Blog posts tagged with 'precious metals'

12/19/2024

Gold remains defensive after the post-Fed plunge, but the range is intact

OUTSIDE MARKET DEVELOPMENTS: Yesterday's FOMC decision was widely anticipated to be a 25 bps  'hawkish cut," but the forward guidance was more hawkish than expected. Members halved their projections for additional easing in 2025 from 100 bps to just 50 bps.

"From here, it's a new phase and we're going to be cautious about further cuts," said Fed Chairman Powell. Fed funds futures are now suggesting the Fed is on hold until June.

The dollar surged, while Treasuries, stocks, and precious metals tumbled. While some markets retraced a portion of yesterday's moves, the greenback remains on the bid.

In other central bank news: The BoJ refrained from another rate hike. The BoE and Norges Bank held steady. Sweden's Riksbank cut by 25 bps. All of these moves were in line with expectations.

Markets will shift into holiday mode after tomorrow's economic releases but traders will continue to ruminate on the Fed's forward guidance and the implications for interest rate differentials through the upcoming holiday weeks. I think they will conclude that this week's events are generally favorable for the dollar.

Philly Fed Index tumbled 10.9 points to a 20-month low of -16.4 in December, well below expectations of 2.5, versus -5.5 in November. New orders and shipments indexes fell into negative territory but "indicators for future activity continue to suggest widespread expectations for growth over the next six months," according to the report.

Q3 GDP (3rd report) was revised to 3.1%, above expectations of 2.9%, versus 2.8% in initial reports and 3.0% in Q2. This bolsters the Fed's assessment that the economy remains resilient.

Initial Jobless Claims fell 22k to 220k in the week ended 14-Dec, below expectations of 231k, versus 242k in the previous week. Continuing claims fell 12k to 1874k in the week ended 7-Dec from 1886k in the previous week.

Leading Indicators rose 0.3% to 99.7 in November, above expectations of -0.1%, versus -0.4% in October. It was the first monthly rise since Feb'22.

Existing Home Sales jumped 4.8% to 4.150M in November, above expectations of 4.092M. versus 3.960M in October. The median sales price dipped $700 to $406,100 versus a revised $406,800 in October. Prices are down $20,800 from June's record high of $426,900.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$30.18 (+1.17%)
5-Day Change: -$79.16 (-2.95%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +24.08

Gold tumbled to a four-week low of $2,585.51 after the Fed's forward guidance for next year came in less dovish than expected. The yellow metal staged a pretty respectable rebound in overseas trading today, but sellers came back in above $2620. While gold is still up 25% YTD hopes for a 30%+ annual gain have been dented.



So far, the well-defined $2,789.68/$2,541.42 range remains intact. My favored scenario called for range trading to prevail into year-end. That's still a possibility but a more bearish tone has emerged, leaving the $2,541.42 low vulnerable to a test.

The violations of the 100-day and 20-week moving averages are troubling for the bull camp. Gold hasn't been below these indicators for more than a year. Dollar strength also poses a significant headwind.

If the $2,541.42 low is penetrated, focus would shift to the $2,482.74 Fibonacci level (38.2% retracement of the rally from $1,986.16 to the $2,789.68 record high). This support is bolstered by the rising 200-day moving average, which is at $2,470.34 today.

Despite recent price action, the long-term trend remains bullish. JPMorgan Chase recently projected that gold could reach $3,000 in 2025. Central bank gold demand has been a major driving force behind the rally and  Goldman Sach doesn't see that slowing down,

A rebound back above the midpoint of the range at $2,665.55 would ease pressure on the downside. That would put gold back above the 20-day moving and close to the 50-day MA ($2,670,07 today).

Silver plunged to three-month lows on Wednesday, weighed by a less dovish Fed and the resulting strength in yields and the dollar. With today's downside extension, the white metal has traded lower in six of the past seven sessions.



With the range violated and silver trading below the 200-day moving average for the first time since March. As noted in yesterday's commentary, the next level of significant support is the $28.306 Fibonacci level (78.6% retrace of the rally from $26.524 to $34.853). Below that, the September low at $27.732 would be the attraction.

