Gold poised for first weekly loss in nine, but a second higher monthly close still seems likely

[I'm at the National Money Show in Atlanta, so I'll keep it brief. If you're at the show, please stop by and see us at Booth 212.]

OUTSIDE MARKET DEVELOPMENTS: Risk-off sentiment prevails as markets continue to weigh tariff threats and sweeping cuts to federal government contracts, programs, and headcount.

PCE inflation slowed to 2.5% y/y in January from 2.6% in December. Core moderated to 2.6% from 2.9%. This was in line with market expectations. I consider the report benign, and there has not been a significant change to rate cut expectations.

Fed funds futures continue to suggest there will be two rate cuts this year, with the first coming in July.

The advance trade deficit ballooned 25.6% to a record-wide -$153.3 bln in January. Imports surged 11.9% to a record $325.4 bln on efforts to avoid threatened tariffs.

President Trump's plans to address persistent trade imbalances have actually led to record deficits.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$14.66 (-0.51%)
5-Day Change: -$96.08 (-3.27%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,028.75 - $2,955.40
Weighted Alpha: +33.57

Gold remains under pressure, weighed by deleveraging pressures and a firm dollar. The yellow metal is poised for its first weekly loss in nine, and it looks like a weekly key reversal will be confirmed on today's close.



It would take a close below $2,798.30 to register a lower monthly close, which seems unlikely...at least as of this writing. Nonetheless, gold will begin March on its back foot.

The violation of the 20-day moving average does suggest potential to the $2,769.62/$2,748.41 zone where the 50-day moving average corresponds closely with the halfway back point of the rally from $2,541,42 to $2,955.40.

A good intervening barrier is noted at $2,800.00/$2,797.26.

A close back above $2,900 would ease pressure on the downside. Monday's record high at $2,955.40 now marks solid resistance ahead of the still valid longer-term objective at $3,000.

Silver plunged convincingly below the 100-day moving average, weighed by more sharp losses in gold and a firm dollar. Considerable wind has been taken out of the sails of the bull camp this week.



The 50-day MA is now under attack, and penetration would return focus to the $30.525/$30.508 zone, where an important Fibonacci level corresponds with the 200-day MA. Below that, the next Fibonacci level comes in at $29.759.

First resistance is marked by the overseas high at $31.375. More substantial resistance is noted at $31.924/928. The bears are in control as long as silver remains below $32.


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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