yield to 2.18%, its lowest level since 2002.

U.S. bases in Europe went on heightened alert over the weekend amid possible terrorist threats. Force Protection Condition “Charlie” is the second highest alert status and reportedly hasn't been seen "in at least 10 years" according to a U.S. official cited by CNN.

U.S. manufacturing PPI rose to 51.6 in Jun, versus 51.3 in May and 51.7 flash. Manufacturing ISM fell to 48.5 in Jun on expectations of 49.1, versus 48.7 in May. ISM prices fell to 52.1 from 57.0 in May.

Construction spending fell 0.1% in May, below expectations of +0.3%, versus a revised +0.3% in Apr (was -0.1%).

Taken in conjunction with last week's soft inflation data, this morning's economic reports perhaps give a slight boost to sooner-than-later Fed rate cut expectations. Fed funds futures put the prospect of a Sep rate cut at 58.2% this morning.


GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.51 (+0.24%)
5-Day Change: +$2.09 (+0.09%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +22.58

Gold starts H1 in neutral territory despite heightened political uncertainty and worries about a potential terrorist attack in Europe. Price action has been contained by Friday's range thus far.



Gold achieved a higher close last week, but ended the month of June with a slight loss (-$1.31). It was the first lower monthly close in five. The yellow metal posted a 4.2% Q2 gain and was up 12.8% for H1.

The corrective low from 07-Jun at $2,287.64 has held for over three weeks now, adding some degree of confidence to the notion that the low is in. A breach of short-term chart/Fibonacci resistance at $2,338.03/$2,339.36 would offer further encouragement to the bull camp and favor a retest of the 21-Jun high at $2,367.22.

On the other hand, a retreat below Friday's low at $2,319.85 would call for more consolidation in the lower half of last week's range with some heightened risk to key support at $2,287.64.

The COT report showed that net speculative long positions rose to 246.2k contracts last week, versus 243.2k in the previous week. That's the highest since Apr 2022 and suggests the $2,300 zone continues to draw bids. 

Central banks reported 10 tonnes of net gold buying in May, despite record-high prices at the time. Top buyers were Poland (10 tonnes), Turkey (6 tonnes), India (4 tonnes), and the Czech Republic (3 tonnes). Kazikstan was the biggest seller at -11 tonnes.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.098 (+0.34%)
5-Day Change: -$0.271 (-0.92%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +30.95

Silver is trading higher for a third session but price action is well contained within last week's range. The white metal notched a second consecutive lower weekly close on Friday and ended June with a decline of 4.2%. It was the first lower monthly close in four.

 

Silver rose 16.8% in Q2 and posted a 22.5% gain for H1. Despite the June losses, the dominant trend is still bullish.

Last week's range of $28.618 to $29.714 defines short-term support and resistance.

The COT report showed that net speculative long positions rose to 56.0k contracts last week, versus 51.9k in the previous week. That's the highest since the first week of June.

Heraeus notes that increased solar power manufacturing in the U.S. and the expansion of EV charging infrastructure bodes well for domestic silver demand. The U.S. is also expected to announce new tariffs aimed at Chinese solar panels. 


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.

Good morning. The precious metals are mostly higher in early U.S. trading.

U.S. calendar features Manufacturing PMI & ISM, Construction Spending.

Powell speaks at Central Banking Forum in Sintra, Portugal.

6/28/2024

Gold hovers near unchanged for the month but appears poised for weekly, quarterly, and H1 gains
 
OUTSIDE MARKET DEVELOPMENTS: The U.S. Democratic Party is in panic mode following President Biden's debate performance last night. The President appeared feeble and was at times incoherent.

Very senior party officials and pols are reportedly having serious conversations about replacing Biden at the top of the ticket with just 130 days until election day. I suspect many Americans are wondering this morning if the true reigns of power are already not in Mr. Biden's hands. If they're not, who's running the country? If they are, should they be?

U.S. personal income rose 0.5% in May on expectations of +0.4%, versus +0.3% in Apr.

PCE climbed 0.2%, just below expectations of +0.3%, versus a negative revised +0.1% in Apr.

The PCE chain price index was unchanged, in line with expectations. The core PCE chain price index also matched expectations at +0.1%.

