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Gold retreats into the range after yet another record high, silver defensive below $32

OUTSIDE MARKET DEVELOPMENTS: Global trade tensions continue to ratchet higher as Europe vowed retaliation against U.S. tariffs announced yesterday against steel and aluminum. “Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures,” said EU President Ursula von der Leyen.

The EU has faced sluggish sub-1% growth for the last two years. Germany is the block's largest economy and its biggest steel exporter. The German economy is already in recession and contracted in 2023 and 2024. The country is also in the midst of a political upheaval with elections slated for later this month.

A trade war with the U.S. does not bode well for an already weakened Germany or the EU as a whole. "Trade wars always cost both sides prosperity,” warned German Chancellor Olaf Scholz. Europe struck a tariff reduction agreement with Trump 45 late in his first term, suggesting that a trade deal between Washington and Brussels is not out of the question.

Fed Chairman Powell testified before the Senate Banking Committee today. He reiterated the message from the last FOMC meeting that the central bank is in no hurry to ease further. “With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said.

Recent FedSpeak has towed that line as well. Citing solid growth last year, a 4% unemployment rate, and above-target inflation Cleveland Fed President Beth Hammack is also inclined to be patient. “It will likely be appropriate to hold the funds rate steady for some time,” she said.

Expectations for the next 25 bps Fed rate cut were pushed out to September late last week after a generally favorable January jobs report. Heightened consumer worries about inflation contributed as well, so the trade will be paying close attention to this week's release of CPI and PPI data.

NFIB Small Business Optimism Index fell 2.3 points to 102.8 in January, below expectations of 104.6, versus 105.1 in December. "Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise." said NFIB Chief Economist Bill Dunkelberg.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$3.54 (-0.12%)
5-Day Change: +$64.63 (+2.27%)
YTD Range: $2,607.16 - $2,940.10
52-Week Range: $1,986.16 - $2,940.10
Weighted Alpha: +42.54

Gold set another new record high at $2,940.10 in overseas trading before retreating into the range. The yellow metal has now set all-time highs in eight out of the last nine sessions as global trade tensions continue to percolate.



The move into the targeted $2,936.00/$2,943.10 zone prompted some profit-taking. While the intraday setback was more than  $50, much of that has already been retraced. Gold is currently trading just below the midpoint of today's range.

As noted in recent commentary, the gold market has become overbought. I remain decisively bullish, but a multi-session corrective/consolidative phase can not ruled out. Fresh intraday lows below $2,884.96 would shift focus to the lows from the previous two sessions at $2,860.70/$2,855.32. Beyond the latter, $2,840.60/$2,839.69 would be in play.

I expect haven interest to perpetuate the dominant uptrend. Voracious central bank gold buying is likely to continue this year as well. The WGC noted an acceleration in official sector demand in Q4'24 suggesting another year of 1,000+ tonne demand may be in the offing.

Despite dollar-favorable interest rate differentials, the greenback remains fairly well contained off the multi-year highs set in January. While I would still categorize the dollar as relatively strong, recent range trading has diminished the headwind for gold.

Our friends at Sprott Money wonder if the U.S. is getting ready to monetize its gold reserves. In discussing President Trump's plan to create a U.S. sovereign wealth fund, Treasury Secretary Bessent said, "We're going to monetize the asset side of the U.S. balance sheet for the American people."

Our 8,134 metric tons of gold reserves are a pretty significant chunk of that balance sheet. Interestingly, our gold reserves are currently valued at a mere $42.22 per ounce.

That price is the fixed statutory price from 1973 and is used for official accounting purposes, resulting in a book value of just over $11 bln. It has never been clear to me why that price hasn't been adjusted periodically over the last 52 years. 

If Treasury were to revalue U.S. gold holdings by marking them to the current market price, instantly that asset would have a book value of $758 bln. But to what end?

Any indication that the U.S. was contemplating selling reserves would be an extraordinarily bearish turn of events. That seems unlikely as even revalued gold reserves would only equate to 2% of the total national debt $36.5 trillion. It wouldn't even make a dent.