Short-term upticks are likely to be viewed as selling opportunities. It would take a rebound above $30 to shift back to a more neutral tone, and a rise above $32 to set a more favorable tone within the old range. That seems unlikely heading into the holiday weeks.


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.

12/18/2024

Gold and silver remain range-bound with all eyes on the Fed

OUTSIDE MARKET DEVELOPMENTS: All eyes are on the Fed today in anticipation of a third consecutive easing to round out the year. A 25 bps cut is widely expected, resulting in 100 bps of cumulative easing since September.

The market is particularly interested in the Fed's forward guidance for 2025, given the generally resilient economy and the fact that inflation remains above the 2% target. There had been some tapering of easing expectations for next year recently, although a bid in Treasuries heading into the decision suggests some unwinding is happening. A pause is still favored for January.

I look for the forward guidance to emphasize data dependency, striking a cautious tone about sticky inflation. Call it neutral with a slight hawkish tilt. The dots are likely to edge toward 75 bps in additional cuts in the year ahead. 

Any over-emphasis on inflation or dots below 75 bps for next year would be positive for the dollar. On the other hand,  a more dovish tilt (unlikely) would weigh on the dollar.

The BoE will announce policy tomorrow and is likely to hold the bank rate at 4.75%, amid heightened inflation worries. Governor Bailey signaled last month that the UK budget is likely to stoke inflation.

The BoJ will announce policy tomorrow (our tonight). While the BoJ is the odd man out with a tightening bias, global and regional uncertainty is likely to result in a hold. The BoJ took rates above the zero-bound for the first time in 14 years in March. It was the first rate hike in 17 years. A follow-on hike in July brought the policy rate to 0.25%, a level not seen since February 1999.

MBA Mortgage Applications fell 0.7% in the week ended 13-Dec, correcting gains seen in the previous two weeks. The 30-year mortgage rate rebounded to 6.75%, versus 6.67% in the previous week.

Housing Starts fell 1.8% to 1.289M in November, below expectations 1.344M, versus a revised 1.312M in October (was 1.311M). That's the weakest pace since July. Multifamily starts plunged 23.2%. High mortgage rates remain a headwind.

Current Account Balance widened to a record deficit of -$310.9 bln in Q3, outside expectations of -$284.0 bln, versus a revised -$275.0 bln in Q2 (was -$266.8 bln). 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.35 (+0.01%)
5-Day Change: -$74.81 (-2.75%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +26.84

Gold slipped to a new low for the week, but remains broadly consolidative awaiting this afternoon's Fed decision. The market is not expecting any big surprises, perhaps just a slightly more hawkish tilt in the forward guidance.

 

While I expect the well-defined $2,789.68/$2,541.42 range to hold, we are in the lower half of that range and recent probes into the upper half have proven to be unsustainable. The lows from the past three weeks at $2,628.79/$2,617.65/$2,609.76 provide a solid intervening barrier ahead of the $2,541.42 cycle low.

On the upside, Monday's high at $2,63.89 needs to be negated to clear the way for renewed tests above $2,700. The $2,719.75/$2.723.70 highs are the key to unlocking a challenge of the $2,789.68 record high.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.169 (-0.55%)
5-Day Change: -$1.578 (-4.95%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +21.79

Silver remains defensive in advance of the Fed decision. The low from early December at $30.08 is intact thus far, keeping the more important $29.736/703 lows at bay, but the downside is seen as vulnerable.



A dip below $30.080/00 would clear the way for a challenge of those lows, with the potential to extend to the 200-day moving average at $29.601. Below the latter, the next level of significant support is the $28.306 Fibonacci level.

Fresh highs for the week above $30.724 would set a more favorable short-term tone, suggesting initial potential to Friday's high at $31.088. Penetration of the latter would bode well for tests back above $32.00.


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 lower in early U.S. trading.

U.S. calendar features MBA Mortgage Applications, Housing Starts, Current Account, EIA Data, FOMC statement, Powell presser.