I see these data as broadly neutral, perhaps modestly heartening those calling for two rate cuts this year. Prospects for a Sep rate cut continue to hover around 60% despite recent hawkish FedSpeak that seems to be trying to dispel the two-cut notion.

The IMF has warned that U.S. high deficits and debt "create a growing risk to the U.S. and global economy." They called on the U.S. to raise taxes to address the issue. The IMF also revised down its U.S. growth outlook from 2.7% to 2.6%.

The latest ECB Consumer Expectations Survey suggests Eurozone inflation will continue to ease. This and the uptick in German unemployment to 6% should help keep the ECB on its recently initiated easing path.

Japan sacked Masato Kanda, Vice Minister of Finance for International Affairs within the Ministry of Finance, replacing him with Atsushi Mimura. Kanda had led unsuccessful efforts to support the yen through jawboning and direct intervention.

The yen has fallen to 38-year lows. Efforts to support the yen are expected to persist, but Japan's massive debt and demographic challenges are a millstone around the neck of monetary policy. Mimura faces those same challenges.

The dollar remains generally well bid with the yen on the ropes and scope seen for further ECB rate cuts. The dollar index retested the 8-week high set on Wednesday at 106.13. While this level remains intact thus far, a challenge of the high for the year at 106.52 seems likely. Beyond that, last year's high of 107.35 attracts. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$8.24 (+0.35%)
5-Day Change: +13.39 (+0.58%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +23.04

Gold extended to a new high for the week of $2,338.03 following a generally uneventful PCE report for May. Most importantly, the Fed's favored measure of inflation suggested price risks are in check which may give the central bank room for at least one, and possibly two rate cuts this year.



The yellow metal appears poised for a higher weekly close. A close above $2,327.82 would confirm a fifth consecutive higher monthly close. With gold presently trading around $2,331.00 the monthly close is too close to call. Current pricing puts gold up 4.4% in Q2 and +13% in H1.

Tests of the downside this week have reinforced support marked by the 07-Jun low at $2,287.64. Bull camp confidence that the corrective low is in place has been bolstered. The 61.8% retracement level of the decline from last week's high has been pressured at $2,339.36. A breach of this level would bode well for a test of $2,367.22 (21-Jun high).

A new intraday low below $2,319.85 would deflate bullish optimism setting up potential for further probes below $2300.

I wrote yesterday about the "Costco effect" pulling average U.S. investors into the gold market and the warmer feelings toward gold among professional investors. An AP article this week reports that Poles have turned to gold amid high inflation and ongoing concerns about geopolitical instability in the region that has led to a migration crisis.

"In Poland, gold’s allure is intertwined with the enduring trauma of World War II, when it could ensure survival." This theme has been repeated around the world and throughout history. A client of a company I previously worked for told a harrowing tale of escaping Vietnam with his family after the fall thanks to their horde of gold tael bars.

A survey from SSGA and WGC showed that 76% of investors in the Asia/Pacific region have some allocation to gold. Nearly half have allocations of 1% to 4.9%. That 24% have no allocation to gold means there is significant room for demand to grow.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.396 (-1.37%)
5-Day Change: -$0.180 (-0.61%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +32.99

Silver set a 5-session high of $29.587 following the PCE report, but the high for the week at $29.714 was not seriously challenged. The white metal fell to a 5-week low midweek and appears poised for a lower weekly close and the first lower monthly close in four.

 

Based on a current price of $29.30, silver is up about 17% for Q2 and +23% for H1. The longer-term trend remains bullish, but I'd need to see further evidence to convince me the corrective low is in place.

UBS believes U.S. rates and the dollar need to start coming down in H2 to open the upside for silver and draw investors back into ETFs. Today's data seem to favor at least one Fed rate cut this year, but even once Fed easing is underway I think interest rate differentials will underpin the dollar for some time.

UBS believes industrial demand, particularly from the photovoltaic sector, will remain strong. They also see mine output contracting marginally this year. Strong demand and reduced supply bode well for the price of silver in H2, even if the dollar remains supported.


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.

6/27/2024

Gold and silver rebound from Wednesday's losses with focus on presidential debate and inflation data

OUTSIDE MARKET DEVELOPMENTS: The dollar has eased from yesterday's 8-week high, providing some relief for the precious metals. The pullback is seen as corrective in nature with interest rate differentials expected to remain broadly supportive to the greenback.

