Good morning. The precious metals are lower in early U.S. trading.
U.S. calendar features Retail Sales (+0.1% expected), Philly Fed Index, Import/Export Price Indexes, Initial Jobless Claims, Business Inventories, NAHB Housing Mkt Index, TIC Data.
FedSpeak due from Kugler, Daly, Cook, & Waller.
Gold firms as cool PPI boosts rate cut expectations and weighs on the dollar
OUTSIDE MARKET DEVELOPMENTS: Producer inflation unexpectedly cooled in June, with headline PPI dropping to 2.3% y/y from 2.7% in May. Core PPI tumbled to 2.6% y/y from 3.2% in May.
Drilling a little deeper, goods prices did rise 0.3%, but that inflation was offset by a drop in transport and warehousing costs along with lower services prices. Nonetheless, one might reasonably expect that tariff-associated inflation would first be reflected in wholesale prices, but the trajectory since the beginning of the year has been downward.
The White House will make hay with the headline numbers, touting that tariffs have not led to higher inflation, despite warnings from President Trump's detractors. With inflation in check – at least for now – look for Trump to escalate pressure on Jerome Powell and the Fed to resume easing.
Most of yesterday's drop in rate cut expectations stemming from June CPI data have been reversed. While a July cut remains off the table, prospects for a 25 bps cut in September rebounded to 62.9% from 54.5% yesterday, versus 65.8% a week ago. Close to 50 bps in cuts are once again priced in for year-end, with the first 25 bps cut most likely to occur in October.
Yields and the dollar are under pressure. The dollar index has retreated from a three-week high set early in the U.S. session and appears poised to end its eleven-session win streak. Nearly half of the July rally has already been retraced. A breach of that retracement level and the 20-day MA at 97.69/64 would return credence to the longer-term downtrend.
Russia launched another massive drone and missile attack against Ukraine. The attack comes just a day after President Trump escalated pressure on Russia to end the war within 50 days or face massive tariffs.
MBA Mortgage Applications fell 10.0% in the week ended 11-Jul, versus +9.4% in the previous week. Purchases dropped 11.8%, while refis fell 7.4%. The 30-year mortgage rates rebounded to 6.82% from a 13-week low of 6.77%.
PPI was unch in June, below expectations of +0.2%, versus a revised +0.3% in May (was +0.1%); 2.3% y/y, down from a revised 2.7% in May (was 2.6%). Core was unch, below expectations of +0.2%, versus a revised +0.4% in May (was +0.1%); 2.6% y/y, down from a revised 3.2% in May (was 3.0%).
Industrial Production rose 0.3% in June, above expectations of +0.1%, versus a revised unch in May (was -0.2%). Cap use rose to 77.6% on expectations of 77.4%.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$9.42 (+0.28%)
5-Day Change: +$21.00 (+0.63%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,354.48 - $3,495.89
Weighted Alpha: +37.78
Gold rebounded to approach Monday's high for the week at $3,374.11, as cooler-than-expected PPI saw rate cut expectations rebound. This put pressure on yields and the dollar, providing additional lift for the yellow metal. Additionally, escalating trade tensions and the latest Russian attacks on Ukraine are underpinning safe-haven interest.
While firmer today, gold remains confined to the range that has dominated since mid-May. The midpoint of the broader range is at $3,311.51. The midpoint of the range-within-the-range is at $3,352.57. The 50-day MA is at $3,323.70 and the 20-day is at $3,334.02.
The above convergence of important levels heightens the significance of the symmetrical triangle apex at $3,327.24. This suggests a breakout could be close at hand. While my analysis continues to tilt in favor of an upside breakout, these stale prices are trying the patience of the bull camp.
Last week's ETF data illustrates this nicely. While global gold ETFs saw an eighth straight week of net inflows, it was a mere 1.8 tonnes. North American investors were net sellers for a second consecutive week.
This suggests to me that there is risk for a false downside breakout. A close below the 20- and 50-day MAs would heighten that risk. A retreat below $3,300 would leave more important supports at $3,284.61 (9-Jul low) and $3,256.02 (30-Jun low) vulnerable to tests.
