Gold and silver consolidate within last week's ranges

Outside Market Developments: Global macro headwinds and shifting risk appetite are colliding this week, as sticky inflation pressures clash with a broader tech sector selloff and cooling economic data. While the Fed is widely expected to pause at next week's policy meeting, investors are navigating a retreating dollar and a sluggish housing market, keeping risk sentiment on edge.

U.S. stocks are trading mixed as investors balance broadly favorable corporate earnings against a backdrop of macro caution. Wall Street is focused on next week's FOMC meeting and crucial PCE inflation, amid expectations that persistent price pressures warrant at least one more rate hike before year-end.

The 30-year fixed mortgage rate reached a near three-year high of 7.5% in the week ended 9-Oct. While the key rate dipped to  7.41% last week, high financing costs will continue to weigh on U.S. housing data.

Housing starts fell 5.2% in September to a seasonally adjusted annual rate of 1.221M units, the second-lowest pace since the pandemic. Meanwhile, forward-looking building permits dropped to a 3.5-year low of 1.4M. Both single-family and multi-family construction pulled back as persistent affordability challenges, elevated mortgage rates, and cautious builder sentiment weighed heavily on the sector.

Moscow has reportedly agreed in principle to resume trilateral negotiations involving Russia, Ukraine, and the United States. The talks are slated to begin after the midterms and are expected to focus heavily on establishing post-conflict security frameworks and resolving long-term stability terms.

Iranian Foreign Minister Abbas Araghchi said that indirect negotiations with the U.S. continue through mediators including Pakistan and Qatar. Tehran has proffered a seven-day ceasefire proposal, which would involve ending the U.S. naval blockade of Iranian ports, lifting oil sanctions, releasing frozen assets, and reopening the Strait of Hormuz. The U.S. is seeking additional conditions, and no agreement has been reached, leaving the strait restricted and oil prices elevated. However, both sides say that diplomatic channels are open and hope for a path to de-escalation springs eternal.

Overall oil exports from the Persian Gulf (excluding Iran) have recently surpassed pre-war levels, averaging more than 24 million barrels per day in the week through October 18, according to Kpler data, thanks to alternative pipelines, U.S.-protected shipping corridors, and ship-to-ship transfers. Flows specifically through the Strait of Hormuz remain at about 82% of pre-war volumes. However, crude prices have not moderated due to the fragility of these routes, increased shipping costs, and sky-high maritime insurance costs.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$1.81 (+0.04%)
5-Day Change: +$26.87 (+0.65%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,887.03 - $5,595.02
Weighted Alpha: -4.38

Gold slipped to a new low for the week in overseas trading before recovering somewhat with help from a defensive dollar. However, both yields and the greenback remain elevated – just off recent highs – capping the yellow metal. Some hope for de-escalation in both Iran and Ukraine may also be sapping haven interest.

 

There is certainly some doubt as to whether gold is attempting to base and confirm the July low, or merely consolidating in preparation for a resumption of the downtrend off the record high that was set early this year. I'm still cautiously biased toward the former amid expectations that robust central bank reserve diversification, global deldollarization, and persistent geopolitical safe-haven demand will continue.

While the official sector provides a massive structural floor through multi-year acquisition programs, physical retail demand has also seen steady support from private investors seeking protection against sticky inflation, currency debasement, and broader macro volatility. Global retail demand for gold bars and coins remained exceptionally resilient through the first half of the year, totaling over 780 tonnes (the strongest first-half in more than a decade) despite the near-record-high price environment.

Major Wall Street banks and commodities analysts maintain a generally bullish outlook for gold, forecasting continued upside through year-end and into 2027. J.P. Morgan targets a push toward$6,000, Goldman Sachs projects $4,900 to $5,400+, Morgan Stanley and TD Securities expect spot prices to comfortably surpass $5,000 in 2027, CIBC forecasts a recovery to $5,200, and Wells Fargo sees potential to $4,900 to $5,100 by late-2026 and targets $5,400/$5,600 in 2027.

Is the bull camp too crowded right now? At this point, I'd be happy to see a sustained move above $4,200 and a close above the 100-day m oving average at $4,231.62. An eventual push above $4,400 would offer additional encouragement and suggest potential back to the August high at $4,696.31.

On the downside, today's intraday low at $4,107.00 reinforces the significance of the $4,100.39/$4,100.00 support level. Below the latter, the potential double bottom at $4,073.90/$4,067.07 would be back in play. If that chart pattern is negated, it would open up the $4,000 zone to a test, and the $3,945.52 low from June would be vulnerable.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.463 (-0.80%)
5-Day Change: +$1.819 (+3.27%)
YTD Range: $54.778 - $121.630
52-Week Range: $45.563 - $121.630
Weighted Alpha: +0.93

Silver has adopted a consolidative tone at the low end of last week's range, as yields near multi-decade highs, firm crude and expectations for another rate hike this year continue to weigh. The recent modest pullback in the dollar is perhaps providing some underpinning, but the white metal continues to look vulnerable.



Recent price activity looks like a bear flag to me, suggesting further attacks on the downside are likely. A breach of Tuesday's low at $56.393 would clear the way for a retest of last week's low at $55.409. Below the latter, attention would return to the summer low at $54.778.

Despite the short-term bearish bias, silver is underpinned by a powerful combination of multi-year structural supply deficits and surging industrial demand. On the supply side, persistent mining constraints and stagnant output have struggled to keep pace with consumption. Simultaneously, industrial demand continues to accelerate, driven heavily by AI infrastructure buildout, solar panel manufacturing, electric vehicles, and consumer electronics, alongside steady retail investment and safe-haven demand that mirror gold's broader bull market.

A rebound above the $60 level is needed to ease pressure on the downside somewhat and shift focus to the highs for October just above $62. The declining 100-day MA will fortify the $62 zone ahead of the weekend.


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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