12/17/2024

Gold and silver remain under pressure within their ranges

OUTSIDE MARKET DEVELOPMENTS: Ukraine's security service is taking credit for placing a remotely detonated bomb in Moscow that killed Lt. General Igor Kirillov, the head of Russia’s Nuclear, Biological, and Chemical Defence Forces. Ukraine had charged Kirillov with using banned chemical weapons, a charge that the U.S. State Department has corroborated.

A targeted killing of a key Russian official in Moscow appears to be a new level of escalation in the nearly three-year-old conflict. Russia has vowed retribution.

German Chancellor Olaf Scholz lost a vote of confidence on Monday, paving the way for snap elections in February. The collapse of the German government is just one in a string of spectacular, political crises, ruling party ousters and outright government collapses this year.

Along with Germany, the UK, France, Japan, and South Korea make the list. Arguably, the Trump win and GOP political gains should also be part of the discussion.

Now there are mounting concerns that the Canadian government of Justin Trudeau is on shaky ground following the resignations of key cabinet members. Trudeau's favorability rating is below 30% and he is unlikely to survive next year's election, resulting in rising pressure to resign.

Today's U.S. economic data were a mixed bag. Better-than-expected retail sales bolster the notion of U.S. economic resilience, although industrial production missed expectations.

The two-day FOMC meeting began today and the Fed is widely anticipated to announce a 25 bps rate cut tomorrow. Market focus has shifted to expectations for a "hawkish cut" with forward guidance indicating a slower pace of easing in 2025.

This is helping to underpin the dollar near three-week highs. Further tests in the dollar index above 107 would bode well for an eventual retest of the two-year high from 22-Nov at 108.07.

Retail Sales rose 0.7% in November, above expectations of +0.5%, versus a positive revised +0.5% in October (was +0.4%). Ex-auto +0.2%, below expectations of +0.4%, versus an upward revised +0.2% in October.

Industrial Production fell 0.1% in November, below expectations of +0.3%, versus a revised -0.4% in October (was -0.3%). Capacity Utilization fell to 76.8%, below expectations of 77.3%, versus a revised 77.0% in October.

Business Inventories rose 0.1% in October, below expectations of +0.2, versus a revised unch in September.

NAHB Housing Market Index was steady at 46 in December. The future sales index rose to 66, its highest level since Apr'22.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$10.75 (-0.41%)
5-Day Change: -$51.54 (-1.91%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +26.77

Gold slipped to a new low for the week, leaving support marked by the lows from the past three weeks at $2,628.79/$2,617.65/$2,609.76 vulnerable to tests. However, the yellow metal remains broadly consolidative near the midpoint of the $2,789.68/$2,541.42 range.



I believe the consolidative tone will prevail as the market shifts to holiday mode at the end of this week. Nonetheless, gold is likely to notch its best annual gain since 2010.

The rise in political uncertainty has tempered risk appetite, but gold isn't garnering much benefit. Bitcoin may be stealing the risk aversion thunder amid hopes that the Trump administration will deem the cryptocurrency a reserve asset. Bitcoin set another record high today at $108,226.65.

Gold may see revived haven interest as political and geopolitical risks extend into the new year. Central bank interest should continue to provide a tailwind as well.

A rebound above this week's highs at $2,658.40/$2,663.89 would clear the way for renewed tests above $2700. Penetration of the more formidable $2,719.75/$2.723.70 level would return focus to the $2736.55 Fibonacci level and the all-time high at $2,789.68.

A breach of support at $2,609.76 would favor tests below $2,600 with potential back to the $2,541.42 range low. 

Silver is under pressure for a fourth straight session, reaching a two-week low of $30.198. The white metal is having additional weight applied from trade tensions and persistent uncertainty stemming from a lack of specifics from Beijing regarding planned stimulus.



The breach of Friday's low at $30.347 favors tests below $30, although the $29.736/703 lows should prove difficult to penetrate as the market shifts to holiday trading. The rising 200-day moving average is at $29.575 today but will correspond with the cycle low by the Christmas week.

