Blog posts tagged with 'silver'

9/11/2024

Gold and silver fade after CPI print further erodes chances for 50 bps Fed cut

OUTSIDE MARKET DEVELOPMENTS: U.S. CPI rose 0.2% in August, in line with expectations, versus +0.2% in July. The annualized rate of consumer inflation slid to 2.5% from 2.9% in July.

Core CPI came in at +0.3%, above expectations of +0.2%, versus +0.2% in July. Core consumer inflation held steady at 3.2% y/y.

Markets have been waiting for confirmation that inflation is still heading in the right direction and that the Fed should now focus on supporting the labor market via easier monetary policy. Today's data favors that rotation and prospects for a larger 50 bps rate cut have fallen to 21%. That's down from 34% yesterday, 44% a week ago, and 51% a month ago.

We'll get August PPI data tomorrow. The market is expecting a 0.2% m/m rise. Import/export prices come out on Friday.

BoJ policymaker Junko Nakagawa suggested a rate hike is still on the table a day after a Bloomberg article reported the central bank sees little need to raise rates again next week. The yen surged in reaction, pushing the USD-JPY rate to a new low for the year of 140.72.

The ECB is widely expected to trim rates by 25 bps tomorrow. Eurozone Q2 GDP was revised down to -0.2% q/q, versus a preliminary print of +0.3%. Government spending continues to rise as fixed investment tumbles.

This prompted former ECB chief Mario Draghi to warn that steps must be taken to correct this, or Europe will face a "slow agony." A 25 bps rate cut won't be enough. Draghi is advocating for up to €800bn a year in investment to pull the EU back from the brink.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$5.30 (+0.21%)
5-Day Change: +$27.74 (+1.11%)
YTD Range: $1,986.16 - $2,529.57
52-Week Range: $1,812.39 - $2,529.57
Weighted Alpha: +31.90

Gold set a new 2-week high at $2,527.18 following the benign CPI print, but has since retreated into the range, leaving the record high from 20-Aug at $2,529.57 intact. Focus now shifts to tomorrow's PPI data.



Dimmed prospects for a larger 50 bps rate cut are keeping the dollar underpinned, providing a bit of a headwind for the yellow metal. The dollar index eked out a new high for the week, despite today's strength in the yen.

Choppy consolidative trading within the range is likely to continue at least through tomorrow's PPI report. The market seems to want to be 100% sure that inflation is in check before committing to a direction.

There is at least one near-certainty: The Fed will launch its easing campaign next week, most likely with a 25 bps cut. The trade will be very interested in the forward guidance and will start speculating about the size of cuts in November and December.

Initial support is a zone from $2,507.93 (20-day SMA) down to yesterday's low at $2,500.63. Secondary support at $2,487.11/06 protects the short-term range lows at $2,474.31/08.

On the upside, the $2,539.77 and $2,597.15/$2,600.00 objectives remain valid, contingent on a move to new all-time highs.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.417 (+1.47%)
5-Day Change: +$0.627 (+2.23%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +24.25

Silver traded as high as $28.842 in post-CPI trading before fading into the range once again. Resistances marked by the 20-, 50-, and 100-day moving averages at $28.930, $29.010, and 29.188 were left intact, leaving last week's high at $29.125 well protected.



Yesterday's low at $28.08 defines first support, protecting the recent lows at $27.791/732. Below the latter, I'm watching $27.505 and $27.237.


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

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

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

U.S. calendar features MBA Mortgage Applications rose 1.4%, CPI (+0.2% expected), EIA Data.

9/10/2024

Gold and silver remain rangebound ahead of inflation data later this week

OUTSIDE MARKET DEVELOPMENTS: Fed funds futures are steady today with prospects for a 50 bps rate cut holding at 27%. The market awaits tomorrow's CPI report and Thursday's PPI data, which will bring us within a week of the FOMC policy announcement. A 25 bps rate cut is the most likely outcome.

The ECB will announce policy on Wednesday this week. A 25 bps cut is widely expected as worries about persistently slow growth override lingering inflation risks.

