Blog posts tagged with 'precious metals'

6/18/2024

Gold caught a bid following weak retail sales data as U.S. yields and the dollar fell

OUTSIDE MARKET DEVELOPMENTS: FedSpeak on Monday generally affirmed the likelihood of a single rate cut this year. Philly Fed President Harker warned that no cuts or two cuts were also possibilities, depending on incoming data.

There's more FedSpeak on the calendar for today from Cook, Barkin, Collins, Logan, Kugler, Musalem, and Goolsbee.

Fed funds futures show that the market continues to lean toward two cuts, the first in September and then again in November. This scenario was reinforced today by weak U.S. retail sales data.

U.S. retail sales rose 0.1% in May, below expectations of +0.3%, versus a negatively revised -0.2% in Apr. Ex-auto fell 0.1% on expectations of +0.2%, versus a negatively revised -0.1% in Apr.

U.S. yields and the dollar fell in reaction, providing some intraday support for the precious metals.

U.S. industrial production for May comes out later this morning. Median expectations are +0.4%. Capacity utilization increased to 78.7% in May, just above expectations of 78.6%, versus a negatively revised 78.2% in Apr.

U.S. business inventories for Apr are expected to come in at +0.3%.

The RBA held steady on policy in line with expectations. Governor Bullock expressed some uncertainty in the presser amid simultaneous growth and price risks. "Earlier on when we were raising rates it was quite obvious what we had to do. It's not so obvious now," she said.
 
The PBoC held steady on policy earlier in the week. This was also widely expected as the Chinese central bank is constrained by a weak yuan.

GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$10.63 (-0.46%)
5-Day Change: -3.35 (-0.14%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34

Gold started the U.S. session on the defensive having set a new low for the week overseas, but price action remains confined to Friday's range. The yellow metal caught a bid following the weak retail sales data as U.S. yields and the dollar fell.



Softness in the consumer sector can ease price pressures but is a harbinger of mounting growth risks. As the Fed is data-dependent, it will be interesting to hear the tenor of today's FedSpeak. Fed funds futures now put the odds of a 25 bps rate cut in Sep at 60%. That's up from 56.7% yesterday and 46.8% a week ago.

Nearby supports and resistances remain unchanged from yesterday.

I'm watching the low from 13-Jun at $2.296.92 on the downside to keep the more important $2,289.43/$2,287.64 lows at bay.

On the upside, the overseas high at $2,325.23 protects Friday's high at $2,334.92 and last week's high at $2,339.48.

The World Gold Council's latest Central Bank Gold Survey revealed that 29% of survey respondents said they "intend to increase their gold reserves in the next twelve months." That's the highest level the WGC has observed since the survey began in 2018. The survey also shows that 81% of respondents believe global central bank gold holdings will increase over the next 12 months.



This certainly takes some of the sting out of the news from 07-Jun that China's PBoC had bought no gold in May. It is likely that they only paused their buying. The survey results reinforce my expectation that global central banks will continue to expand their gold reserves amid "an increasingly complex geopolitical and financial environment."

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.332 (-1.13%)
5-Day Change: -0.082 (-0.28%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379

Silver has formed an outside day, exceeding both yesterday's high and low. The $29 zone has attracted buying interest in recent weeks.



Today's retail sales miss prompted an intraday rebound as the dollar retreated. However, weaker demand for consumer electronics and cars could be seen as a negative for silver.

At this point, last week's low of $28.719 remains protected by Friday's low of $28.887. Fresh highs today would be encouraging, shifting focus to last week's high at $30.169.

BofA remains bullish on silver, targeting $35 within the next 2 years. They see the global economy "turning the corner," which will not only increase industrial demand for the white metal but pull investors into the market.


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.

6/17/2024

The precious metals start the week easier after notching higher closes last week

OUTSIDE MARKET DEVELOPMENTS: Consolidative trading prevails for the precious metals as the market awaits a host of FedSpeak this week. Minneapolis Fed President Kashkari said over the weekend that a single rate cut this year was a “reasonable prediction.”

