Blog posts tagged with 'platinum'

11/7/2024

Gold and silver retrace some of Wednesday's sharp losses

OUTSIDE MARKET DEVELOPMENTS: Markets are continuing to digest yesterday's election results with control of the House yet to be decided. Today's focus is on the Fed's policy decision.

A 25 bps rate cut remains widely anticipated. The trade will be paying close attention to the guidance in the hope of discerning if there will be any significant change to the policy path.

An additional 25 bps of easing in December is still favored. While odds for a December hold continue to hover around 32%, Fed funds futures are suddenly reflecting a very slight change of a 50 bps cut at the last FOMC meeting of the year.

Yesterday the markets expressed heightened concern that the trade policies of the new Trump administration will stoke inflation and cause the Fed to become less dovish. However, I do not think the Fed will proactively adjust policy guidance based on campaign talking points.

I believe that Trump's tariff threats against China are likely a negotiating tactic to get Xi Jinping to pull back on direct subsidies to Chinese corporations that give them an unfair competitive edge. See China's 'hidden' subsidies fuel export onslaught. 

The current state of the Chinese economy probably makes ending any subsidies problematic. In fact, Beijing is currently contemplating additional measures to boost the flagging economy.

Today's 25 bps BoE rate cut was widely expected. There was a single lone dissenter on the MPC. Governor Bailey said the BoE will continue to take a gradual approach to further easing, 

Sweden's Riksbank trimmed rates by 50 bps and indicated further easing is in the offing. The policy statement said the move was to "provide further support to the economy and help inflation stabilise at the target".

Norway's Norgesbank left rates unchanged at a 16-year high of 4.5%. Governor Ida Wolden Bache indicated the central bank will likely stay on hold for the remainder of the year.

German Chancellor Scholz fired Finance Minister Christian Lindner on Wednesday creating political uncertainty in Europe's largest economy on the same day U.S. election results were coming in. Lindner's Free Democratic Party withdrew from the ruling coalition government forcing Scholz to call for a confidence vote to be held on 15-Jan with new elections likely by the end of March.

U.S. Q3 Productivity (preliminary) rose 2.2%, below expectations of +2.6%, versus a negative revised +2.1% in Q2 (was +2.5%). ULCs fell to a +1.9% pace, above expectations of +1.1%, versus a sharply upward revised +2.4% in Q2 (was +0.4%).

U.S. Initial Jobless Claims rose 221k in the week ended 02-Nov, below expectations of +225k, versus a revised +218k in the previous week (was +216k). Continuing jobless claims increased 39k to 1,892k in the 26-Oct week from 1,853k in the previous week.

U.S. Wholesale Sales rose 0.3% in September, above expectations of +0.1%, versus a positive revised +0.2% in August (was -0.1%). Wholesale inventories fell by 0.2%.

U.S. Consumer Credit is expected to print a $14.0 bln increase later today.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$7.67 (+0.29%)
5-Day Change: -$48.41 (-1.76%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +38.77

Gold is retracing some of yesterday's sharp losses, attempting to regain the $2,700 level. With U.S. election results behind us, the focus today is on the anticipated Fed rate cut and the forward guidance. Yields and the dollar have moderated from yesterday.



Rate cuts by the BoE and Riksbank today indicate that the overarching bias of the world's major central banks remains toward easing. This is a positive for gold.

Markets, including gold, will continue to make adjustments as the new Trump administration trots out its policy priorities in the weeks ahead. As of this morning, the Republican Party is seven seats shy of a majority in the House with 34 races yet to be called.

Even as political uncertainty in the U.S. moderates, uncertainty in Germany has spiked after the Finance Minister was sacked, fracturing the coalition government. The German government is now likely to be hamstrung until after a confidence vote in January which could lead to new elections in March.

Choppy consolidative trading is likely to prevail in the short term, although the underlying trend is still perceived to be bullish. A trade above $2,702.41 would clear the way for additional retracement to the halfway back point of the correction at $2,719.07. Penetration of the latter would bode well for a retest of the record high at $2,789.68.

While it's premature to suggest the corrective low is in place at $2,648.46 (today's Asian low), I like that Fibonacci support at $2,645.79 (78.6% retrace of the leg up from $2,606.62 to $2,789.68) and $2,639.70 (50-day moving average) remains intact. These are the levels to be watching on the downside.

Silver is trading higher in the lower half of yesterday's range. While the midpoint of yesterday's range was slightly exceeded the downside remains vulnerable as traders hash out the medium to longer-term potential in light of yesterday's seismic shift in the U.S. political picture.



With the presidential race designated as 'too close to call' into election day, a Trump victory was always a possibility. However, I think the odds for a Trump win plus Republican majorities in both houses of Congress were pretty long.