On the other hand, fresh highs for the week above $3,374.11 will spark additional buying interest. However. $3,400 must be regained to clear the way for a retest of the 16-Jun high at $3,449.14. Above the latter, the record high at $3,500 would be back in play.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.362 (+0.99%)
5-Day Change: +$1.491 (+4.10%)
YTD Range: $28.565 - $39.119
52-Week Range: $26.524 - $39.119
Weighted Alpha: +33.86
Silver rebounded from a new low for the week, buoyed by encouraging inflation data and the corresponding drop in yields and the dollar. The white metal is still trading lower on the week after failing to sustain 14-year highs above $39, but other industrial metals are providing underpinning.
Copper remains well bid near record highs as a result of the recent tariff threat. Meanwhile, platinum is back on the bid after President Trump threatened to levy 100% tariffs on Russia if they don't end the war in Ukraine.
The U.S. gets 70% of its silver from Mexico and Canada. While silver is generally exempt from tariffs based on the US-Mexico-Canada Agreement, rising trade tensions and President Trump's unpredictability have elevated concerns. Canada and Mexico could also implement export controls on silver as a retaliatory measure.
Today's earlier low at $37.557 now protects the more important $37.288/244 level. The latter is marked by the previous cycle high and the halfway back point of the leg up from $35.369 (24-Jun low) to Monday's high $39.119.
The 61.8% retracement level of the aforementioned move and the 20-day MA are noted at $36.801/747. It would take a break of this zone to raise the prospect for a deeper correction, or at least another consolidative phase.
The halfway back point of the retreat from $39.119 peak comes in at $38.338. A breach of this would lend credence to the bullish scenario that targets $40 and $41.610.
Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com
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.
Gold edges lower as warmer inflation weighs on rate cut expectations, boosts dollar
OUTSIDE MARKET DEVELOPMENTS: Consumer inflation picked up in June, although it was largely in line with expectations. Headline CPI accelerated to 2.7% from 2.4% in May, while core CPI edged up to 2.9% from 2.8%.
U.S. yields are mostly higher as expectations for Fed easing later in the year ebb. This has pushed the dollar index to three-week highs.
Treasury Secretary Bessent noted on X that at least core inflation has come in at or below expectations since the Trump term began.
Speaking on Bloomberg TV earlier today, Bessent acknowledged that the process has begun to find a replacement for Jerome Powell. While Powell's term as Fed Chair doesn't end until May 2026, his position on the Board of Governors extends until January 2028.
Bessent reaffirmed that the White House is “not looking to fire” Powell, despite President Trump's regular denigration. However, Trump would like to see Powell resign once his term as chair expires.
“There’s been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination, and I can tell you, I think it would be very confusing for the market for a former Fed chair to stay on," Bessent said.
Market attention remains fixed on tariff developments after this week's escalations, but risk appetite remains elevated. That suggests the trade remains optimistic that deals will be struck, and/or worries about tariff-driven inflation are waning.
Fiscal worries associated with the OBBB also seem to be waning. Custom duty collections hit a record $27.2 bln in June, surpassing the previous records from May ($22.3 bln) and April ($16.5 bln). The total for the fiscal year reached a record high $113 bln, an increase of 86% versus the same period last fiscal year.
The tariff revenue helped produce a surprise $27 bln budget surplus for the month. It was the first monthly budget surplus since September that wasn't associated with an April tax revenue influx.
The September 2024 surplus may have been the result of a shift in the timing of outlays that artificially boosted the fiscal position in September. The next monthly surplus (not an April) was in January 2022.
CPI rose 0.3% in June, in line with expectations, versus +0.1% in May; 2.7% y/y, up from 2.4% in May. Core +0.2%, below expectations of +0.3%, versus +0.1% in May; 2.9% y/y, versus 2.8% in May.
Empire State Index rebounded 22 points to a five-month high of 5.5 in July, above expectations of -8.5, versus -16.0 in June. "The prices paid index rose nine points to 56.0, pointing to a pickup in input price increases, while the prices received index held steady at 25.7, suggesting that selling price increases remained moderate," according to the NY Fed report.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$18.63 (+0.56%)
5-Day Change: +$50.47 (+1.53%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,354.48 - $3,495.89
Weighted Alpha: +38.75
Gold eased back toward the midpoint of the range after this morning's warmer inflation reading tempered rate cut expectations and boosted yields and the dollar. I consider the CPI data as largely benign and therefore not the catalyst for a range breakout we needed.