Additional FedSpeak is due from Williams, Harker, and Cook today. The calendar is chock-full of Fed speakers this week. I suspect the message will be largely consistent: One rate cut this year, probably in November, but it's all data-dependent.

Policy decisions are on tap this week for the BoE, SNB, RBA, PBoC, and Bank Indonesia. While the global bias is toward easing, timing remains dependent on perceived progress toward taming inflation and maintaining jobs growth.

U.S. calendar highlights include May retail sales (+0.3% expected) and IP (+0.4% expected) on Tuesday. Flash PMIs come out on Friday. Initial jobless claims will also be closely watched on Thursday, given the 10-month high of 242k seen in the last report. 

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -12.56 (-0.54%)
5-Day Change: +8.41 (+0.36%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34

Gold ended higher last week, breaking a string of three consecutive lower weekly closes. Price action was choppy, but confined to the previous week's range, leaving the $2,287.64 low from 07-Jun intact.



The yellow metal begins this week on its back foot and still appears vulnerable to further tests of the downside with the dollar holding firm. Gold may be forming a base here, or staging for another leg down. The low from 13-Jun at $2.296.92 protects more important support marked by the  $2,289.43/$2,287.64 lows.

First resistance is marked by Friday's high at $2,334.92, which stands in front of last week's high at $2,339.48. Penetation of the latter would highlight $2348.98 initially, but such a move would make the 07-Jun high at $2,386.90 look attractive.

RBI data revealed that India's forex reserves reached a record $655.8 bln in the week ended 07-Jun. Gold reserves rose by $481 million to $57 bln.

The sharp sell-off on 07-Jun was triggered by news that China's central bank hadn't bought any gold in May. Central bank gold buying is expected to remain a major source of demand, even if the PBoC has paused its buying.

The latest COT report for the week ended 14-Jun shows that net spec positions in gold dipped to 233.9k, versus 237.3k in the previous week. 


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.322 (-1.09%)
5-Day Change: -0.473 (-1.59%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379

Silver closed higher last week, but not before setting a 4-week low at $28.719. The lower low and higher close result in a simple reversal on the weekly chart, but the white metal is defensive early in the new week. Price action remains confined to Friday's range thus far.



Recent losses are still seen as corrective within the longer-term uptrend. While dips below $29 have generated some buying interest, momentum on the upside has failed to impress, suggesting that the low is not in yet.

Geopolitical tensions surrounding China's EV exports may be damping demand amid worries of a trade war. Additionally, the recent lurch right in the EU parliament may temper aggressive low-carbon benchmarks in Europe, which currently include banning ICE vehicle sales by 2035.

A less aggressive push toward EV and solar adoption could somewhat lessen the demand for silver, but I doubt it will materially alleviate the current supply deficit. This could however be a positive for platinum and palladium, which are used in the catalytic converters of ICE vehicles to reduce emissions.

U.S. Mint data show that demand for silver coins remained robust in May. A total of 1.75Moz of silver coins were sold in May, a rise of 9.7% y/y. Year-to-date sales now stand at 12.6Moz. +52% versus this time last year.

The latest COT report for the week ended 14-Jun shows that net spec positions in silver dipped to 51.7k, versus 56.4k in the previous week. 


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.

6/14/2024

Gold is poised for its first higher weekly close in four

OUTSIDE MARKET DEVELOPMENTS: French stocks are leading European markets lower amid mounting political uncertainty. The CAC index is down more than 2% today and is now trading lower on the year.

Concerns are rising that French President Macron's gamble to call snap elections will propel the National Rally (RN) party to a majority in France's National Assembly. The RN saw strong gains in the recent EU Parliament election. If the RN takes control of the French government, some worry that they will launch unsustainable fiscal spending.

Risk aversion in Europe is on the rise, which is helping both the dollar and gold. 

The BoJ held steady on rates, as was widely expected. They also indicated that they would reduce bond buying over the next 1 to 2 years. Details of that plan are expected to be revealed in July.

Favorable U.S. inflation data seems to be offsetting the reduction of Fed rate cut expectations to some degree. Yesterday's PPI report saw the largest decline since October. Both import and export price indexes for May declined more than expected this morning, -0.4% and -0.6% respectively.