Sweden's Riksbank held steady on rates as expected, but the messaging was quite dovish with inflation seemingly in check and the economy slowing. "If inflation prospects remain the same, the policy rate can be cut two or three times during the second half," said Riksbank Governor Erik Thedeen.

U.S. market focus remains squarely on tonight's presidential debate and Friday's personal income and PCE data for May. Particular attention will be paid to the PCE chain price index as it is the Fed's preferred measure of inflation. Median expectations are unchanged, and an uptick of 0.1% in the core reading.

U.S. durable goods new orders rose 0.1% in May on expectations of +0.2%, versus a negative revised +0.2% in Apr (was +0.7%). Ex-transportation fell 0.1% and shipments came in at -0.3%.

Initial jobless claims fell 6k to 233k in the week ended 22-Jun, versus an upward revised 239k in the previous week.

U.S. advance goods trade deficit expanded to -$100.6 bln in May, outside expectations of -$96.0 bln, versus -$97.9 bln in Apr.

U.S. Q1 GDP was revised up to 1.4% in the third report in line with expectations, versus 1.3% previously. The GDP chain price index was revised to 3.1% from 3.0%. Core was revised up to 3.7% from 3.6%.


GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$17.11 (+0.74%)
5-Day Change: -$41.80 (-1.77%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +21.84

Gold has retraced all of yesterday's losses and then some, buoyed by a setback in the dollar. Important short-term support at $2,287.64 was left untested yesterday as the trade awaits tomorrow's inflation data.



A downtick in inflation would likely be a positive for gold as it would heighten expectations for a sooner-than-later Fed rate cut. On the other hand, a hot inflation print would keep the Fed on hold and continue to pose a headwind for the yellow metal.

China's net imports of gold through Hong Kong fell 22.7% to 26.722 tonnes in May, versus 34.575 tonnes in Apr. This may be attributable to record high prices in May.

The CEO of MKS PAMP, the fabricators of the Fortuna gold bar being sold at Costco, says he has "not seen such dynamic physical markets." Certainly, Costco's entrance into the bar and coin market last year is having an outsized impact on the space.

Wells Fargo estimates that Costco is selling $200M worth of gold per month. That's more than 80,000 ounces every month, and that's being throttled by availability. Costco inventory typically sells out "within a few hours."

The following is a fascinating graphic from the latest Costco article, showing the decline in Americans' confidence in political and social institutions. The implication is that this broad-based loss of confidence is driving average investors to seek shelter in "the old-school store of value."



A recently commissioned World Gold Council survey shows that gold ownership is also on the rise among professional investors. "A staggering 85% reported an allocation to some type of gold investment, up from 69% in 2018," said the WGC. The survey suggests gold allocations will be steady to higher over the next 12-18 months.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.126 (+0.44%)
5-Day Change: -$1.638 (-5.33%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +31.30

Silver has bounced from the 6-week low set yesterday at $28.618. However, the new cycle lows set this week leave the downside vulnerable heading into the end of Q2 and H1.



It would take a rebound above $29.714/$29.721 to set a more favorable short-term tone. This level is defined by the high for the week from Monday and the halfway back point of the decline from last week's high at $30.824.

Such a move seems unlikely in advance of Friday's inflation data and the intraday overbought condition that has developed. Below-expectations inflation tomorrow could open the upside to more serious tests. Alternatively, hot inflation would keep focus on the downside.

Action tomorrow should be telling. Will corrective forces continue to dominate, or will the long-term up-trend reexert itself early in Q3?


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.

6/26/2024

Gold and silver continue to slide on strong dollar, hawkish Fed, and inflation concerns

OUTSIDE MARKET DEVELOPMENTS: The dollar remains generally well bid, buoyed by interest rate differentials. The dollar index has reached 8-week highs and appears poised to trade with a 106 handle, which it hasn't seen since 01-May.

U.S. Dollar Index Daily Chart

Hawkish FedSpeak from Fed Governor Bowman yesterday suggested there may not be a Fed rate cut at all this year. In fact, Bowman indicated she was willing to raise rates if progress on inflation stalls or reverses. 

We'll get to see the Fed's favored measure of inflation on Friday. Expectations are that the chain price index for May will be unchanged, with perhaps a 0.1% increase ex-food & energy.

