Gold and silver easier amid firm yields and dollar

OUTSIDE MARKET DEVELOPMENTS: Markets are primarily focused on geopolitics and policy signals this week. The U.S. economic calendar is relatively light.

After last week’s 25 bps Fed rate hike (the first since July 2023) and hawkish tone, we'll hear from multiple Fed officials this week, including Goolsbee, Williams, Jefferson, Barkin, Barr, and Hammack. Markets will parse those comments for clues on further tightening. Yields and the dollar will react accordingly.

The probability of further tightening this year has moderated somewhat, helped by further losses in oil to start the week. An October rate hike is near a 50/50 proposition, while the odds of at least one more before year-end remain elevated around 89%.

Yields have pulled back modestly (10-year around or below 5%, down a few basis points) as lower oil reduces inflation fears. Stocks are trading higher, led by tech/AI names. The dollar index remains well bid after setting a seven-week high last week amid persistent yen weakness.

The Bank of Japan raised its policy interest rate by 25 bps on Friday to 1.25% – the highest level in about 31 years – in a 7-2 vote aimed at preventing underlying inflation from overshooting its 2% target amid rising energy costs. Governor Kazuo Ueda indicated the central bank has entered a new phase of preemptive policy adjustment and did not rule out further or larger hikes depending on economic and price developments. Based on USD-JPY price action, the trade judged the decision and tone to be insufficiently hawkish.

The UN General Assembly meets this week with a theme of “Restoring trust, managing transformation: A United Nations that delivers for all.” World leaders are set to address global challenges including ongoing conflicts in the Middle East and Ukraine, climate action, AI governance, and sustainable development. High-profile speeches are expected from figures such as President Donald Trump, Iranian President Masoud Pezeshkian, and others, alongside side meetings that could influence diplomacy amid heightened geopolitical tensions.

Chinese President Xi Jinping is skipping the UNGA to focus on a high-profile summit with President Trump in Washington. This will be Xi’s first official state visit in over a decade. The talks are expected to focus on extending a fragile trade truce, tariffs, critical minerals and rare earths, artificial intelligence cooperation and safeguards, with Taiwan and the ongoing Middle East conflict also likely to be covered.

The U.S., Denmark, and Greenland reached a new security agreement that expands permanent U.S. military access, basing, and overflight rights in Greenland while explicitly preserving Danish sovereignty and Greenland’s right to self-determination. Expected to be formally signed during this week’s UN General Assembly, the deal also prohibits non-NATO countries from establishing bases or making sensitive investments on the island, addressing U.S. strategic concerns in the Arctic without any transfer of territory.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$35.40 (-0.81%)
5-Day Change: +$54.15 (+1.26%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,684.09 - $5,595.02
Weighted Alpha: +9.22

Gold begins the week slightly defensive with generally firmer yields and the dollar posing headwinds. The yellow metal managed to eke out a higher weekly close last week, despite rate hikes by both the Fed and the BoJ.



The bull camp should be encouraged by gold holding above the 100-day moving average. The declining 20-day MA at $4,406.39 closely corresponds to Friday's high at $4,399.30, defining important short-term resistance. Penetration would clear the way for a challenge of the midpoint of the recent range at $4,566.15 with potential to the rising 200-day MA at $4,544.67. Above the latter, the August high at $4,696.31 would be in play.

Despite softer prices last week, global ETFs saw solid net inflows of 27.1 tonnes. It was the eleventh straight weekly inflow. North American investors led the charge amid mounting macro uncertainty and fiscal risks. This persistent demand highlights a structural shift toward safe-haven portfolio protection and currency hedging over short-term price momentum.

Today's early U.S. low at $4,323.27 bolsters the declining 100-day MA at $$4,318.77. The rising 50-day MA at $4,295.66 attracted buying interest last week. A close below the 50-day or a breach of last week's low at $4,235.99 would leave gold vulnerable to further bearish retracement toward $4,200.

Gold’s longer-term fundamentals remain strongly supportive, underpinned by persistent central bank buying for reserve diversification, elevated geopolitical risks, and concerns over fiscal sustainability and currency debasement that reinforce its role as a monetary hedge. These structural drivers are complemented by seasonal bullishness that can extend into February, driven by Indian wedding/Diwali demand, Western holiday jewelry buying, and Chinese New Year preparations.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.352 (-0.53%)
5-Day Change: +$3.455 (+5.46%)
YTD Range: $54.778 - $121.630
52-Week Range: $43.035 - $121.630
Weighted Alpha: +28.79

Silver notched a higher weekly close last week, despite reaching a six-week low at $62.331 last Monday. The white metal starts this week lower, but in a generally neutral position.



Probes above the declining 100-day moving average have been unsustainable thus far, leaving the downside vulnerable to further tests. The falling 20-day MA has provided support so far today, keeping Friday's low at $65.227 at bay.

A close above the 100-day MA would put last week's high at $67.328 to the test. Above that, more formidable resistance at $68.314 (9-Sep high) is the key to unlock further tests above $70. Key resistance is well defined by the August high at $71.104.

Major global physical silver ETFs experienced net outflows of approximately 0.5 million troy ounces (around $29M) for the week ending 18-Sep. This mild position squaring was led primarily by redemptions in SLV as investors exercised caution amid firm Treasury yields and expectations of higher interest rates.

The longer-term bullish thesis for silver rests on a persistent structural supply deficit combined with indispensable non-discretionary industrial demand. Global demand is set to outstrip mine supply for a sixth consecutive year in 2026, widening the deficit to an estimated 46.3 Moz and drawing above-ground vault inventories down by over 760 Moz since 2021.

With roughly 70% of silver mined as a byproduct of other metals (like copper, lead, and zinc), mine output cannot easily expand to meet rising prices. Meanwhile, demand remains supported by silver's electrical conductivity in green energy infrastructure, solar photovoltaics, electric vehicles, and AI hardware.

PGMs

Platinum is trading in a consolidative range near $1,800, showing modest upward bias at times amid broader precious-metals support from geopolitical tensions and tight physical supply, though gains have been capped by higher U.S. yields and a firmer dollar following last week's Fed rate hike.

Palladium has recovered above $1,300 after setting a six-week low of $1,254.83 last week. Recent softer performance is tied to industrial demand concerns – particularly from the automotive sector – and elevated interest rates have outweighed any safe-haven or supply-side support, resulting in more subdued price action compared with platinum and gold.

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.