While the Fed now projects just a single rate cut this year, down from a projection of three from the March FOMC meeting, policy remains data-dependent. Fed funds futures continue to show November as the most likely meeting for that cut.

However, further signs that inflation is moving back toward the Fed's 2% target, and/or indications of weakness in the labor market will see an increase in bets for a rate cut in September. The probability of a Sep rate cut currently stands at 61.1%.

The World Bank raised its 2024 global growth outlook to 2.6%, up from a 2.4% projection in January. This upgrade comes largely due to the resilience of the U.S. economy. “U.S. growth is exceptional,’’ said Ayhan Kose, the World Bank’s deputy chief economist.

"Exceptional" seems a bit dramatic given the tumble in Q1 GDP to 1.3%, versus 3.4% in Q4-23. However, growth is expected to accelerate to 2.5% in Q2.

GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +25.98 (+1.13%)
5-Day Change: +$38.10 (+1.66%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34

Gold continues to trade in a choppy manner in the lower half of last Friday's big $99 range. A close above $2,293.71 (07-Jun close) seems likely at this point, which would confirm the first higher weekly close in 4 weeks.



There were solid inflows of 12.1 tonnes into gold ETFs last week. North America and Europe led the charge with +4.4 tonnes each. The appetite of European investors for gold remains strong, spurred by political and economic uncertainty that has led to risk aversion. The sharply lower price at the end of last week likely contributed.



The underlying fundamentals in the gold market remain broadly supportive, and the longer-term trend is still decidedly bullish with the yellow metal less than 5% off the record high of $2,449.34 that was set less than a month ago.

A number of analysts have reiterated their bullish outlooks and suggested buying the dip. However, it is not a foregone conclusion that the corrective low is in place.

A higher weekly close today would be encouraging. A breach of Wednesday's high at $2,339.48 would be better yet. Secondary resistance is marked by the 61.8% retracement level of last Friday's plunge at $2348.98.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.291 (+1.00%)
5-Day Change: +$0.046 (+0.16%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379

Silver is trading higher on the day, but generally consolidative at the low end of yesterday's range. While gold has been able to hold last Friday's low, the white metal extended losses on Thursday to set a fresh 4-week low at $28.719. 



Silver needs to close above $29.172 to record a higher weekly close. However, a convincing move back above $30 and a breach of Wednesday's high at $30.169 is needed to ease short-term pressure on the downside.

However, at this point, a challenge of support at $28.467 (61.8% retracement of the leg-up from $26.049 to $32.379) can not be ruled out. The overseas low at $28.887 offers an intervening barrier ahead of Thursday's low at $28.719. 

Prospects for stronger economic growth in H2 should help underpin silver, as it derives the majority of demand from industrial applications. A resumption of the uptrend in gold should also help, as silver offers a less expensive alternative to the yellow metal as a means of portfolio diversification.


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.

6/12/2024

Gold and silver firm in early U.S. trading on unch CPI print

OUTSIDE MARKET DEVELOPMENTS: The precious metals caught a bid in early U.S. trading after May CPI came in unchanged, just below expectations of +0.1%. However, price action remains broadly consolidative in the wake of last Friday's sharp sell-off.

Annualized CPI edged down to 3.3%, from 3.4% in April. Core CPI was +0.2% in May on expectations of +0.3%; +3.4% y/y, versus 3.6% in April.

These data will likely reinforce the notion that the Fed is making progress on inflation and will have room to cut rates later this year, even amid persistent strength in the labor market. The prospects for a rate cut in September are back on the rise and currently stand at 59.9% based on Fed funds futures.

The 2-day FOMC meeting ends today and policy will be announced at 1:00PM CDT this afternoon. Steady policy is widely expected. The statement and Powell's presser will be closely monitored for clues as to the likely policy path in H2.

PPI comes out tomorrow. Median expectations are +0.1%. Core PPI is expected to come in at +0.3%.

GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$3.09 (-0.13%)
5-Day Change: -41.67 (-1.77%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34

Gold was under modest pressure at the beginning of the U.S. session, but jumped in reaction to the below-expectations CPI print. The yellow metal is up for a third consecutive day, and more than half of Friday's plunge has now been retraced.