Other countries would probably be eager to snap up U.S. gold, particularly if prices fell dramatically. This could hasten ongoing dedollarization efforts and would not be in the best interest of the United States.

Again this is all speculation, but a more likely scenario might be movement toward a new gold standard. "Some think it will be an issuance of the sort of gold-backed treasuries that are favored by Trump's onetime Fed Governor nominee Judy Shelton," according to the Sprott post.

Could this have something to do with the massive movement of gold to the U.S.? Interesting fodder for conversation to be sure!

A rebound above that midpoint of today's range at $2,912.53 would bode well for further tests of the upside. A breach of $2,940.10/43.10 would clear the way for the much-anticipated challenge of $3,000. Above that, $3,037.94 (200% retracement of the decline from $2,789.68 to $2,541.42) would attract.

Silver didn't get much help from the latest round of record highs in gold. Rising trade war concerns are stoking global growth risks and worries about industrial demand destruction. This outweighs the haven appeal of the white metal as a less expensive alternative to gold.



Silver dropped to a six-session low of $31.334. However, the important support zone highlighted by the 20-day, 100-day, and 20-week moving averages at $31.186/178 was left unmolested.

A close back above $32 today would keep hope alive for the bull camp, favoring tests of the highs from the last two sessions at $32.212  and $32.320. A breach of last week's high at $32,590 is needed to return focus to $33.000/066 and the next Fibonacci level at $33.554.

If silver closes below the important moving averages, a deeper retreat below $31 would be likely, with potential to the 3-Feb low at $30.763. While I don't think the lows from December at $28.802/783 are in jeopardy, more consolidation in the lower half of the well-defined $34.853/$28.783 range could be in the offing. 


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 reaches new record above $2,900, dragging silver back above $32

OUTSIDE MARKET DEVELOPMENTS: President Trump is expected to announce 25% tariffs on all steel and aluminum imports this week. Trump also pledged reciprocal tariffs on countries that already have levies on U.S. goods. "Very simply it's if they charge us, we charge them," he said.

The latest round of tariff threats has trade war concerns back on the rise after they moderated somewhat last week. Risk appetite is fairly balanced to start the week.

Markets were rattled on Friday by a full percentage point surge in year-ahead consumer inflation expectations to a 15-month high of 4.3%. The barrage of headlines in recent months about what's going to cost more due to Trump's trade policies understandably has consumers worried.

The New York Fed's survey of consumer inflation expectations was not as hot as the University of Michigan's reading. Nonetheless, the NY Fed survey reflects a worry that inflation will remain sticky near 3% out to the five-year horizon.

"Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—was unchanged at the one-year horizon, declined at the three-year horizon, and increased at the five-year horizon," according to the NY Fed's SCE.

The trade will be watching this week's U.S. inflation data for signs that prices are indeed heating up. January CPI (Wednesday) and PPI (Thursday) are both expected to show increases of 0.3%. Import/Export prices are out on Friday and the market is anticipating +04% and +0.3% respectively.

Despite the headline NFP miss, Friday's jobs data suggests the U.S. economy continues to hum along thanks to positive back-month revisions and a downtick in the jobless rate to an eight-month low of 4%.

As a result, Fed funds futures now don't show the next 25 bps rate cut fully priced in until September. Fed Chairman Powell will be on Capitol Hill this week for his semiannual testimony to lawmakers amid pressure from President Trump for more accommodative monetary policy.

Aside from the NY Fed SCE, today's U.S. economic calendar is empty.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$43.23 (+1.51%)
5-Day Change: +$90.10 (+3.20%)
YTD Range: $2,607.16 - $2,910.37
52-Week Range: $1,986.16 - $2,910.37
Weighted Alpha: +42.40

Gold has reached new all-time highs above $2,900. The yellow metal has set record highs in seven of the last eight sessions, with last Thursday the lone exception.



Arguably the trade has become quite crowded and Thursday's modest setback did little to relieve the developing overbought condition. While today's RSI reading of 78 is the highest since April, the indicator reached a high of 85 before we saw a meaningful correction.