Fed Governor Cook said it would be appropriate to cut rates "at some point." It doesn't get much more non-committal with regard to timing than that. Certainly, it was not enough to offset Bowman's comments. Neither was the decline in Jun consumer confidence nor a weak Richmond Fed Index.

The Japanese yen has fallen to its lowest level since 1986 against the dollar, putting the market on alert for more BoJ supportive intervention. While the BoJ has recently hiked rates, they remain near zero making carry trades extremely enticing. Borrow at near-zero rates in Japan and invest in U.S. Treasuries that are yielding 4.25% to 5.49%. Seems like a no-brainer.

Japan narrowly avoided a recession last year, eking out 0.4% growth in Q4-23. However, the economy contracted at a 1.8% annualized rate in the first quarter of this year. While Japan returned to growth in Q2 (JCER forecasts +2.19%), the IMF projects 2024 GDP to be just +0.9%.

Japan's aging population and low birth rate are weighing on productivity and economic growth. This is a macro trend that Japan will have to contend with for some time.

The yuan also continues to weaken as the Chinese 10-year bond yield fell to a 22-year low. The PBoC lowered the reference rate for the yuan to 7.1248. It was the sixth consecutive cut.

ECB Governing Council member Rehn said that market data implies two more rate cuts this year. "In my view, they are reasonable expectations," said Rehn. The ECB's Panetta stressed that policy must remain data-dependent, noting that "political and geopolitical risks remain high."

Aside from a developing overbought condition, there seems to be little standing in the way of the greenback. The high for the year in the dollar index at 106.52 is within striking distance. A breach of that level would put the COVID-era high at 114.78 (Sep-2022) in play.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$11.26 (-0.49%)
5-Day Change: -$15.15 (-0.65%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +21.50

Gold slid to fresh 2-week lows in overseas trading and losses have extended early in the U.S. session. The market is still reeling somewhat from Bowman's comments yesterday, and the yellow metal's historic inverse relationship with the dollar may be re-exerting itself.



Gold had shown remarkable resilience in the face of higher interest rates and a strong dollar throughout the Fed's tightening cycle. Gains since Feb were largely the result of expectations that the Fed was on the verge of pivoting toward looser policy.

Gold set a record high on 12-Apr at $2,427.00, just days before the dollar index reached its high for the year (thus far) of 106.62. Gold went on to set another record on 20-May at $2,449.34. Even now, gold is just 6% off that all-time high.

Nonetheless, the short-term outlook has dimmed this week. The breach of support at $2,296.92 (13-Jun low) leaves the more important $2,287.64 (07-Jun) and $2,281.97 (01-May) lows vulnerable to challenges. A case can be made for a head-and-shoulders top on the daily chart with a line drawn between those lows defining a slightly upsloping neckline.

It seems unlikely that the bears will be able to take out this formidable chart level ahead of important inflation data on Friday. However, if inflation comes in hotter-than-expected further losses would be likely. Below $2,281.97 there's not much in the way of support until $2,206.03 based on a Fibonacci retracement.

Inflation at or below expectations would bode well for a rebound into the range. A short-term move above $2,334.36/$2,326.64 would ease pressure on the downside.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.044 (-0.15%)
5-Day Change: -$1.001 (-3.36%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +29.22

Silver is leading the metals lower in U.S. trading. The white metal has fallen to a fresh 6-week low at $28.618.



The next level of support I'm watching is $28.467 (61.8% retracement of the leg up from $26.049 to $32.379). The lower limits of a bearish channel will come in just below $28 by the time Friday's important inflation data are released.

On the optimistic side, looking at the daily and weekly charts, that bear channel has the earmarks of a bull flag. A word of caution though, the lower limits may need to survive another test and there needs to be considerable upside retracement to build confidence in this chart pattern.

The halfway back point of the decline from last week's high at $30.824 comes in at $29.05. I'd like to see this level regained to shift focus to Monday's high at $29.714 and the upper reaches of the bear channel/bull flag which are just above $30 through the end of the week.

The Royal Canadian Mint published a piece this week highlighting silver's role in the green economy. The article features data previously mentioned in this newsletter that shows strong demand for silver for use in applications such as solar panels, EVs, hydrogen fuels, 5G networks, and water purification. This demand exceeds the available supply, providing a significant long-term tailwind for silver.