Earlier this week, I had deemed that 50% retracement level at $2,337.27 as important short-term resistance. Focus now shifts to the 61.8% retracement level at $2348.98.

A measure of confidence has been returned to the underlying uptrend, but the market is unlikely to prosecute the breach of $2,337.27 until after Fed policy is announced. Softer-than-expected consumer inflation is already pulling rate-cut expectations back toward the present, but the Fed could temper those expectations with a more hawkish tenor later today.

There is also PPI to worry about tomorrow.

Reuters reports that demand for gold remains strong in Asia, despite near-record high prices. Asian buyers are primarily seeking to hedge geopolitical and economic uncertainty, which has led to lower confidence in other investments such as stocks and real estate.

"The trend in the market has been that if the consumer wants to buy gold, they will. The price doesn't matter." – Albert Cheng, CEO of the Singapore Bullion Market Association

India remains an exception, due to price sensitivity. Indian gold demand has fallen to a 3-year low, although the recent setback in the price of gold has seen some buyers return.

Wells Fargo and UBS have reiterated their bullish outlook on gold. Buy the dips is the strategy according to UBS.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.111 (+0.38%)
5-Day Change: -0.591 (-1.97%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379

Silver rallied to new highs for the week in reaction to the CPI print. Trades back above $30 are encouraging, but unlike gold, the midpoint of Friday's range in silver at $30.331 remains protected at this point.



The 61.8% retracement level of the decline from Friday's high to Tuesday's low at $29.098 comes in at $30.592. A minor chart point is noted at $30.825.

I suspect the intraday range has been set at this point. Barring a dovish surprise from the Fed later today, further tests of the downside can not be ruled out.

The underlying trend remains decidedly bullish, with the fundamentals broadly supportive. Therefore recent losses are considered corrective in nature. What is in doubt is whether the corrective low is in place at $29.098 or not.

Please subscribe to receive this report via email by clicking here.

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.

6/11/2024

Gold continues to consolidate Friday's sharp losses

OUTSIDE MARKET DEVELOPMENTS: The precious metals market continues to assess the implications of Friday's news that the PBoC did not buy any gold in May. While China had added to official reserves for 18 consecutive months through April, buying in April was only 2 tonnes. That was well below their average purchase of 18 tonnes going back to Nov 2022.



Based on the chart above, it's obviously not uncommon for China to hold steady on gold reserves for extended periods. The market will eagerly anticipate June data to see if China's reserves remain at 2264 tonnes.

A number of central banks have been participating in the gold-buying spree so far this year. Turkey has actually been leading the charge. China was number 2 in terms of YTD volume through April. India, Kazakhstan, and Singapore round out the top 5.

With or without PBoC participation, central bank buying is likely to remain an important theme with regard to the underlying bull trend in gold.

Conservatives made gains in the recent EU Parliamentary elections, based in large part on voters' growing concerns about mass immigration. French President Macron reacted by dissolving the General Assembly and calling for a snap election. This may be an attempt by Macron to re-consolidate his power, but there is a risk that it will backfire. 

There is growing speculation that gains by the right in Europe could be a harbinger ahead of U.S. elections in November. Political uncertainty may provide some support for gold in the months ahead.

Look for choppy consolidative trading to prevail – with a bearish bias – ahead of Wednesday's FOMC decision and CPI data. PPI data comes out on Thursday.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -2.94 (-0.13%)
5-Day Change: -18.58 (-0.80%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34

Gold continues to consolidate the sharp losses seen on Friday, with a bit of a bid emerging in early U.S. trading that has taken the yellow metal into positive territory for the session.



Initial resistance at $2,315.47/$2,318.36 has been slightly exceeded, leaving $2326.73 vulnerable to a test. The more important level to watch is the midpoint of Friday's range at $2,337.27. Penetration of this level would set a more favorable short-term tone, shifting focus to $2348.98 (61.8% retrace) and then $2,386.90.