Today's gains lend further credence to the next upside targets at $2,943.10 (Fibonacci), $2,936.00 (measuring), and $3,000.00 (psychological). Today's intraday and all-time high at $2,910.37 marks first resistance.

Net global ETF inflows totaled 17.7 tonnes in the week ended 31-Jan. European investors led the charge for a third straight week as growth risks and dovish monetary policy expectations continue to weigh on the euro. A more than 2% gain in gold last week, likely sparked additional inflows.

 

The CFTC's COT report showed that net speculative long positions rose 3.1k to a 19-week high of 302.5k contracts in the week ended 7-Feb, versus 299.4k in the previous week.

CFTC Silver speculative net positions
 

News last week indicated China will allow insurance funds to invest up to 1% of their assets in gold. According to a Bloomberg article, that would equate to a potential inflow of ¥200 bln ($27.4 bln) into the gold market, providing a new source of demand.

China is already a gold-centric country so a 1% allocation is quite conservative. If this pilot program is successful China could increase that threshold. It is widely believed that a 2-10% allocation is optimal and can improve returns in a well-diversified portfolio over time.

Overall gold demand hit a record high in 2024. "Total gold demand (including OTC investment) rose 1% y/y in Q4 to reach a new quarterly high and contribute to a record annual total of 4,974t," said the World Gold Council in its latest Gold Demand Trends report.

"Central banks continued to hoover up gold at an eye-watering pace," said the WGC. Official sector buying exceeded 1,000 tonnes for the third straight year with a notable acceleration in Q4'24.

The flow of gold from global bullion centers to Comex vaults on tariff uncertainty continues to garner a lot of attention. "Gold stored in London's professional bullion vaults fell by 151 tonnes in January," according to Adrian Ash of BullionVault. "Comex warehouses today hold over 4 years of total US jewellery, industrial, coin and small-bar demand," wrote Ash.

Today's low from early U.S. trading at $2,898.16 marks initial support and protects today's Asian low at $2,860.70. Short-term dips will likely continue to be viewed as buying opportunities.

Silver is back above $32 after Friday's soft close raised some concerns about the six-week uptrend. While continued records in gold provide underpinnings for the white metals, global trade, and growth concerns remain headwinds.



The breach of the 61.8% retracement level of the decline off October's high at $34.853 was a bullish technical signal on Friday, but that was tempered by the fade below $32 into the close. Fresh 14-week highs above $32.590 would likely reinvigorate the bull camp.

Such a move would bode well for a push above $33 and a challenge of the next Fibonacci level at $33.554 (78.6% retrace of the decline from $34.853 to $28.783). Above the latter, the cycle high at $34.853 would very much be back in play.

I'm inclined to continue leaning cautiously bullish as long as silver remains above its 100-day moving average. That indicator comes in at $31.179 today. Adding significance to this support is the fact that the 20-week MA is right there as well. The rising 20-day MA will correspond by midweek.

If silver closes below these important moving averages, a dive back below $31 would be likely, with potential to the 3-Feb low at $30.763. That would also signal more consolidation in the lower half of the well-defined range. 

The COT report for last week revealed that net speculative long positions jumped 6k to 50.4k contracts, versus 44.4k in the previous week. It was the first >50k reading in  13 weeks.

CFTC Silver speculative net positions

Like the gold market, the silver market is also experiencing dislocation. Adrian Ash of Bullion Vault reported last week that the one-month lease rate was 7%, well above what the market is accustomed to. The contango between March futures and spot remains elevated at more than 40¢, although it's been as big as $1 in recent weeks.

Rumblings of a potential silver squeeze have been steady background noise for decades. However, that chatter seems to be intensifying amid ever-growing demand and a persistent supply deficit 


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.

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

U.S. calendar is empty today. Market focus this week will be on inflation data and Powell testimony on the Hill.