A rebound above $32 is needed to set a more favorable tone within the range. The recent highs at $32.255/306 reinforced the range midpoint at $32.278.


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.

12/16/2024

Gold and silver remain consolidative, awaiting Fed decision

OUTSIDE MARKET DEVELOPMENTS: This week's focus is squarely on the two-day FOMC meeting that begins tomorrow. Fed funds futures are fully pricing a 25 bps cut for Wednesday's announcement.

It's the forward guidance and the central tendencies for 2025 that the market is most interested in. Easing expectations for the year ahead have ebbed in recent weeks amid signs of a resilient economy and some warmer inflation readings.

I suspect the policy statement and Powell's comments will lean toward a more cautious rate path in 2025 that will likely begin with a January hold. At this point, the market continues to reflect a bias for slightly less than 100 bps in cuts next year.

A less-dovish Fed and more-dovish tilts from some other major central banks are underpinning the dollar. The dollar index reached a two-week of 107.19 last week and remains well-bid to start the new week.

Before the market shifts into holiday mode, we'll also get U.S. retail sales for November (Tuesday) and the Fed's favored measure of inflation (Friday). Median expectations for retail sales are +0.5%. The PCE chain price index is expected to rise 0.2% m/m.

ECB President Christine Lagarde signaled further interest rate cuts are in the offing. While inflation remains elevated, she's seeing some encouraging signs. "If the incoming data continue to confirm our baseline, the direction of travel is clear, and we expect to lower interest rates further," said Lagarde.

Moody's cut France's credit rating to Aa3 from Aa2 based on a view that "the country's public finances will be substantially weakened over the coming years." Fitch and S&P had already made similar downgrades.

Members of South Korea's General Assembly voted on Saturday to impeach President Yoon Suk Yeol after he angered policymakers by declaring martial law earlier in the month. Yoon's presidential powers have been suspended while the Constitutional Court decides if he will be removed or reinstated.

U.S. Empire State Index plunged 31 points to 0.2 in December, below expectations of 9.8, versus 31.2 in November. “On the heels of a strong November, manufacturing activity held steady in New York State in December. The pace of price increases moderated, and employment declined modestly. Firms were fairly optimistic about future conditions,” said Richard Deitz, Economic Research Advisor at the New York Fed.

U.S. Flash Manufacturing PMI fell 1.4 points to 48.3 in December, versus 49.7 in November. "...output is falling sharply and at an increased rate, in part due to weak export demand," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

U.S. Flash Services PMI rose 2.54 points to 58.5, versus 56.1 in November. “The service sector expansion is helping drive overall growth in the economy to its fastest for nearly three years..." said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$14.65 (+0.55%)
5-Day Change: +$0.33 (+0.01%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +27.99

Gold remains range-bound near the 20-day moving average. The yellow metal managed to close 0.6% higher last week, despite the failure to sustain gains above $2,700. Consolidative trading is likely to prevail into year-end. 



Ongoing geopolitical tensions, expectations for a 25 bps Fed rate cut on Wednesday, and ongoing dovishness from other major central banks are providing support for gold. On the other hand, an anticipated tilt by the Fed to a less-dovish bias and the resulting firmness in the dollar pose a headwind.

A sustained move above $2,700 is needed to set a more favorable tone within the broader range. The $2,719.75/$2.723.70 area now provides a formidable barrier ahead of the $2,789.68 record high.

A short-term trendline off the $2,541.42 cycle low has contained the downside thus far today, but the retreat seen late last week leaves the lows from the past three weeks at $2,628.79/$2,617.65/$2,609.76 vulnerable to a challenge.

Gold ETFs saw net outflows of 1.7 tonnes in the week ended 13-Dec. It was the second consecutive net weekly outflow. Selling by North American investors eclipsed small inflows from Europe and Asia.