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.

6/25/2024

Gold and silver retreat on hawkish FedSpeak

OUTSIDE MARKET DEVELOPMENTS: The Chinese yuan remains under pressure, falling to a 7-month low against the dollar. This puts the tightly controlled currency within striking distance of lows not seen since 2008.

The world's second-largest economy has yet to fully recover from the COVID-era, leading investors to reallocate funds elsewhere. The U.S. has been a particularly attractive destination due to high yields and strong stock market.

Businesses in China are hoarding dollars on expectations that the downtrend in the yuan will continue. They are also worried about the upcoming U.S. election and the implications for tougher trade policies should Donald Trump win.

Weakness in the euro is also helping to underpin the dollar amid diverging central bank policy. The ECB cut rates for the first time in 5 years on 06-Jun. Today the ECB's Isabel Schnabel downplayed the divergent policy as "slight" and "temporary." The differential between the ECB's deposit rate of 3.75% and the midpoint of the Fed funds target range is 162.5 basis points. That's significant.

Fed Governor Michelle Bowman said she doesn't anticipate any U.S. rate cuts this year. Rather she projects rate cuts in 2025 if inflation continues to moderate. She remains open to a rate hike should price risks escalate. “I remain willing to raise the target range for the federal funds rate at a future meeting should progress on inflation stall or even reverse,” Bowman said.

The S&P Case-Shiller home price index rose 1.4% to a new record high of 329.78 in Apr. The FHFA home price index rose 0.2% to 424.3 in Apr, also an all-time high. The unwillingness of U.S. homeowners to give up their low mortgage rates is keeping supply tight and underpinning prices.

The Chicago Fed National Activity Index rose to 0.18 in May from a negatively revised -0.26 in Apr.

Consumer Confidence and the Richmond Fed Index are out later this morning. We'll also get FedSpeak from Cook and Bowman will speak again.


GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$1.39 (+0.06%)
5-Day Change: -$0.64 (-0.03%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34
Weighted Alpha: +22.64

Gold fell to fresh intraday lows after Fed Governor Bowman said she did not expect any rate cuts this year and suggested a rate hike was not off the table. Treasuries retreated in reaction, but the dollar index remains higher on the day thus far.



Chinese yuan weakness makes gold an attractive investment in the world's largest gold-consuming nation. It was the top-performing RMB-denominated asset through May with a return of more than 15%. Gold-backed ETFs saw inflows of RMB1.8bn (US$253mn) in May.

Bar and coin demand cooled in May due to record-high prices and high premiums. While the current level is arguably more attractive and premiums have moderated, some may be waiting for an even lower price. Nonetheless, I suspect that persistent yuan weakness and concerns ahead of the U.S. election will lead to improved physical demand in China.

The market is also eagerly anticipating any news on PBoC gold purchases in June. Was May's pause a one-off or is something more significant happening?

Last Friday's low at $2,317.85 marks initial support. Additional barriers are noted at $2,307.45 (18-Jun low), and $2,296.92 (13-Jun low) which protect the more important $2,287.64 low from 07-Jun.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.027 (-0.09%)
5-Day Change: -$0.036 (-0.12%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +33.87

Silver tumbled to new 5-session lows on this morning's hawkish FedSpeak. The inability of the white metal to regain $30 in the wake of last Friday's sell-off leaves the downside vulnerable in the short term.



I wrote yesterday that strength in the U.S. manufacturing sector should provide support to silver. However, growth risks in China may be an offsetting factor.

China's GDP grew at a 5.3% annualized pace in Q1. This better-than-expected performance prompted the IMF to upgrade its 2024 projection to 5.0% from 4.6% previously. Q2 forecasts are generally right around 5.0%.

However, government stimulus efforts don't seem to be working particularly well in the face of an ongoing property crisis and demographic pressures. The IMF warns that China's GDP could drop to 3.3% by 2029 due to an aging population and reduced productivity.

The violation of support marked by yesterday's low at $29.356 leaves $29.022 (18-Jun low) vulnerable to a challenge. The latter protects the more important $28.719 low from 13-Jun.

A rebound above $29.422 would ease intraday pressure on the downside, but $30 must still be regained to set a more positive short-term tone. Today's earlier high and Monday's high at $29.645/$29.714 respectively provide an intervening barrier.


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.