Gold surges to new record on heightened inflation and trade worries, silver retreats below $32

OUTSIDE MARKET DEVELOPMENTS: While January payrolls missed expectations, there were significant back-month revisions and the unemployment rate ticked down to 4%. The market has broadly interpreted the jobs data as solid and reflective of a robust U.S. economy.

Fed funds futures have pushed the likelihood of the next Fed rate cut to September. The implied Fed funds rate for December is 3.975%, suggesting the market now believes there will be just one rate cut this year.

The more hawkish Fed outlook, a surprising drop in consumer sentiment, and a surge in inflation fears are all contributing to risk-off sentiment. All the major U.S. stock indexes are under pressure and the VIX is up more than 3%.

The University of Michigan's year-ahead inflation expectations surged to a 15-month high of 4.3% in February from 3.3% in January due to tariff worries. "This is only the fifth time in 14 years we have seen such a large one-month rise (one percentage point or more) in year-ahead inflation expectations," according to survey director Janet Hsu.

It was the second straight "unusually large" increase amid ceaseless reporting on what's going to cost more as a result of Trump's trade policies. It's not surprising that consumers are rattled.

Despite the delay of tariffs on Mexico and Canada, worries about a potential trade war remain high. Tariffs on China have been implemented and they have responded with tariffs of their own. Europe is worried that they are now in the crosshairs, as is every country that carries a trade surplus with the U.S.

Nonfarm Payrolls rose 143k in January, below expectations of +165k, versus an upward revised +307k in December (was +256k).  The unemployment rate ticked down to 4% on expectations of 4.1%, versus 4.1% in December. Hourly earnings rose 0.5%, above expectations of +0.3%, versus +0.3% in December. The average workweek fell to 34.1 hours, the lowest since March 2020. Weather and the LA fires may have contributed to the drop.

Michigan Sentiment (prelim) unexpectedly tumbled to a seven-month low of 67.8 in February, below expectations of 71.5, versus 71.1 in January. One-year inflation expectations rose a full percentage point to a 15-month high of 4.3%.

Wholesale Sales rose 1.0% in December, above expectations of +0.7%, versus a positive revised +0.9% in November (was +0.6%). Inventories fell 0.5% in line with expectations, versus -0.1% in November. The inventory-sales ratio dropped to 30-month 1.31. The net impact on Q4 GDP should be positive.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$11.29 (+0.40%)
5-Day Change: +$64.46 (+2.30%)
YTD Range: $2,607.16 - $2,880.41
52-Week Range: $1,986.16 - $2,880.41
Weighted Alpha: +39.78

Gold surged to a new record high in early U.S. trading on Friday, buoyed by ongoing haven interest and increased inflation worries. It was the seventh record high out of the last eight sessions. The yellow metal also appears poised for its sixth consecutive higher weekly close.



The yellow metal is also garnering support from news released today that showed China's PBoC added gold to reserves in January. It was the third straight monthly increase, fortifying the belief that a new buying trend is underway after last year's six-month pause.

Additionally, China's National Financial Regulatory Administration announced a pilot program that would allow insurance funds to invest in gold. Increased institutional demand provides yet another tailwind for gold and could stoke more broad-based buying – including jewelry – in the world's largest gold-consuming nation, regardless of record-high prices.

Furthermore, despite more hawkish Fed expectations and a retreat in Treasuries, the dollar remains fairly subdued. While the dollar index is higher on the day, it remains in the lower half of this week's range.

At Thursday's policy decision presser, BoE Deputy Governor Ramsden responded to a question about the gold outflow from the central bank's vaults. He acknowledged that all of the available delivery slots are booked, and any new requests will have to wait longer. However, he classified the process as “very orderly.”

Ramsden noted that as gold is a physical asset there are "real logistical constraints," including security constraints. "The stuff is also quite heavy," he said, which got a chuckle from the press corp.

Upside targets at $2.936.00 (measuring) $2,943.10 (Fibonacci), and $3,000 (psychological) remain valid. Today's intraday and all-time high at $2,885.75 provides an intervening barrier.