However, it seems unlikely in the wake of last week's collapse that the bears won't try and take the market lower again. Today's intraday low at $2,298.90 protects the lows of the previous 2 sessions at $2,289.43/$2,287.64. Key support is marked by the low from 01-May $2,281.97.  


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.481 (-1.62%)
5-Day Change: -0.165 (-0.56%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379

Silver eked out a new 4-week low of $29.103 in overseas trading, sightly exceeding Friday's low at $29.146. The magnitude of the total decline off the 11-year high at $32.379 (21-May) is now 10.1%.



The lack of downside follow-through is perhaps mildly encouraging, yet further attacks on the downside seem likely. Another round of new lows would confirm potential to $28.467 (61.8% retracement of the leg-up from $26.049 to $32.379).

Initial resistance defined by Monday's high at $29.805 has been reinforced by today's price action. Penetration is needed to call for further retracement of Friday's losses to the midpoint of that range at $30.764.

Please subscribe to receive this report via email by clicking here.


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 NFIB Small Business Optimism Index, FOMC 2-Day meeting begins.

6/10/2024

Gold and silver have recovered somewhat from Friday's rout

OUTSIDE MARKET DEVELOPMENTS: The precious metals rebounded modestly in overseas trading on Monday, but the sharp losses seen on Friday leave the downside vulnerable.

Gold was initially pressured on Friday by news that China's central bank did not buy any gold in May as the yellow metal reached record highs. China's gold reserves held steady at 2264 tonnes.

The PBoC had bought just under 2 tonnes of gold in April, well below its average of 18 tonnes since they resumed reporting in Nov 2022. Nonetheless, the end of the PBoC's 18-month buying spree caught the market by surprise.

Is this just a pause in PBoC buying, or does this signal a significant policy shift? My bet is on the former as I see reserve diversification remaining a persistent theme in China.

The precious metals were hit again on Friday when U.S. nonfarm payrolls beat expectations. Resilience in the jobs market further reduced the likelihood of a Fed rate hike in September. 

The Fed's 2-day FOMC meeting begins on Tuesday and policy will be announced on Wednesday. Steady policy is widely expected. Investors will be paying close attention to the policy statement, economic projections, and Powell's presser for clues as to when the Fed will start to ease.

U.S. CPI for May comes out on Wednesday and PPI on Thursday. Median expectations are +0.1% for both. The Fed is likely to note progress on inflation, but not enough to warrant a rate cute any time soon.

GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +4.39 (+0.19%)
5-Day Change: -50.69 (-2.16%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34

Gold is up modestly from Friday's 5-week low at $2,287.64. Friday's plunge of more than $80 (nearly 3.5%) was the biggest 1-day drop since November 2020. The range on Friday was just shy of $100!



News that China had bought no gold in May combined with a U.S. payrolls beat weighed heavily on the yellow metal. While the May low at $2,281.97 was approached, this important support level remains intact thus far.

The intraday climb back above $2300 eases the immediate pressure on the downside. However, momentum on today's bounce is not terribly impressive, so further tests of the downside must be considered.

Former supports at $2,315.47/$2,318.36 and $2326.73 now provide resistance. These levels protect the more important halfway back point of Friday's range at $2,337.27. A breach of this level would offer some encouragement to the bulls.

While Friday's move and the sharp losses in late May were certainly dramatic, the retreat off the all-time high at $2,449.34 on 20-May to Friday's low is "just" 6.6%. These losses are considered corrective within the longer-term uptrend. 

However, if $2,281.97 (01-May low) gives way, a more protracted corrective phase with potential to $2.204.41/$2,200.00 would become likely.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.547 (+1.88%)
5-Day Change: -0.962 (-3.13%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379

Silver is trading at the low end of Friday's large $2.37 range. The sharp losses realized on Friday leave focus squarely on the downside. Intraday upticks have been lackluster in terms of momentum, but they have relieved the short-term oversold condition somewhat. Further tests of the downside are likely. 



The magnitude of the retreat off the 11-year high at $32.379 (21-May) is now almost exactly 10%. Fresh lows would shift focus to the $28.467 (61.8% retracement of the leg-up from $26.049 to $32.379).