PPI comes out tomorrow, and import/export prices on Thursday. I'm not expecting anything disruptive in either case, suggesting the range is likely to hold.
The chart pattern that has emerged over the past couple of months is indicative of a symmetrical triangle, which is a continuation pattern. The technician in me continues to favor an eventual upside breakout.
The World Gold Council's Mid-Year Outlook seems to come to a similar conclusion, suggesting "gold may move sideways with some possible upside – increasing an additional 0%-5% in the second half." However, the WGC notes that increased safe-haven demand could push gold up an additional 10-15% from here if "economic and financial conditions deteriorate, exacerbating stagflationary pressures and geoeconomic tensions."
"On the flipside, widespread and sustained conflict resolution – something that appears unlikely in the current environment – would see gold give back 12%-17% of this year’s gains," according to the report.
Resilient risk-on sentiment and buoyant gold suggest the market may have a slightly different take. Regardless of shifts in risk appetite, central banks are likely to continue buying gold as reserve diversification. That has contributed to the heightened awareness of gold as portfolio diversification among individual investors.
A climb above $3,400 is needed to reinvigorate the bull camp, but Monday's high at $3,374.11 stands in the way. More importantly, penetration of the 16-Jun high at $3,449.14 is needed to put the record high at $3,500 back in play.
However, the consolidative tone is trying the patience of the bulls. This may prompt some short-term liquidations, which could drive gold back to the lower limit of the range-within-the-range at $3,256.02 (30-Jun low). Intervening support is marked by triangle support around $3,300 and last week's low at $3,284.61.
The 100-day (~$3,218) and 20-week (~$3,237) moving averages have climbed above $3,200, which should help keep the low end of the primary range at $3,127.12 at bay. Dips within the range should continue to be viewed as buying opportunities.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.170 (+0.46%)
5-Day Change: +$1.512 (+4.01%)
YTD Range: $28.565 - $39.119
52-Week Range: $26.524 - $39.119
Weighted Alpha: +35.74
Silver is trading lower on the week after failing to sustain yesterday's surge to 14-year highs above $39. The market was certainly overextended at the highs yesterday, so it was not surprising to see a pullback. Softer gold and a firmer dollar are adding some additional weight today.
The latest Trump tariff threats played a role in silver's recent price surge, although there hasn't been any official indication that the white metal's exempt status will be changed. That probably factored into selling interest above $39. I continue to believe threatened copper tariffs will be walked back.
Even with the retreat, silver is still up 30% YTD, modestly outpacing gold's performance so far this year. Strong industrial and investment demand, along with a persistent supply deficit, remain broadly supportive for silver.
Yesterday's breach of the $38.750 Fibonacci objective bodes well for a push to $40. Beyond the latter, the next Fibonacci target is $41.610 (78.6% retracement of the entire decline from $49.752 to $11.703).
Thus far, losses have stalled shy of the previous cycle high at $37.288. Below that, the $37.198/$36.956 zone protects the 20-day moving average at $36.693.
Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com
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.
Gold sets two-week highs on rising trade tensions, as silver surges to 14-year highs
OUTSIDE MARKET DEVELOPMENTS: Trade tensions are back on the upswing after President Trump announced 35% tariffs on Canadian imports would go into effect on August 1. ″[Canada] has many Tariff, and Non-Tariff, Policies and Trade Barriers, which cause unsustainable Trade Deficits against the United States ... The Trade Deficit is a major threat to our Economy and, indeed, our National Security,” according to the letter sent to Canadian PM Mark Carney.
Trump also believes Canada is not doing enough to halt the flow of fentanyl. He went on to warn Canada not to retaliate. “If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 35% that we charge,” he wrote.
The S&P 500 and NASDAQ have retreated from Thursday's record highs as diminished risk appetite prompts profit taking ahead of the weekend. Gains in the DJIA this week stalled ahead of 45,000, leaving the Nov/Jan double top at 45,0054/071 intact.
The Administration also escalated pressure on the Fed and Chairman Powell this week. “The president is extremely troubled by your management of the Federal Reserve system,” wrote Russel Vought, the director of the Office of Management and Budget, in a letter to Powell.
With inflation in check despite trade uncertainties, and the economy and labor market resilient, Trump believes the Fed funds rate is 300 bps too high. However, markets are signalling a far less dovish reality, with Fed funds futures pricing just under 50 bps in cuts by year-end.