The intraday retreat from today's record high is seen as profit-taking ahead of the weekend.  First support at $2,855.32 protects more substantial support marked by the lows from Wednesday and Thursday at $2,740.60/$2,739.69. Below the latter, the $2,800 zone and the old highs at $2,789.68/$2,784.96 are highlighted.

Silver eked out a new high for the week at $32.590 before succumbing to intraday selling pressure. While the white metal still seems like to notch a third straight higher weekly close, it appears like a second consecutive lower daily close is in the offing.



Global trade and growth worries continue to be a headwind for silver, which derives the majority of demand from industry. A close below $32 to end the week would be a concern for the bull camp, suggesting potential back to Tuesday's low at $31.40. Below that, the 100-day moving average at $31.166 and Monday's low at $30.763 would be back in play.

Ongoing strength in gold perhaps generated some spillover haven buying in silver this week, but that was overwhelmed today by souring consumer sentiment. The $32.530/590 level now provides a good upside barrier ahead of the $32.657/700 chart point and the next Fibonacci level at $33.554.

I'd like to see the 100-day moving average hold on the downside and $32 regained on a close basis to reinstill some degree of confidence in the bullish scenario that emerged this week.


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 corrects after five-session win streak, silver attracts buying interest on dips below $32

OUTSIDE MARKET DEVELOPMENTS: White House spokesperson Karoline Leavitt indicated that Chinese President Xi tried to engage President Trump in trade negotiations earlier this week. "I will speak to him at the appropriate time. I'm in no rush," said Trump.

With tariffs on Canada and Mexico on hold for a month, there are concerns that Trump will turn his attention to Europe next. "We are ready to engage immediately and we hope that through this early engagement, we can avoid the measures which would bring a lot of disturbance to the most important trade and investment relationship on this planet," said EU trade chief Maros Sefcovic.

World leaders are decrying President Trump's audacious proposal to "take over" and redevelop the Gaza Strip. The White House is already walking back the plan, but some think Trump was merely goading regional stakeholders to proffer their own ideas.

The BoE cut the bank rate by 25 bps to 4.5% in a widely expected move. The vote to ease was unanimous, but two committee members wanted a larger 50 bps cut.

“We expect to be able to cut bank rate further as the disinflation process continues. But we will have to judge meeting by meeting how far and how fast,” said BoE Governor Bailey. The expectation of further cuts prompted cable to retreat from four-week highs.

Challenger Layoffs rebounded 11k to 49.8k in January, versus 28.8k in December. "January was relatively quiet in terms of job cut announcements. However, we’ve already seen major announcements in the early days of February, so it seems this quiet is unlikely to last,” said Andrew Challenger.

Productivity (prelim) moderated to a 1.2% pace in Q4, below expectations of 1.8%, versus an upward revised 2.3% in Q3 (was 2.2%). ULCs jumped 3.3%, above expectations of +3.3%, versus +0.8% in Q3.

Initial Jobless Claims rose to 219k in the week ended 1-Feb, above expectations of 214k, versus a revised 208k in the previous week. Continuing Jobless Claims increased to 1,886k in the 25-Jan week, above expectations of 1,870k, versus a revised 1,850k in the previous week.

FedSpeak is due from Waller and Logan this afternoon.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.99 (-0.03%)
5-Day Change: +$68.33 (+2.45%)
YTD Range: $2,607.16 - $2,880.41
52-Week Range: $1,986.16 - $2,880.41
Weighted Alpha: +39.63

Gold has come under modest corrective pressure. It seems likely that the yellow metal will notch its first lower close in over a week. However, gold still appears to be on track for a sixth straight higher weekly close.



Wednesday's low was slightly exceeded, but price action has been largely confined to yesterday's range. After five successive days of record highs, a period of correction or consolidation would be welcomed by the bull camp as it would relieve the short-term overbought condition.

Upside targets at $2.936.00 (measuring) and $3,000 (psychological) remain valid. The all-time high from yesterday at $2,880.41 provides an intervening barrier.

On the downside, yesterday's low at $2,840.60 was reinforced by today's intraday low at $2,839.69. More substantial support is marked by the $2,808.92/2800.00 zone. Dips are likely to continue attracting buying interest.