Commodities are likely to remain volatile as the market debates the merits and likelihoods of President-elect Trump's trade and fiscal policies.   

A close today back above the 50-day moving average at $31.338 would be mildly encouraging to the bull camp. Gains above $32 would bode well for a retest of the 20-day moving average and chart resistance at $32.805/860.

Penetration of the latter would return confidence to the underlying uptrend and call for renewed tests above $34 with potential back to the 12-year high at $34.853 (22-Oct).

Failure to sustain today's gains would mean the $30.856 low from 15-Oct remains vulnerable to a test. The recent lows at $31.921/903 provide an intervening barrier.

More substantial support is marked by last month's low and the 100-day moving average at $30.264/229.


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.

11/6/2024

Gold and silver break hard on U.S. election outcome

OUTSIDE MARKET DEVELOPMENTS: The U.S. election is over, and former President Trump won a decisive victory. Besides surpassing the 270 electoral vote threshold to secure the Presidency, Trump appears poised to win the popular vote. With no doubt about the outcome, VP Harris is expected to concede today.

With the Nation calm thus far, markets are unwinding the political uncertainty trade and shifting to a risk-on profile. U.S. stocks are surging in anticipation of a more business-friendly regulatory environment. Treasury yields are on the rise.

Concern that inflation could reignite if Trump follows through on plans to impose tariffs on some foreign goods may alter the Fed's easing path. The Fed began its two-day FOMC meeting today and is still expected to announce a 25 bps rate cut tomorrow.

While another 25 bps cut remains favored for December, the prospects for a hold increased to 32.4%, versus 22.0% yesterday, 26.7% a week ago, and 2.1% last month. Bets on additional rate cuts in 2025 were also trimmed.

The dollar index has surged to four-month highs buoyed by rising yields. The 10-year note has reached a five-month high of 4.467%. Some of the dollar gains are certainly attributable to foreign investors rotating into U.S. shares.

Oil fell nearly 2% on Trump's promise to "drill baby drill" would increase supply. Meanwhile, trade war risks could also sap demand. Lower energy costs would at least partially offset inflation risks.

With the Chinese economy already on the ropes, a second Trump term increases the likelihood that China will have to deploy much larger stimulus measures to offset negative market sentiment associated with a potential trade war. The National Peoples Congress is already in session and could make an announcement by the end of the week. 

U.S. Mortage Applications plunged 10.8% in the week ended 01-Nov, versus -0.1% in the prior week. The drop in refinances was even greater at -18.5%. Rising mortgage rates continue to pose a headwind with the 30-year mortgage rate reaching a 14-week high of 6.81%.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$44.23 (-1.61%)
5-Day Change: -$105.39 (-3.78%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +37.77

Gold has come under heavy selling pressure as haven bets associated with political uncertainty were unwound. The prospects for less-dovish Fed policy, rising yields, a higher dollar, and the rotation out of haven assets into risk assets are all weighing on the yellow metal.



Thus far, the correction from last week's record high at $2,789.69 to today's intraday low at $2,655.59 is less than 5%. It may take a week or more for the market to stabilize and buyers to step back in, but the longer-term trend is still unquestionably bullish.

There are a number of fundamental factors that remain bullish for gold:

While the Fed may have to adopt a less-dovish policy stance, the bias is still toward easing through 2025. The ECB, BoE, and BoC are likely to remain on their easing paths.

Geopolitical risks still abound. While there is some level of hope that Trump's foreign policies could ease global tensions, other hot spots may flare.

We remain in the midst of a period of heightened seasonal demand associated with the Indian wedding season. The Lunar New Year holiday in Asia is just around the corner. These lower prices are likely to be appealing.

Global central banks still have plenty of incentive to diversify reserve holdings. Gold is likely to remain a popular alternative to foreign currency, particularly the dollar.

The next support level I'm watching is the 50-day moving average at $2,636.32, which is bolstered by a minor chart point at $2,639.35 (15-Oct ow). Below that, October's low at $2,606.62 will correspond with the rising trendline early next week.

On the upside, minor intraday chart resistance is noted at $2,676.02. A rebound above the 20-day moving average at $2,714.32 would ease pressure on the downside and suggest the corrective low is in.

A breach of the $2,748.72/87 level would clear the way for a challenge of the $2,789.69 record high and return a measure of credence to the previously established $2,810.38 Fibonacci objective.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -0.876 (-2.68%)
5-Day Change: -$2.360 (-6.99%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +38.07

Silver plunged to a three-week low of $30.903 as markets made significant adjustments in anticipation of a second Trump Presidency. The white metal now appears poised for a third consecutive lower weekly close.



