Gold and silver start the week on the bid

Outside Market Developments: The potential for a September Fed rate hike continues to erode amid recent concerning economic data and signs of tamer inflation. The probability of a 25 bps tightening at the next FOMC meeting has dipped to 30.6%, down from 33.1% on Friday and 52.2% a week ago.

The minutes from the July FOMC meeting will be released on Wednesday, and the market will try to glean further insights into the likely policy path. I don't think they'll find much.

Steady policy in September is likely, and the higher-for-longer bias of the Warsh Fed prevails. Despite evidence of moderating inflation, the PCE price index (also out on Wednesday) will remain well above the Fed's 2% target.

In terms of guidance, we'll likely get something more meaningful from Chairman Warsh at next week's Jackson Hole Symposium. As his first major policy signal since taking the helm, his remarks could decide whether the recent less-hawkish tilt has legs – or whether a full-throated restatement of the Fed's inflation-fighting resolve revives rate hike expectations.

Walmart, Target, Home Depot, Lowe’s, and other retailers are slated to announce earnings this week. On the heels of Friday's July retail sales and consumer confidence misses, investors are hoping to get a better read on the health of U.S. consumers.

U.S. stocks are mixed to start the week, with the DJIA and S&P 500 under modest pressure, while the Nasdaq is flat to slightly positive. Technology and semiconductor shares continue to provide support amid optimism around AI-related forecasts, even as investors remain cautious ahead of those major retail earnings reports later in the week.

Shipping traffic through the Strait of Hormuz has slowed sharply amid the unresolved tensions between the U.S. and Iran. Brent crude rose just over 3% last week, but remains below the midpoint of this year's range.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$22.87 (+0.52%)
5-Day Change: +$162.60 (+3.83%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,311.66 - $5,595.02
Weighted Alpha: +22.18

Gold is recovering from Friday's dip to a new low for last week as the market continues to price out the risk for a rate hike next month. Fresh 10-week lows in the dollar index are providing a tailwind for the yellow metal to begin the week.



Initial resistance is well defined by last week's high at $4,449.00. A breach of this level would keep gold on track for an upside extension to test the 200-day moving average at $4,512.28. Beyond that, Fibonacci/chart resistance at $4,584.68/$4,594.43 would attract.

Last week saw another solid week of global ETF inflows, suggesting gathering investor confidence in the underlying uptrend. It was the sixth straight week of net inflows, and the 23.6 tonne figure marks a 24-week high.



Gold is also heading into what's historically its strongest stretch of the year, with the August-through-November window driven by Indian festival and wedding-season buying (Navratri, Dhanteras, Diwali) layering on top of typical safe-haven demand. That said, seasonality is a backdrop, not a guarantee – price action for the remainder of the year will still hinge heavily on Fed policy signals.

Today's Asian low at $4,367.68 now provides an intervening barrier ahead of the more important lows from last week at $4.313.86/$4,311.40. Penetration of the latter would leave gold vulnerable to a retreat below $4,300 and a reversion to the rising 20-day MA (currently at $4,195.64).


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.912 (+1.41%)
5-Day Change: -$0.106 (-0.16%)
YTD Range: $54.778 - $121.630
52-Week Range: $36.976 - $121.630
Weighted Alpha: +43.66

Silver starts the week on the bid, buoyed by fading rate-hike expectations and a weaker dollar. While ongoing tech/AI optimism provides additional underpinning, the muted upside performance relative to gold is troubling.



Recent soft economic data, most notably July jobs data, retail sales, and consumer confidence, may be limiting the upside. These metrics can signal reduced willingness to spend on non-essential goods, and consumer electronics are among the categories that often feel the impact first.

Broader support comes from ongoing physical market tightness and multi-year supply deficits. However, some analysts note potential headwinds from softer industrial demand in key markets like China and India, plus thrifting in solar panels.

I still think the white metal needs to get back above $80 to reinvigorate the bull camp and get them leaning toward a return to the $100 zone. Intervening resistances are marked by last week's high at $66.782, $68.737 (100-day MA), and $71.951 (200-day MA).

While I can't rule out a short-term challenge of the $61 zone, where the 20- and 50-day moving averages are concerning, I'd view such a move as a buying opportunity. Intervening supports are well-defined at $64.710 (Monday's Asian low), $63.522 (Friday's low), $63.004 (last week's low).


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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