The gold market continues to be roiled by the flow of metal from global trading centers to Comex vaults in America. What started as an attempt to preposition physical metal in the U.S. to avoid potential tariffs, turned into an arbitrage opportunity that’s taken on a life of its own.

Futures market premiums over spot are just too appealing to pass up. “There are challenges when the US is operating at this kind of premium, but it is something that the market is managing well,” said Ruth Crowell, CEO of the LBMA.

Comex inventories have risen 88% since November according to the FT, while London has been drained. "There is more gold in the U.S. than there should be under normal circumstance, and there is less gold in London than there should be," said John Reade of the World Gold Council.

"Dealers are quoting prices for gold at the BOE at discounts of more than $5 an ounce below spot in London," according to Bloomberg. Amid reports that it's taking up to eight weeks to get gold out of the BoE vault, dealers are inclined to sell those claims at a discount to spot to get gold in hand now. At this point, I think it's more about capitalizing on the higher U.S. price than dodging tariffs.

The turmoil has caused significant dislocation in lease rates and OTC market carry charges. In these market conditions, hedgers suddenly faced with having to pay a carry on short positions may choose to go un or under-hedged, adding additional impetus to the uptrend.

A word of caution though: The market is really out of balance right now. If the contango moderates to the point where it no longer makes sense to ship gold to the U.S. this thing could start to unwind with potentially volatile results.

Silver probed repeatedly back below $32 intraday, but those downticks could not be sustained. While still lower on the day, the white metal is trading comfortably above $32 and appears likely to register a third consecutive higher weekly close.



Silver staged an unsuccessful challenge of the $32.534 Fibonacci level on Wednesday, resulting in a 13-week high of $32.530. A short-term breach of $32.530/534 would clear the way for tests of $33.00 and then the next Fibonacci level at $33.554 (78.6% retracement). Penetration of the latter would put the cycle high from October at $34.853 back in play.

Today's intraday low at $31.816 now provides a good intervening barrier ahead of secondary supports at $31.40 (Tuesday's low) and the 100-day moving average at $31.148. It would take a retreat below the $31.00 zone to take the wind out of the bulls' sails. Ongoing uncertainty on the trade front and global growth risks are the fundamental factors posing downside risks.


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 hits record highs for a fifth straight day, silver at its highest since November

OUTSIDE MARKET DEVELOPMENTS: Ongoing uncertainty on the trade front continues to drive speculation about inflation. My news feed is chock full of one article after another about what will cost more due to the Trump tariffs.

While President Trump delayed tariffs on Canada and Mexico after some progress on border security issues, the drama is far from over. Canadian PM Trudeau has called a trade summit on Friday with the goal of building a "long-term prosperity agenda for Canada. One that is resilient, that breaks down barriers between provinces and territories, and that is diversified in global trade."

In seeking greater trade diversification, Trudeau seems to acknowledge that Canada had become too dependent on its neighbor to the south. Prior to the pause, Canada appeared ready to launch retaliatory tariffs, but with the reprieve comes the opportunity for both countries to seek an equitable trade deal.

Today's big ADP jobs survey beat creates upside risk for Friday's payrolls report and is suggestive of ongoing U.S. economic resilience. Fed funds futures continue to suggest midyear as the most likely timing for the next rate cut.

FedSpeak this week has centered on the "no hurry" to adjust policy messaging, amid ongoing uncertainty. "There is just a lot of uncertainty in the air," said Richmond Fed President Barkin (moderate hawk). However, with signs of economic growth and an expectation that inflation will ultimately continue to moderate, Barkin said he is leaning toward further cuts.

The dollar continues to ease from Monday's high after a measured response from China on tariffs. The PBoC chose not to devalue the yuan as an offset to U.S. tariffs, which also suggests some level of tolerance. 

Further weight was applied to the greenback after stronger-than-expected wage growth in Japan boosted prospects for more BoJ rate hikes, and lifting the yen. The USD-JPY rate slid more than 1% to an eight-week low of 152.119.