The market is worried that restrictive trade policies particularly against China could weigh on demand for consumer electronics, solar panels, cars...and by extension silver. This same concern is what may prompt China to unleash new fiscal and monetary stimulus to support the economy.

Gold's weakness, a higher dollar, and higher yields are also contributing to the sell-off in silver.

With more than 78.6% of the rally from $30.229 to $34.853 already retraced, and the 50-day moving average violated, further attacks on the $30.856 low from 15-Oct seem likely. A breach of this level would leave last month's low and the 100-day moving average at $30.229/$30.253 vulnerable to a test.

Initial resistance is marked by the 50-day moving average and a minor intraday chart point at $31.290/$31.381. A close above the 50-day would be mildly encouraging but I suspect upticks will be viewed as selling opportunities for at least one more day.

It will take a short-term rebound above $33 to suggest the low is in place. At that point, I'd anticipate a period of choppy consolidation as the bulls and bears hash out the longer-term implications of the election outcome.


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.

11/5/2024

Gold and silver mildly corrective to consolidative awaiting election outcome

OUTSIDE MARKET DEVELOPMENTS: It's election day in America and more than 80 million votes have already been cast. The outcome of the Presidential race remains too close to call.

Boeing machinists have agreed to a new employment contract, ending a 7-week strike. The workers will receive a 38% raise over the next four years.

U.S. Secretary of State Anthony Blinken says Hamas has rejected a short-term ceasefire deal proffered by Egypt. Arab mediators contend that Netanyahu's intransigence remains a major roadblock as well.

Iran's supreme leader Ayatollah Ali Khamenei continues to threaten retaliation against both Israel and the U.S. The regime is also warning it may restart its nuclear weapons program which would be very destabilizing to the region.

A 25 bps rate cut is fully priced in for the two-day FOMC meeting that begins tomorrow. Fed funds futures continue to show a chance for a pause in December. The trade will be paying close attention to the guidance, but I think the central bank will stick to the 'data-dependent' mantra.

U.S. Goods & Services Trade Deficit surged to $84.4 bln in September, outside expectations of -$84.1 bln, versus -$70.8 bln in August (was -$70.4 bln). "The September increase in the goods and services deficit reflected an increase in the goods deficit of $14.2 billion to $109.0 billion and an increase in the services surplus of $0.6 billion to $24.6 billion," according to the BEA report.

U.S. S&P Service PMI fell to 55.0 in October, below expectations of 55.3, versus a preliminary read of 55.3. "Particularly welcome news comes from the cooling inflation picture," said Chris Williamson of S&P Global Market Intelligence.

U.S. Services ISM rose to a 27-month high of 56.0 in October, above expectations of 53.5, versus 54.9 in September. Prices moderated to 58.1 from 59.4. The employment gauge rebounded 4.9 points to 53.0.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.64 (+0.21%)
5-Day Change: -$34.68 (-1.25%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +41.93

Gold edged to an eight-session low in Asian trading before rebounding into the range. The short-term tone is consolidative to mildly corrective as the market awaits the U.S. election outcome.



Ultimately, the trend in gold remains decidedly bullish. While election results will remove the risk associated with U.S. political uncertainty, the technicals and a host of fundamental factors will continue to drive the uptrend.

Geopolitical risks, debt, easing by some major central banks, growth risks in Europe and China, official sector gold buying, and seasonal demand are all on the bullish side of the ledger. A resilient U.S. economy and stock market, cooling inflation, and recent three-month highs in the dollar pose headwinds.

The latest COT report shows the net speculative long position in gold futures contracted by 17.5k contracts to 278.7k in the week ended 01-Nov. This was likely associated with profit-taking and position squaring ahead of the election.

I'm hopeful that the U.S. election will go smoothly with a winner in the Presidential race declared by late this evening. Without any significant political unrest, we could see gold extend the correction.

I'm watching chart support at $2,715.51/$2,711.17, which is bolstered by the 20-day moving average at $2,711.08 today. Secondary support is at $2,698.15 (50% retracement of the leg up from $2,606.62 to $2,789.68).

Anything that extends the political uncertainty such as a drawn-out period of recounts, legal challenges, and unrest would put the yellow metal back on the bid. Initial resistance is marked by the intraday high at $2,748.87, which protects the more important $2,757.95/$2,762.22 area.

Penetration of the latter would bode well for a retest of the $2,789.68 record high from last week. Beyond that, the previously established $2,810.38 Fibonacci objective attracts.

Silver slipped to a 12-session low in Asian trading but subsequently rebounded to exceed yesterday's high and set up a potential key reversal. Like gold, I call the short-term tone consolidative to mildly corrective ahead of the U.S. election results.