There's quite a bit of FedSpeak on tap next week, and the Beige Book comes out on Tuesday. Arguably, the two most dovish FOMC members are Governor Waller and Chicago Fed President Goolsbee, but nobody is even close to being on board with what President Trump is asking for.
"I think we're too tight, and we could consider cutting the policy rate in July," Waller said on Thursday. Fed funds futures suggest there's just a 6.7% chance of a 25 bps cut at the July 29-30 FOMC meeting.
After this week's thin economic calendar, the market is eagerly looking ahead to next week's inflation data. Expectations suggest both CPI and PPI will remain subdued with scope for modest downticks in annualized inflation rates.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$21.66 (+0.65%)
5-Day Change: +$13.59 (+0.41%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,354.48 - $3,495.89
Weighted Alpha: +38.82
Gold is setting new highs for the week, as heightened trade tensions spurred safe-haven demand. While the yellow metal appears poised for a second straight higher weekly close, gains above last week's high at $3,364.27 have been limited.
A more convincing breach of that level would bode well for a move back above $3,400. Penetration of the 16-Jun high at $3,449.14 would put the record high at $3,500 back in play.
The dollar index is trading higher for a ninth consecutive session, providing a headwind for gold. However, momentum on dollar upticks has been lackluster, and I still see the gains as corrective.
I also believe the recent consolidation in gold is a mere pause in the long-term uptrend. Price action since mid-May has formed a symmetrical triangle. An eventual upside breakout would project gold to new record highs.
When asked about a bear case for gold, the World Gold Council's Ray Jia thinks the yellow metal could face short- to mid-term pressure if:
While hopes for a ceasefire in Gaza remain elevated, meaningful progress toward a ceasefire and peace deal in Ukraine has been elusive. President Trump seems pretty committed to creating a path to peace for both conflicts.
Despite recent upticks, the dollar index set a more than three-year low just last week. Meanwhile, global central banks remain tilted toward easing, and the Fed is widely expected to resume rate cuts later this year.
Central bank gold demand remains robust amid U.S. fiscal worries and ongoing de-dollarization. There is no indication that it will change anytime soon.
Global ETFs saw H1 inflows of $38 bln (322 tonnes), the strongest first half performance since H1'20, driven by geopolitical risks, trade war worries, and dovish central bank policies. Total global AUM hit a record $383 bln with holdings at 3,616 tonnes, the highest in 34 months.
On the downside, the important 30-Jun low at $3,256.02 (30-Jun low) is now well protected by tiers of support at $3,323.20 (today's low), and Wednesday's low at $3,284.61.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.519 (+1.40%)
5-Day Change: +$0.748 (+2.03%)
YTD Range: $28.565 - $37.682
52-Week Range: $26.524 - $37.682
Weighted Alpha: +28.70
Silver has surged to 14-year highs above $38, shrugging off any headwind provided by a firmer dollar. The white metal is being spurred by firmer gold prices and this week's record highs in copper.
I have maintained that the supply and demand fundamentals remain broadly supportive. The proliferation of computers and cell phones over the past decade drove a 78% surge in silver demand for electronics from 272 Moz in 2015 to 486 Moz in 2024. Solar demand surged 289% over the same period.
Meanwhile, demand has exceeded available supply since 2021. This year's deficit is expected to be 149 Moz, marking the fifth consecutive year of supply deficit.
The Silver Institute notes that silver ETPs saw inflows of 95 Moz in H1, surpassing the total for all of last year. Total global holdings reached 1.13 Boz, within striking distance of the COVID-era high at 1.21 Boz.
Clearly, investors are taking a heightened interest in silver both as a strategic investment and a safe-haven alternative to gold. Silver tends to perform well during periods of uncertainty, high inflation, and currency depreciation.
The long-standing Fibonacci objective at $38.750 is within striking distance. Above that, the $40 level attracts. Beyond the latter, the next Fibonacci target is at $41.610.
Former resistance at $37.288/198 now marks first support, and protects today's overseas low at $36.956. The 20-day moving average has been an important support over the past week and comes in at $36.556 today.
Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com
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.