Germany – Europe's largest economy – contracted by 0.1% in Q2 and is threatening to slip back into recession. Annualized growth this year is a scant 0.2%.

Former ECB President Mario Draghi is pitching a new coordinated industrial policy for Europe to boost competitiveness and lift the EU out of its doldrums. Draghi recognizes that productivity is "very weak" and a significant investment of up to €800bn a year will be needed to keep the Continent from falling further behind the U.S. and China.

According to a Bloomberg article, the BoJ reportedly sees little need to raise rates again next week. Officials are still monitoring lingering market volatility in the wake of the July hike and are keen to see how markets react to the anticipated first easing move by the Fed in more than four years.

U.S. NIFB small business optimism tumbled 2.5 points to 91.2 in August, versus 93.7 in July. Fewer firms are planning to hire as those expecting a better economy plunged to -13% from -7% in July. The uncertainty index rose 2 points to 92, the highest since October 2020.

Fed Vice Chair Michael Barr (centrist) is slated to speak on Basel III later this morning. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$1.03 (+0.04%)
5-Day Change: +$14.33 (+0.57%)
YTD Range: $1,986.16 - $2,529.57
52-Week Range: $1,812.39 - $2,529.57
Weighted Alpha: +30.84

Gold is pushing higher but remains confined to Friday's range for a second session. Consolidative trading is likely to prevail ahead of U.S. inflation data later this week.



The yellow metal continues to hold the 20-day moving average on a close basis, which is encouraging for the bull camp. The all-time high at $2,529.57 (20-Aug high) defines the upper boundary of the range.

A move to new record highs would reestablish the uptrend and confirm potential to the $2,539.77 Fibonacci objective. Beyond that, the $2,597.15/$2,600.00 zone.

Initial support is at $2,501.33/$2,500.63, where the 20-day SMA corresponds closely with today's overseas low. More substantial support at $2,487.11/06 protects the short-term range lows at $2,474.31/08.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.117 (+0.41%)
5-Day Change: +$0.395 (+1.41%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +22.12

Silver edged higher within Friday's range into early U.S. trading. Just over 50% of the decline from $29.125 (5-Sep high) to $27.732 (6-Sep low) was retraced, but the white metal came under renewed pressure and has since fallen to fresh intraday lows.

  
A minor chart point is noted at $28.079 which stands in front of the recent lows at $27.791/732.

Choppy trading within the range is likely to prevail through Thursday's PPI release. Market expectations for both CPI and PPI are +0.2%. It would take something significantly hotter than expectations to get the market to believe the Fed will hold steady next week. 

A short-term close back above the 20-, 50-, and 100-day moving average complex is needed to return a measure of credence to the underlying uptrend and call for another run at $30. Those are out of reach today at $28.884, $29.052, and $29.174 respectively.

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.

9/9/2024

Gold and silver consolidate ahead of this week's inflation data

OUTSIDE MARKET DEVELOPMENTS: Friday's jobs report reinforced that the labor market is cooling. August payrolls undershot expectations by 20k jobs, and back-month revision totaled -86k.

The downtick in the jobless rate to 4.2% suggested that the slowdown in the labor market remains orderly thus far. “While the labor market has clearly cooled, based on the evidence I see, I do not believe the economy is in a recession or necessarily headed for one soon,” said Fed Governor Chris Waller on Friday. Hopes for a soft landing spring eternal.

FedSpeak last week indicated that the focus has shifted to the "full employment“ side of the central bank's dual mandate. Fed funds futures were volatile on Friday, but ultimately swung in favor of a smaller 25 bps rate cut when the Fed announces policy on 18-Sep. 

The probability of a 25 bps cut has fallen to 25%. That's down from 30% last week, and 51% a month ago. Fed funds futures imply 112 bps in cuts by year-end.

While the Fed's focus may be on the weakening labor market, inflation data out this week will have the market's attention.  Median expectations for August CPI (out on Wednesday) stand at +0.2%. Thursday's PPI report is expected to come in at +0.2% as well.