MBA Mortgage Applications rebounded 2.2% on stronger refinancing demand in the week ended 31-Jan, versus -2.0% in the previous week. The 30-year mortgage rate dipped back below 7%.

ADP Employment Survey +183k in January, above expectations of +142k, versus an upward revised +176k in December (was +122k). "We had a strong start to 2025 but it masked a dichotomy in the labor market. Consumer-facing industries drove hiring, while job growth was weaker in business services and production," said Nela Richardson, Chief Economist at ADP.

Trade Balance widened to a -$98.4 bln deficit in December, outside expectations of -$96.3 bln, versus a revised -$78.9 bln in November. It was the second largest deficit on record as imports surged 3.5% to $364.9 bln on tariff frontrunning.

S&P Global Services PMI edged up to 52.9 in January on expectations of 52.8, versus 52.8 in December.  "Service sector businesses reported a slowdown at the start of 2025, with activity levels growing at a reduced pace compared to the robust gains seen late last year," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

Services ISM fell to 52.8 in January, below expectations of 54.2, versus a revised 54.0 in December. Prices moderated from 64.4 to 60.4.

GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$26.26 (+0.92%)
5-Day Change: +$109.72 (+3.98%)
YTD Range: $2,607.16 - $2,880.41
52-Week Range: $1,986.16 - $2,880.41
Weighted Alpha: +40.09

Gold has now reached fresh record highs in five consecutive sessions. The yellow metal is being driven by ongoing trade uncertainties but received an additional boost over the last two days from a weaker dollar.



Arguably, concerns about an all-out trade war have moderated somewhat since the beginning of the week. Yen strength today is contributing to the weight on the dollar. The dollar index has retrace all of Monday's sharp gains and then some. The breach of support at 107.50 leaves last week's low at 106.97 vulnerable to a retest.

With the Fibonacci objective in gold at $2,857.21 exceeded, the $2936 measuring objective gains credence. The latter corresponds fairly closely with the next Fibonacci level at $2,943.10 (161.8% retrace of the decline from  $2,789.68 to $2,541.42).

The increase in upside momentum this week bodes well for attainment of the $3,000 psychological threshold. New corrective lows in the dollar should bring this level within reach.

Market dislocation associated with the movement of physical gold from global trading centers to Comex, both to avoid potential tariffs and to take advantage of the arbitrage opportunity presented, continues to roil the market. Liquidity issues in London and structural concerns about the LBMA – even if its just perception – add another level to the buying interest that could overshadow the developing overbought condition.

But has the pendulum swung too far? Ross Norman of MetalsDaily makes a good point: "[I]f 435 tonnes of kilobars are now in New York then surely the problem is as much about surpluses on one side of the Atlantic, as much as so-called 'shortages' on the other."

The last time we saw anything like this was during COVID. Ultimately that situation got unwound and the gold market returned to more-or-less normal operations. However, twice in five years may lead to erosion of trust in the paper claims on physical gold that have become such a big part of the market. 

Today's Asian low at $2,840.60 marks first support. Setbacks are likely to be viewed as buying opportunities with the $2,800 zone seen as well protected.

Silver remains well-bid above the $32 level, buoyed by yet another round of record highs and gold and a softer dollar. Some moderation of trade concerns may be helping the cause, but uncertainty prevails on that front.



The white metal has notched only one lower close (Friday) in the last seven sessions. Upside momentum has increased as confidence from the bull camp grows.

The $32.534 Fibonacci level has been pressured but remains intact thus far. A breach of this level would return additional credence to the longer-term uptrend, targeting $33.00 initially, and then the next Fibonacci tier at $33.554 (78.6% retracement).

The $32.00 level now defines first support and is reinforced by today's intraday low at $31.996. Secondary support is marked by Tuesday's low at $31.40.


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.

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

U.S. calendar features MBA Mortgage Applications, ADP Employment Survey, Balance of Trade, Services PMI & ISM, EIA Data.

FedSpeak due from Barkin, Goolsbee & Bowman.