The CFTC COT report for the week ended 01-Nov showed the net speculative long position in silver fell by 6k to 60.4k contracts versus 66.4k in the previous week. The fact that the spec long position remains above 60k contracts despite the 3.8% price decline is encouraging.

CFTC Silver speculative net positions

The dominant trend remains bullish with the white metal just 6% off the 12-year high set 22-Oct at $34.853. However, ongoing concerns about the Chinese economy and worries that a Trump win may lead to more restrictive trade policies that could negatively impact demand for imported silver-centric products like consumer electronics, solar panels, and cars are headwinds.

Further downside potential to $31.995 (61.8% retracement of the leg-up from $30.229 to $34.853) can't be ruled out. Today's Asian low at $32.309 provides an intervening barrier.

A rebound above Friday's high at $33.066 would further ease pressure on the downside and shift focus to the halfway back point of the correction at  $33.581. Penetration of the latter would bode well for renewed short-term tests above $34.


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.

11/4/2024

Gold and silver consolidate ahead of election day

OUTSIDE MARKET DEVELOPMENTS: New eight-foot security fencing has been installed around the White House, U.S. Capitol, the Vice President's residence, and the Treasury Complex as Washington, DC, prepares for potential post-election unrest. Businesses and commercial buildings in the nation's capital have also begun boarding up.

Let's hope these all prove to be unnecessary precautions.

The Des Moines Register poll showed that Kamala Harris has "leapfrogged" Donald Trump to take the lead in historically Republic-leaning Iowa. While the poll was within the margin of error, it has sparked the unwinding of so-called "Trump trades".

The Chinese yuan and Mexico peso rallied as tariff bets were unwound, putting pressure on the dollar. U.S. Treasuries also rallied providing additional weight to the greenback as the trade reduced bets for more aggressive government spending and a less dovish Fed. Stocks are mixed.

In other FX news, the Indian rupee fell to another record low against the dollar amid ongoing equity outflows. The RBI is expected to continue intervening to defend the 84 zone.

China's National Peoples Congress began a week-long meeting to discuss additional stimulus measures. The body is expected to approve China's largest fiscal spending package yet, but many experts believe it won't be enough.

The challenge faced by policymakers has been to revive confidence among Chinese consumers beset by a prolonged property crisis. That goal remains elusive even as those policymakers have continued to reveal new monetary and fiscal measures.

U.S. Factory Orders fell 0.5% in September, in line with expectations, versus a negative revised -0.8% in August (was -0.2%). Inventories fell 0.2%.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$4.68 (+0.17%)
5-Day Change: -$5.27 (-0.19%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +41.75

Gold remains generally well bid and within striking distance of the $2,789.68 record high set on 30-Oct, despite last week's corrective setback. Uncertainty about tomorrow's U.S. election, persistent geopolitical risks, and expectations that the Fed will continue its easing campaign on Thursday are all seen as supportive.



If the election goes smoothly with a winner in the Presidential race declared in a reasonable time frame, and without resulting in political unrest, gold could correct further. However, I'd expect those losses to attract buying interest as focus returns to the geopolitical situation and the overarching easing campaigns of many key central banks.

Throughout this year's rally, the 20-day moving average has been an attraction during corrective phases. The 20-day MA comes in at $2,705.1o today, bolstering chart support at $2,715.51/$2,711.17. Additional support is noted at $2,698.15 (50% retracement of the leg up from $2,606.62 to $2,789.68).

On the other hand, a drawn-out period of recounts, legal challenges, and unrest would keep the yellow metal underpinned with the potential for fresh record highs. A rebound above resistance at $2,757.95/$2,762.22 would bode well for a retest of $2,789.68 and an eventual extension to the previously established $2,810.38 Fibonacci objective.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +0.353 (+1.09%)
5-Day Change: -$1.278 (-3.80%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +44.13

Silver has fallen to a two-week low having failed to sustain earlier upticks. The white metal is trading lower for a fourth consecutive session.



Price action in silver suggests the market doesn't have much faith in what Chinese policymakers are likely to come up with to stoke the flagging economy. Friday's breach of support at $32.700/$32.542 suggested further downside potential to $31.995 (61.8% retracement of the leg-up from $30.229 to $34.853).

A rebound above Friday's high at $33.066 would ease pressure on the downside somewhat and shift focus to the halfway back point of the correction at  $33.591. Penetration of the latter would bode well for renewed short-term tests above $34.


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.

11/1/2024

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

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

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

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

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

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

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

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

The unemployment rate held steady at 4.1%.

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

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

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

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

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

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

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

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

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

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


GOLD

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

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



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

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

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

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

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

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



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

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

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

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


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

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