CFTC Gold speculative net positions

The COT report for last week saw net speculative long positions increase by 15.9k to 275.6k contracts, versus 259.7k contracts in the previous week. It was the third straight weekly increase in spec longs.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.123 (+0.40%)
5-Day Change: -$1.127 (-3.54%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +23.91

Silver is consolidating at the low end of Friday's range after failing once again to sustain gains above $32 last week. While the white metal was encouraged by the most recent Chinese stimulus pledges, the lack of specifics has disappointed once again.



With silver confined to the lower half of the broad $34.853/$29.703 range, I see a modest downside bias. A breach of Friday's low at $30.347 would suggest potential for tests below $30, although the cycle low at $29.703 is likely to remain protected as the market shifts to holiday trading at the end of this week.

A sustained push above $32 is needed to set a more favorable tone within the range. The recent highs at $32.255/306 reinforced the range midpoint at $32.278.

CFTC Silver speculative net positions

Net speculative long positions in silver futures declined 2.1k to 41.2k contracts, versus 43.3k in the previous week. It was the sixth weekly decline out of the last seven.


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.

12/12/2024

Gold and silver retreat despite SNB and ECB rate cuts

OUTSIDE MARKET DEVELOPMENTS: While the geopolitical focus shifted to Syria over the past week, Israel continues to prosecute its war against Hamas. Tensions remain high in other regions as well.

Ukrainian missiles and drones struck an oil depot and an "industrial facility" within Russia on Wednesday. Ukraine also fired six U.S.-made ATACMS missiles at a Russian military airfield.

Russia claims that all the ATCMS were shot down or defeated with electronic warfare measures. "This attack by Western long-range weapons will not go unanswered and appropriate measures will be taken," said the Russian Defense Ministry.

There are worries that the promised retaliation will come in the form of another hypersonic Oreshnik missile. Putin also warned previously that the use of NATO-provided weapons like the ATACMS could prompt a Russian response against the providers of those systems.

Earlier this week, China launched one of its largest-ever maritime training exercises in the East and South China Seas. Nikkei Asia reported that China "wants to 'pressure test' Taiwan and see how far it can go." However, Chinese forces are also operating in waters around Okinawa and the Philippines.

The Swiss National Bank (SNB) surprised with a jumbo 50 bps rate cut, halving its policy rate from 1.0% to 0.5%. It was the biggest cut in nearly a decade, bringing the policy rate to its lowest since November 2022.

The SNB noted in the policy assessment that "underlying inflationary pressure has decreased." However, growth risks have become more pronounced.

“Uncertainty about the economic outlook has increased in recent months. In particular, the future course of economic policy in the US is still uncertain, and political uncertainty has also risen in Europe. In addition, geopolitical tensions could result in weaker development of global economic activity. Equally, it cannot be ruled out that inflation could remain higher than expected in some countries.” – SNB Monetary policy assessment

The ECB followed with a 25 bps cut, as was widely expected. The central bank noted that inflation continued to edge down, but remains elevated. They also acknowledged the economy is weakening.

Today's easings come on the heels of yesterday's jumbo rate cut by the BoC and in advance of next week's anticipated 25 bps cut by the Fed. With the policy emphasis shifting from price risks to growth risks, further easing is likely in 2025.

Outgoing Treasury Secretary Yellen expressed regret about not making "more progress" on the deficit during her tenure.

“I am concerned about fiscal sustainability, and I am sorry that we haven’t made more progress. I believe that the deficit needs to be brought down, especially now that we’re in an environment of higher interest rates.” – Treasury Secretary Janet Yellen

Alluding to having made any progress at all has to be a joke. During Yellen's tenure at Treasury, the national debt has increased by $8.4 trillion to exceed $36 trillion. Not to mention the $6.8 trillion increase that occurred when she served as vice-chair and chair of the Fed.

In just the last two months alone, the federal budget deficit reached $622 bln, a $242 bln increase over the same period last year. Government outlays are up 18%, while revenue has dropped 7%.

U.S. PPI rose 0.4% in November, above expectations of +0.3%, versus an upward revised +0.3% in October (was +0.2%); 3.0% y/y, up from a revised 2.6% pace in October (was 2.4%). Core was in line with expectations at +0.2%, versus +0.3% in October. The annualized rate of producer inflation was steady at 3.4%, but October was revised up to 3.4% from 3.1%.

