Gold and silver poised for higher monthly closes, despite recent retreats

Outside Market Developments: In his first Jackson Hole speech as Fed Chair on Friday, Kevin Warsh struck a hawkish tone, emphasizing that inflation remains above the 2% PCE target (3.7% y/y in July), so the Fed’s predominant focus must be on prices and it “has work to do” if progress is insufficient. He described the economy as strong and resilient with labor markets at full employment, financial conditions not broadly restrictive, and potential productivity gains from AI, while rejecting traditional forward guidance in favor of a “quieter Fed” that avoids excessive policy predictions and lets markets assess the data.

“While this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved,” said Warsh. Despite his aversion to forward guidance, he sure seemed to be guiding the trade away from its recent assessment that inflation is moderating and the potential for a September rate hike was waning.

Prospects for a 25 bps rate hike at the September FOMC meeting have jumped to 66.1%, up from 57.0% on Friday and 41.1% a week ago. That puts the probability back where it was about a month ago.

The vote in July was 9-3 to hold steady on policy. Warsh himself was one of the nine. Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie Logan were the dissenters who favored a 25 bps hike.

August CPI and PPI come out before the next FOMC meeting. Although oil prices have traded in a range and will end lower in August, the elevated energy prices from July could still produce modestly warmer inflation readings. Absent a significant hot surprise or a fresh energy shock, I believe the Fed remains on hold.

August jobs data comes out on Friday. Median expectations are +58k payrolls and a steady unemployment rate of 4.1%. Evidence of ongoing labor market weakness could absolutely derail the rebound in hawkishness.

The dollar index has been unable to sustain the two-week highs set on Friday, with the 100-day MA providing resistance.
Debasement worries prevail in the wake of U.S. debt exceeding the $40 trillion threshold and the Treasury's long-bond buyback plans, and focus shifts to upcoming data. The dollar appears poised for a second straight lower monthly close.

The U.S. conducted airstrikes on Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday, ending a roughly one-month pause in direct attacks on Iranian territory. Washington said the limited operation targeted Revolutionary Guard forces preparing to launch rockets carrying sea mines into the strategic waterway.

Iran responded on Monday by firing ballistic missiles at U.S. military bases in Jordan and claiming strikes on targets in the UAE. Iranian President Pezeshkian stated that further war is not in Iran’s interest and called for dialogue, while President Trump vowed a strong American response.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$1.40 (-0.03%)
5-Day Change: -$207.14 (-4.45%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,404.53 - $5,595.02
Weighted Alpha: +16.58

Gold starts the week lower, extending Friday’s decline after Fed Chair Kevin Warsh’s hawkish Jackson Hole remarks revived expectations of a September rate hike. Even so, the yellow metal is on track to finish August with a gain of more than 9%, its strongest monthly performance since January.



A setback in the dollar stemming from heightened debasement concerns provides some underpinning, as does heightened geopolitical risks, strengthening investor interest and seasonal influences. As noted last week, I expect setbacks to attract buying interest, especially given that a September rate hike still strikes me as a long shot.

Losses below the rising 20-day moving average at $4,429.84 have proven difficult to sustain thus far, leaving the more important 100-day MA at $4,370.19 well protected. Chart support at $4,325.73/$4,311.40 should keep the 50-day MA ($4,210.89) at bay.

Initial resistance is marked by today's Asian high at $4,471.29. The rising 200-day MA at $4,533.92 and the halfwayback point of the recent decline at $4,546.83 must be cleared to return confidence to the bullish objective at  $4,777.59.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.851 (+1.28%)
5-Day Change: -$2.340 (-3.39%)
YTD Range: $54.778 - $121.630
52-Week Range: $37.732 - $121.630
Weighted Alpha: +40.29

Silver continues to be weighted by the more hawkish tilt to Fed expectations that emerged on Friday. Despite the recent pressure, the white metal is on track for its first higher monthly close since May, and at +15% (currently) it would likely be the best monthly performance since January.



Geopolitical tension from the renewed U.S.-Iran exchanges and firmer oil have provided only limited support, while the modestly softer dollar today has not been enough to reverse the post-Warsh selling. The inability of silver to sustain the recent try above $70 is somewhat troubling, but I think calmer heads concerning a September rate hike will ultimately prevail.

Additionally, longer-term supply/demand dynamics remain constructive. Recent blockbuster AI and tech earnings have reinforced the structural demand story, as surging investment in data centers, semiconductors, and electrification continues to outstrip constrained supply.

A close back above the 100-day MA ($68.056) would be encouraging to the bull camp, although they may have to wait until after Friday's jobs data. Such a move would return focus to the rising 200-day MA at $72.767. The $70 zone and last week's high at $71.104 provide intervening barriers.

PGMs

Platinum and palladium also start the week under pressure, extending Friday’s declines after Fed Chair Warsh’s hawkish Jackson Hole remarks lifted rate-hike expectations and weighed on non-yielding precious metals. Platinum’s longer-term fundamentals remain supportive, with multi-year market deficits expected to persist amid constrained South African and Russian mine supply and steady demand from autocatalysts (especially hybrids) and industrial uses. Palladium faces a more challenging path as the market is forecast to shift toward balance or surplus from 2027 onward, driven by the gradual decline in internal-combustion engine vehicles, rising recycling volumes, and platinum-for-palladium substitution – though near-term supply disruptions could still provide intermittent support.


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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