Gold and silver remain well contained within their ranges, awaiting fresh inputs
OUTSIDE MARKET DEVELOPMENTS: Copper is back pressuring record highs after President Trump clarified that 50% tariffs will take effect on Aug 1. While consistency and clarity have not been hallmarks of the Administration's trade policy, U.S. companies will likely accelerate stockpiling over the next several weeks.
Hoarding, associated with tariff front-running, has been driving up the price of copper ever since President Trump first launched an investigation into copper imports early in his term. At the first mention of 50% tariffs early this week, copper surged to record highs near $6.
Trump threatened Brazil with tariffs of 50%, even though the U.S. has carried a trade surplus with the country. President Luiz Inácio Lula da Silva has said that he will retaliate with reciprocal 50% tariffs.
Trump has a beef with President Lula, after former President Jair Bolsonaro, a Trump ally, was charged with an attempted coup. "This is nothing more, or less, than an attack on a Political Opponent — Something I know much about!," wrote Trump on TruthSocial.
Despite Trump dialing up the pressure on trading partners that have not yet struck deals, the trade remains tilted toward risk-on. The resilience of the U.S. economy, expectations that the Fed will resume easing later in the year, optimism that trade deals will be worked out, and hopes for a Gaza ceasefire are all underpinnning risk appetite.
The minutes from the June FOMC meeting came out yesterday afternoon, and as expected, they didn't provide any new insights. The Fed remains on hold amid trade policy uncertainties and generally balanced price and growth risks.
Initial Jobless Claims fell 5k to 227k in the week ended 5-Jul, below expectations of 234k, versus a revised 232k in the previous week (was 233k). Continuing claims rose 10k to 1,965k in the 28-Jun week, versus 1,955k in the previous week.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$12.77 (+0.39%)
5-Day Change: -$6.44 (-0.18%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,352.28 - $3,495.89
Weighted Alpha: +37.06
Gold is trading modestly higher for a second straight session, even as the dollar index edged to a two-week high. The yellow metal continues to straddle the midpoint of the range at $3,311.51, awaiting fresh impetus.
The dollar index rebounded from yesterday's intraday losses, notching a seventh consecutive higher close, and seems to be on track for an eighth. However, the DX is less than 1.5% above the more than three-year low set last week. Recent dollar gains appear to be corrective.
The dearth of U.S. economic data this week has the trade looking ahead to next week's inflation and retail sales reports. CPI is out on Tuesday (+0.3% expected), PPI on Wednesday (+0.2% expected), and retail sales on Thursday (+0.1% expected).
While gold remains entrenched in its range, the chart pattern that has developed over the past couple of months appears to be a continuation pattern. This favors an eventual upside breakout and resumption of the dominant uptrend.
A breach of Tuesday's high at $3,344.27 would clear the way for probes back above $3,400. More substantial resistance marked by the 16-Jun high at $3,449.14 must be exceeded to put the record high at $3,500 back in play.
Yesterday's low at $3,284.61 protects the more important 30-Jun low at $3,256.02. The 100-day moving average has risen to the $3,200 zone, which should keep the range low at $3,127.12 (15-May) at bay.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.362 (+0.99%)
5-Day Change: -$0.186 (-0.50%)
YTD Range: $28.565 - $37.288
52-Week Range: $26.524 - $37.288
Weighted Alpha: +23.91
Silver is recovering somewhat from three days of losses, after failing to sustain Monday's probe back above $37. The white metal is being helped by a second day of gains in gold and ongoing strength in copper.
Market focus remains on trade developments, and copper has become an increasingly significant piece of that puzzle. As silver has migrated in recent decades from a monetary metal to an industrial metal, it has become less correlated with gold and arguably more correlated with copper.
The gold/silver ratio has traded above 100 in recent years, rising from a historic average of 15, to a 100-year average of 40, to a 25-year average of 68. The copper/silver ratio has been in a fairly stable 0.3/0.1 range throughout much of history, but more recently has been confined to the lower half of that range.
Tuesday's high at $36.864 has been slightly penetrated, and a more convincing breach would bode well for further probes above $37. The more substantial $37.198/288 zone must be negated to bolster confidence in previously established upside objectives at $38.750 (Fibonacci) and $40 (psychological).
On the downside, the 20-day moving average ($36.453) has provided decent support over the past week and should help keep Monday's low at $36.201 at bay. More substantial support at $35.369 (24-Jun low) is considered well protected at this point.
Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com
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.