U.S. Initial Jobless Claims surged 17k to 242k in the week ended 7-Dec, above expectations of 220k, versus a revised 225k in the previous week. Continuing jobless claims rose to 1,886k in the 30-Nov week, up from 1,871k in the previous week.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$6.34 (-0.23%)
5-Day Change: +$49.63 (+1.89%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +31.33

Gold eked out a new five-week high in Asian trading at $2,723.70 but was unable to find the stops that I thought were likely above resistance at $2,714.94/$2,719.75. The yellow metal is presently trading more than 1% lower, reinforcing expectations for consolidative trading into year-end.



Nonetheless, the underlying trend remains bullish with help from the dovish stances of key central banks which are likely to extend into 2025. Heightened geopolitical tensions are seen as broadly supportive as well.

The BoC, SNB, ECB, and PBoC have all indicated rising concerns about growth, suggesting they may be more aggressive in cutting rates moving forward. Meanwhile, the resilient U.S. economy may prompt the Fed to be less aggressive in early-2025. The resulting shift in interest rate differential expectations is buoying the dollar, which is limiting the upside in gold.

The World Gold Council released its Gold Outlook 2025 today. "Gold is poised for its best annual performance in more than a decade – up 28% through November," trumpets the WGC. It has indeed been a great year with record highs established through late October.

The WGC remains bullish on gold for 2025, but their outlook is nuanced: 

“The market consensus of key macro variables such as GDP, yields and inflation – if taken at face value – suggests positive but much more modest growth for gold in 2025. Upside could come from stronger than expected central bank demand, or from a rapid deterioration of financial conditions leading to flight-to-quality flows. Conversely, a reversal in monetary policy, leading to higher interest rates, would likely bring challenges. In addition, China’s contribution to the gold market will be key: consumers have been on the sidelines while investors have provided support. But these dynamics hang on the direct (and indirect) effects of trade, stimulus and perceptions of risk.” – World Gold Council

If inflation reverses direction, central banks might have to revert to a more restrictive monetary policy, which would be a headwind for gold. Potential US tariffs are seen by many as a risk that could drive up inflation.

We'll have to wait until after 20-Jan to see how U.S. trade policy unfolds. Some central banks have specifically blamed Trump's tariff threats for stoking uncertainty.

I'm sticking to my choppy/consolidative call for the last several weeks of this year. Given this year's stellar price performance, investors and traders will likely look to lock in profits on upticks within the range. At the same time, gold is still in an uptrend so setbacks within the range continue to offer buying opportunities.

Today's Asian high at $2,723.70 now marks an intervening barrier ahead of the $2,736.55 Fibonacci level (78.6% retracement of the decline from $2,789.68 to $2,541.52). Above the latter, chart resistance at $2,748.72/87 is the last significant barrier ahead of the $2,789.68 all-time high.

Yesterday's low at $2,678.27 has contained the downside thus far, keeping the 50-day moving average ($2,670.62 today) at bay. The latter protects the 20-day MA at $2,648.96 and this week's low at $2,628.79.  
 

Silver reached a five-week high of $32.306 in overseas trade, but for the fourth straight session gains above $32.00 could not be sustained. Today's weakness in gold, this week's upward bias in the dollar, and ongoing concerns about economic growth in much of the world weigh on the white metal.



Silver plunged more than 4% intraday to challenge important support at $30.958/900, where the 20-day moving average corresponds closely with the low for the week. A breach of this level would shift focus to the 100-day moving average at $30.523.

Last week's low at $30.080 provides an additional tier of support ahead of the double bottom at $29.736/703. I continue to favor range trading into year-end, although as mentioned, the range may have narrowed to $32.306/$29.703.

A rebound above the midpoint of today's range at $31.628 is needed to ease short-term pressure on the downside. The $32.278/306 level has been fortified as a key resistance.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
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