12/23/2024

Gold remains within its range to start the holiday week

OUTSIDE MARKET DEVELOPMENTS: Markets continue to digest the forward guidance from last week's FOMC meeting as the Christmas week begins. The trade is now anticipating a much shallower easing path in 2025 amid solid growth and employment, and persistent worries about inflation.

Friday's Personal Income report saw headline PCE inflation for November edge up to 2.4% y/y, versus 2.3% in October. Core PCE inflation was steady at 2.8%. While well off the cycle highs of 7.2% (headline) and 5.6% (core), they are still the hottest since July and April respectively.

The Fed will likely be on hold in January, and perhaps March as well. The Fed's dots project just 50 bps in additional cuts in 2025, down from 100 bps in September. Fed funds futures suggest the first 25 bps cut won't come until March.

ECB President Lagarde remains optimistic about taming inflation. "We are getting very close to that stage when we can declare that we have sustainably brought inflation to our medium term 2%," she told the FT. Lagarde expressed some ongoing concerns about services inflation.

President-elect Trump says Russian President Putin wants a meeting on Ukraine soonest. “President Putin said that he wants to meet with me as soon as possible,” said Trump. According to the Washington Post, Ukrainian President Zelensky is now indicating some willingness to negotiate.

Durable Orders fell 1.1% in November, well below expectations of -0.3%, versus a positive revised +0.8% in October (was +0.2%). That's the largest monthly drop since June. Ex-trans -0.1%. Shipments -0.1%.

Chicago Fed Index rose to -0.12 in November from a revised -0.50 in October.

Consumer Confidence and New Home Sales are out later this morning.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -6.62 (-0.25%)
5-Day Change: -$74.81 (-2.75%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +24.24

Gold remains confined to the well-defined $2,789.68/$2,541.42 range. After some modest retracement late last week, the yellow metal ended up with a loss of less than 1%.



Consolidative trading is likely to continue through this holiday week, and probably next. In fact, the range may prevail until inauguration day on 20-Jan given the significance of some of the executive orders expected from President Trump.

Movement on a negotiated peace in Ukraine could ultimately reduce the haven bid for gold and put the low end of the range at $2,541.42 in jeopardy. A breach of this level would shift focus to $2,482.74/$2,474.95. where an important Fibonacci level corresponds with the 200-day moving average.

On the upside, last Monday's high at $2,663.89 needs to be negated to clear the way for renewed tests above $2,700. A breach of chart resistance at $2,719.75/$2.723.70 would return focus to the $2,789.68 record high.

SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.169 (-0.55%)
5-Day Change: -$0.855 (-2.80%)
YTD Range: $21.945 - $34.853
52-Week Range: $20.704 - $34.853
Weighted Alpha: +19.28

Silver is trading higher for a second session, but remains broadly defensive in the wake of last week's range breakout. The white metal ended last week with nearly a 3.5% loss.


Scope remains for a challenge of the $28.306 Fibonacci level (78.6% retrace of the rally from $26.524 to $34.853). Last week's low at $28.783 provides an intervening barrier.

Short-term upticks are likely to be viewed as selling opportunities. It would take a rebound above $30 to shift back to a more neutral tone, and a rise above $32 to set a more favorable tone within the old range. That seems unlikely this holiday week.


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