U.S. wholesale sales surged 1.1% in July, well above expectations of +0.2%, versus an upward revised -0.3% (was -0.6%). It's the best monthly sales jump since February. Inventories rose 0.2%, just off the advance print of +0.3%, versus +0.2% in June.

We'll see July consumer credit later today. The market is anticipating a monthly increase of $10.2 bln, versus an $8.9 bln rise in June. 

Over the weekend, The Wall Street Journal reported that there are "about 590 million active cards in circulation in the first quarter of this year, 40 million more than in 2019." America's total credit card balance reached a record-high $1.142 trillion in the second quarter.

With an average interest rate on credit cards north of 27%, this level of debt is an ever-growing millstone around the neck of the U.S. consumer and the economy. Even with home prices and stocks at/near record highs, the Fed is behooved to start bringing rates down or consumption is going to collapse.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$2.74 (-0.11%)
5-Day Change: -$0.61 (-0.02%)
YTD Range: $1,986.16 - $2,529.57
52-Week Range: $1,812.39 - $2,529.57
Weighted Alpha: +30.25

Gold is straddling the $2500 level as traders look ahead to this week's inflation data. The market is expecting fairly benign readings for both CPI and PPI, which should solidify beliefs that the Fed will begin its easing campaign with a cautious 25 bps cut.



Consolidative trading is likely to prevail early this week as the market awaits the inflation data. The range is well defined by the all-time high at $2,529.57 (20-Aug) and the lows since then at $2,474.31/08. The 20-day moving average has been serving as support on a close basis and comes in at $2,498.84 today.

ETF inflows were unchanged last week amid some lingering uncertainty as to Fed intentions. Modest North American inflows were offset by European outflows.

The COT report shows that net spec positions moderated slightly to 287.6k contracts, versus 294.5k contracts in the previous week. The market is still quite long, at levels not seen since Q1'20. That does create some downside risk, but the long specs have proven themselves to be sticky up here.

CFTC Gold speculative net positions

With the underlying trend bullish, and recent activity deemed corrective/consolidative, buying strategies remain favored. A short-term breach of $2,529.57 would clear the way for tests of $2,539.77 (Fibonacci) and  $2,597.15/$2,600.00 (measuring).


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.194 (+0.69%)
5-Day Change: -$0.419 (-1.47%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +20.29

Silver is trading higher on the day, buoyed by the strong wholesale sales print. However, price action has been confined to the lower half of Friday's range.



The inability of silver to sustain rallies in recent weeks is reflective of persistent concerns about growth and doubts that the Fed will successfully orchestrate a soft landing. Where the 20-day moving average has been providing support in the gold market, the 20-day serves as resistance on a close basis for silver.

Short-term conditions are likely to remain choppy with a modest downside bias ahead of this week's inflation data. The comparative strength of the gold market may provide some underpinning with the gold/silver ratio above 90.

Net speculative long positions in silver futures fell to 46.1k last week, versus 52.2k in the previous week. The specs have been reducing long exposure since mid-July. Current positioning is the lowest since the week ended 16-Aug. A little over a week later, silver was testing above $30.

CFTC Silver speculative net positions

A climb back above the midpoint of last week's retreat at $28.429, would be somewhat encouraging. The 20-day SMA comes in at $28.863 today. A breach of Thursday's high at $29.125 is needed to return focus to the August highs above $30.

Intraday support at $28.079/00 protects the recent lows at $27.791732. The latter now appears to be a formidable downside barrier.



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

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

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

U.S. calendar features Wholesale Sales, Consumer Credit. 

9/6/2024

Gold and silver initially rallied on NFP miss, but subsequently retreated

OUTSIDE MARKET DEVELOPMENTS: U.S. nonfarm payrolls rose 142k in August, below expectations of +162k, versus a negative revised +89k in July (was +114k). June was revised lower by 61k from 179k to 118k.

The unemployment rate ticked down to 4.2% in line with expectations, versus 4.3% in July.

