12/26/2024

Gold and silver firm in thin holiday trade on heightened geopolitical risks

OUTSIDE MARKET DEVELOPMENTS: Geopolitical tensions have escalated amid speculation that Russia is responsible for the downing of the Azerbaijan Airlines passenger plane on Wednesday. Some reports suggest that Russian air defenses were engaging Ukrainian drones and the commercial flight was struck inadvertently.

Most European and Canadian markets remain closed for the holidays. Thin trading conditions.are expected to prevail until after the new year.

Once 2025 has begun, the market's focus will shift to the inauguration of President Trump, his initial raft of executive orders, and political priorities associated with trade, immigration, taxes, and fiscal policies.

Initial Jobless Claims fell 1k to 219k in the week ended 21-Dec, below expectations of 222k, versus 220k in the previous week. Continuing jobless claims surged 46k to a three-year high of 1,910k in the 14-Dec week, versus a revised 1,864k in the previous week.

M2 will be released this afternoon.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$11.82 (+0.45%)
5-Day Change: +$41.43 (+1.60%)
YTD Range: $1,986.16 - $2,789.68
52-Week Range: $1,812.39 - $2,789.68
Weighted Alpha: +25.03

Gold jumped more than 1% in thin holiday trading to set new highs for the week. Reports that Russian air defenses may be responsible for the downing of the Azerbaijan Airlines passenger plane have increased geopolitical tensions. The Kremlin has warned against such speculation until they have conducted a full investigation.



The yellow metal remains confined to the lower half of the well-defined $2,789.68/$2,541.42 range. The midpoint of the range at $2,665.55 corresponds closely with the 50-day moving average and should remain protected for the remainder of this week. The 20-day MA at $2,642.71 provides an intervening barrier.

A move into the upper half of the range in the week ahead would bode well for tests back above $2700 with potential back to the record high at $2,789.68. An eventual resumption of the dominant uptrend is favored in 2025. The next significant upside objective beyond the all-time high is $3,000.

A minor chart point at $2,622.93 now protects the low for this week at $2,608.94. More important support is marked by last week's low at $2,585.51, which stands in front of the range low at $2,541.42.

Silver is engaged in a test of Monday's high at $29.868, bolstered by safe-haven flows into gold. While last week's range breakout and drop below the 200-day moving average leaves the short-term tone bearish, the downside is likely to be limited as long as gold's range is intact.

 
The white metal has been stymied by global growth concerns and yet silver is poised to end the year with a 25% gain, similar to that of gold. If gold's uptrend resumes in 2025, so too should silver's.

It would take improved global growth prospects to set silver up to outperform in the year ahead. While the U.S. economy remains resilient, concerns about China and Europe are likely to persist and provide headwinds for silver and other commodities.

It would take a sustained rebound above $30 to shift back to a more neutral tone. The $32 level must be exceeded to set a more favorable tone within the old range. That seems unlikely given another holiday week ahead of us.

A breach of last week's low at $28.783 would clear the way for a challenge of the $28.306 Fibonacci level (78.6% retrace of the rally from $26.524 to $34.853). Below that, the September low at $27.732 would be the likely attraction.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
Tornado Precious Metals Solutions by Zaner
312-549-9986 Direct/Text
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