8/16/2024

Gold reaches new record highs as silver consolidates within yesterday's range

OUTSIDE MARKET DEVELOPMENTS: Despite a bit of an upside surprise in July export prices (+0.7%), this week's U.S. data largely supports the notion that inflation continues to moderate. This bodes well for the Fed to begin easing in September.

The prospects for a larger 50 bps rate cut have ebbed significantly to just 28.5%, versus more than 50% last week. The unwinding of those bets weighed on markets earlier in the week, but conditions seem to have stabilized ahead of the weekend.

U.S. housing starts fell 6.8% to 1.238M in July, below expectations of 1.350M, versus a downward revised 1.329M in June (was 1.353M). Permits and completions also undershot expectations as high mortgage rates continue to weigh on the housing sector.

Atlanta Fed President Bostic said earlier in the week that he wanted to see "more data" before supporting rate cuts. However, he told the FT that the Fed "can't afford to be late." There are plenty of worries that the central bank is already well behind the curve.

Chicago Fed President Austan Goolsbee (centrist-hawk) expressed concerns today about the weakening jobs market in an NPR interview. He warned that the U.S. economy is flashing recessionary warning signals.

Michigan Sentiment (prelim) rebounded to 67.8 in August, above expectations 66.5, versus an 8-month low of 66.4 in July. This ended the string of consecutive monthly declines at five.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: +$8.48 (+0.35%)
5-Day Change: +$37.08 (+1.53%)
YTD Range: $1,986.16 - $2,481.63
52-Week Range: $1,812.39 - $2,481.63
Weighted Alpha: +31.54

Gold extended to new record highs in early U.S. trading, signaling that the dominant uptrend is back underway. The yellow metal is trading more than 2% higher on the week.



With the uptrend officially back underway, scope is seen for tests of upside targets at $2,500.00/$2,503.27 and $2,539.77. A measuring objective off the recent corrective/consolidative pattern suggests potential toward $2,597.15/$2,600.00.

Gold continues to be supported by haven buying, rate cut expectations, a weaker dollar, and seasonals. The yellow metal tends to bottom mid-summer ahead of the Indian festival and wedding seasons.

The highs from earlier in the week at $2,476.29/$2,472.36 now define initial support.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CDT: -$0.234(-0.83%)
5-Day Change: +$0.620 (+2.26%)
YTD Range: $21.945 - $32.379
52-Week Range: $20.704 - $32.379
Weighted Alpha: +22.31

Silver has been unable to build on yesterday's solid gains, despite new all-time highs in gold. Nonetheless, the white metal is poised for a higher weekly close.



The tone in silver remains consolidative to corrective. Price action today is confined to the high end of yesterday's range, while price action this week is within last week's range.

The fresh highs in gold along with silver's move back above the 20-day moving average will lend credence to the scenario suggesting that the corrective low is in place at $26.524 (08-Aug low). If silver holds above the 20-day and registers a higher close today the bull camp will be further emboldened.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
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