Hourly earnings rose 0.4% on expectations of +0.3%, versus a 0.2% rise in July.

The average workweek ticked up to 34.3 hours in line with expectations, versus 4.2% in July.

The 20k miss on the August payrolls print wasn't as bad as some of the whispers. However, -86k in back-month revisions to the previous two months strengthened – at least initially – the probability of a 50 bps rate cut on 18-Sep.

The likelihood of a 50 bps cut jumped to 59% immediately after the jobs report but those odds plunged in subsequent trading. As of this writing, the chances are just 25%, 5 percentage points lower than last week.

"[I]t is now appropriate to dial down the degree of restrictiveness in the stance of policy," said New York Fed President John Willams (centrist). However, Williams claims not to have a personal opinion on the appropriate size of a September rate cut, repeating the Fed's 'data dependence' mantra.

“The balance of risks has shifted toward the employment side of our dual mandate,” said Fed Governor Chris Waller (hawk). He noted that recent jobs data "no longer requires patience, it requires action." Waller said he was "open-minded about the size and pace of rate cuts," but seemed to hint at a preference for a slower pace of rate cuts.

I continue to believe the Fed's first step on the easing path will be a cautious one. In commentary earlier this week, I suggested a sub-100k August payrolls print might get me to change my view. While July was revised down below 100k, August was just moderately below expectations.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$2.45 (+0.10%)
5-Day Change: +$7.86 (+0.31%)
YTD Range: $1,986.16 - $2,529.57
52-Week Range: $1,812.39 - $2,529.57
Weighted Alpha: +31.81

Gold jumped to a new high for the week after nonfarm payrolls missed expectations prompting more aggressive rate-cut bets and a drop in the dollar. However, gains stalled ahead of the record high at $2,529.57 and the yellow metal retreated into the range.



Despite today's volatility, gold still appears poised to register a higher weekly close. If confirmed with a close above $2,503.45, it would be the fourth higher weekly close in six.

Tests of the downside this week were successfully contained by the 20-day moving average on a close basis. I find that to be technically encouraging.

Price action since the record high was established on 20-Aug has been only mildly corrective; dropping just 2.2% from high to low. Arguably the tone for the past two weeks has been more consolidative than anything.

The underlying trend remains decisively bullish. The yellow metal is up more than 20% year to date and has closed higher every month except January. Gold is up nearly 30% since 06-Sep'23.

A short-term move to new all-time highs will favor a test of the $2,539.77 Fibonacci objective. Beyond that, potential is to the $2,597.15/$2,600.00 zone.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.021 (+0.07%)
5-Day Change: -$0.360 (-1.25%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +23.08

Silver modest upticks after the jobs report stalled ahead of yesterday's high at $29.125 leading to a sharp sell-off to new 3-week low. The white metal is now down more than $1 on the day and trading below $28.



Silver is poised for a second consecutive lower weekly close. This market sucks you in with encouraging signals and then spits you right back out again.

The resilience displayed by gold should provide some underpinning to the market, but that's not readily apparent at this point. Suddenly the $27.303 Fibonacci level (78.6% retrace of the August rally) is back in play.

I don't think it will get there today as this move is already pretty overdone. I wouldn't be surprised to see at least some short-covering into the close.

There are still 12 days until the FOMC announces policy. A lot can happen between now and then. Look for silver to remain volatile as traders on each side of the 25 bps or 50 bps debate continue to duke it out.

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.

9/5/2024

Gold and silver retrace recent losses and await jobs data

OUTSIDE MARKET DEVELOPMENTS: Heightened growth risks continue to weigh on global stocks. Most of the major overseas indices were lower once again today. U.S. shares are called lower today.

The ADP Employment Survey showed private payrolls rose by just 99k in August, well below market expectations of 148k, versus a negative revised 111k in July (was 122k). This is the weakest print since Jan 2021 and adds to whispers of a potential nonfarm payrolls miss tomorrow.

Challenger Layoffs surged 50k to 75.9k in August, a 193% increase over July. That's the highest August print in 15 years. 