A convincing rebound above $30 might encourage the bulls, but I suspect the bears will be sellers ahead of this level. More important resistance at $30.764 (halfway back point of Friday's range) must be cleared to set a more favorable short-term tone. 

Please subscribe to receive this report via email by clicking here.

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.

6/07/2024

Gold tumbles on news that the PBoC didn't buy any gold in May

OUTSIDE MARKET DEVELOPMENTS: Official data from the People's Bank of China (PBoC) revealed that the central bank had not added any gold to official reserves in May as the yellow metal was making record highs. This apparently ended a buying spree that had lasted 18 consecutive months.

May U.S. nonfarm payrolls significantly beat expectations with a print of +272k. Median expectations were +195k, but there had been whispers of a weaker number based on soft jobs market data that came out earlier in the week. Back-month revisions totalled -15k.

The unemployment rate ticked up to 4.0%, largely due to a 250k drop in the labor force. Hourly earnings rose 0.4%, above expectations of +0.3%, versus +0.2% in April. The average workweek held steady at 34.3 hours.

These generally robust data downgraded rate cut hopes for July and September, putting additional pressure on the precious metals. Fed funds futures continue to suggest that the first Fed rate cut is most likely to come in November.

With the BoC and the ECB having cut rates this week, and hopes for a 'sooner rather than later' Fed cut dashed for the time being, the dollar index rebounded to new highs for the week. Prevailing interest rate differentials should help to underpin the greenback and pose a headwind for the precious metals.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -41.61 (-1.75%)
5-Day Change: -5.23 (-0.22%)
YTD Range: $1,986.16 - $2,449.34
52-Week Range: $1,812.39 - $2,449.34

Gold fell sharply in overseas trading as the market was surprised to learn that the PBoC had not bought any gold in May. This understandably rattled the gold market and the weekly gains that had accumulated through early Asian trading were quickly erased.



Of course, the PBoC is rather opaque when it comes to policy matters, including its gold holdings. Is the central bank really on pause? Was May just a one-off aberration? Are they still accumulating gold by other means? There will be much speculation on all these questions in the week ahead.

Net central bank gold purchases had picked up in April, but China was the second-biggest buyer behind Turkey. Without China in the mix, we could see net central bank sales of gold for the first time in a year.

The better-than-expected U.S. jobs report added further weight to gold, as Fed rate cut hopes dimmed and the dollar rose. The yellow metal tumbled to a new low for the week. Not only do we have an outside trading day, but an outside trading week as well.

If gold closes lower today, which seems likely, it will be the third consecutive lower weekly close since the record high of $2,449.34 was established on 20-May. None of this is terribly encouraging from a technical perspective, but keep in mind that gold is only off 5.7% from its all-time high. I still see the losses as corrective in nature.

Focus returns to chart support at $2,307.65 down to $2,300.00. More important support is defined by the May low at $2,281.97. Should this level give way, a more protracted corrective phase becomes more likely.

First resistance is marked by a minor intraday pre-jobs-data high at $2,337.28. The halfway back point of today's range at $ 2,348.40 is a more significant technical level.

One potential bright spot today was news that global ETFs registered inflows in May for the first time in 12 months. I say "potential" because one month does not a trend make.


European and Asian buyers provided the boost, while outflows from North America and other regions were relatively small.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.986 (-3.15%)
5-Day Change: -0.573 (-1.88%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379

Silver is displaying a bearish outside day and appears poised to register a weekly loss. At the time of this writing, Monday's low at $29.413 was being challenged, but was intact.


A new low for the week would further erode the short-term technical picture, shifting focus to a retracement level at $29.214 (50% retracement of the rally from $26.049 to the $32.379 high). The 61.8% retracement level comes in at $28.467. Losses since the 21-May 11-year high are just over 9%.

The halfway back point of today's range thus far is $30.469 which corresponds closely with a minor intraday chart point. A minor intervening barrier is noted at $29.710.

It's been a wild roller coaster ride in the white metal this week. Such is the nature of the silver market. Nonetheless, I continue to see the underlying trend as bullish.

Please subscribe to receive this report via email by clicking here.

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.