Initial jobless claims fell 5k in the week ended 31-Aug to 227k, below expectations of 232k, versus a revised 232k in the previous week. Continuing claims dipped 22k to 1,838k, versus a downward revised 1,860k in the previous week.

U.S. Q2 productivity was revised up to +2.5% on expectations of +2.4%, versus +2.3% preliminary read. Unit Labor Costs were slashed to +0.4%, below expectations of +0.8%, versus +0.9% preliminary read.

U.S. S&P Global Services PMI was revised up to 55.7 from a preliminary read of 55.2. It was the 19th consecutive month above 50, and the highest print since March 2022.

U.S. Services ISM rose to 51.5 in August, above expectations of 51.0, versus 51.4 in July. Prices rose to 57.3 from 57.0 in July. Employment fell 0.9 points to 50.2 retracing some of the strong 5-point gain seen in July.   

While the services sector continues to show strength, signs from the labor market are raising concerns about the economy. Traders have boosted expectations for a 50 bps Fed rate cut this month to 45%. That's up from 34% a week ago, but down significantly from 85% a month ago.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$22.26 (+0.89%)
5-Day Change: -$3.30 (-0.13%)
YTD Range: $1,986.16 - $2,529.57
52-Week Range: $1,812.39 - $2,529.57
Weighted Alpha: +32.31

Gold has rebounded to new highs for the week, buoyed by an uptick in bets that the Fed will be more aggressive in cutting rates this month and a weaker dollar. The record high at $2,529.57 (20-Aug high) is suddenly back within striking distance.



I don't see gold setting new highs before tomorrow's nonfarm payrolls report. However, if payrolls miss expectations, 50 bps rate cut bets would increase, the dollar will weaken further, and gold will be back on track for attainment of previously established objectives at $2,539.77 (Fibonacci) and  $2,597.15/$2,600.00 (measuring objective).

While the low from 22-Aug at $2,474.31 was slightly exceeded yesterday, I'm going to call this level technically intact. I'm also encouraged by gold's inability to sustain tests below the 20-day moving average on a close basis.

Global gold ETFs saw inflows of 14.3 tonnes last week as the yellow metal was consolidating just off its record high. North American investors accounted for the vast majority of that interest (11.6 tonnes).

Gold ETFs notched a fourth monthly net inflow in August. Inflows totaled 28.5 tonnes for the month with North American investors responsible for 17.2 tonnes of buying interest.

UBS Global Research claimed in August that the uptrend in gold has legs and could continue for the next couple of years. The report went on to say that "Gold models are unable to explain the bulk of gold’s rally," even though aggressive official sector (central bank) buying is heavily featured.

Jan Nieuwenhuijs of the Gold Observer believes the PBoC hasn't paused its gold buying at all. Covert PBoC gold buying is hidden in plain sight in global customs data according to Nieuwenhuijs. It's a great piece of research that goes a long way toward explaining what UBS models can not.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$0.542 (+1.92%)
5-Day Change: -$0.693 (-2.36%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +24.42

Silver has rebounded smartly to test back above $29 as choppy trading prevails ahead of Friday's payrolls report. New highs for the week have been established and more than 50% of the pullback from last week's high at $30.164 has been retraced.



The 50- and 100-day moving averages come in at $29.123 and $29.160 today and have successfully capped the upside thus far. The market now awaits the jobs data.

If job growth is weaker than expected, silver should follow gold higher on heightened expectations of a 50 bps rate cut on 18-Sep and a weaker dollar. Secondary resistance is noted at $29,583/635.

A short-term breach of last week's highs at $30.082/164 would put the yellow metal back on the path for a challenge of the July high at $31.652 and eventually the 11-year highs from May at $32.379.

A beat on the jobs front would likely send the precious metals back down into their ranges as rate-cut bets are pared. A decisive swing back in favor of a 25 bps Fed rate cut would support the dollar.

Minor intraday support is noted in silver at $28.655, which protects the lows from Wednesday and Tuesday at $27.791/779. 


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.