Gold and silver easier but poised for weekly gains after benign NFP print 

OUTSIDE MARKET DEVELOPMENTS: February nonfarm payrolls missed expectations, but the print was not as bad as some had feared after a weak ADP print and a surge in Challenger layoffs. I classify the NFP report as benign.

Payrolls rose by 151k on expectations of +160k. Net back-month revisions were -2k. The unemployment rate ticked up to 4.1% from 4.0% in January.

White House economic advisor Kevin Hassett was encouraged by the solid 10k increase in manufacturing jobs in February, most of which are well-paying auto sector jobs. He sees President Trump's policy resulting in "a massive amount of onshoring," including more than $1.5 trillion in commitments for new factories.

Earlier in the week, Treasury Secretary Bessent acknowledged signs of economic weakening. "There’s going to be a natural adjustment as we move away from public spending to private spending,” warned Bessent on CNBC. "We’ve become addicted to this government spending, and there’s going to be a detox period,” he added.

On the trade front, on-again/off-again tariffs are stoking market uncertainty. Weeks of erratic policy are making business planning difficult, and risk-off sentiment prevails. Markets want clarity, and stocks are likely to remain vulnerable until that need is satisfied.

President Trump says he is considering even harsher sanctions and tariffs on Russia as a means to drive them to the negotiating table. "To Russia and Ukraine, get to the table right now, before it is too late," he wrote on TruthSocial.

The EU unexpectedly revised Q4 GDP to +0.2% from +0.1% initially. Despite the doubling, it's still half of the +0.4% Q3 print. The EU economy remains on the ropes, and Brussels is probably eagerly awaiting Germany's planned spending blitz.

German manufacturing orders plunged -7.0% in February. The spending bazooka can't come soon enough to revive Europe's largest economy. But it comes at the expense of an estimated 5 percentage point increase in the debt-to-GDP ratio over the next two years.

Even with the new debt, German debt levels will remain well below EU and global averages. However, Bund yields surged on Wednesday by the most since the months after the Berlin Wall fell, reaching their highest since October 2023. This seems to fly in the face of the fiscal sensibilities of the German citizenry.

Nonfarm Payrolls rose 151k in February, below expectations of +160k, versus a downward revised +125k in January (was +143k). The unemployment rate edged up to 4.1% from 4.0%. Hourly earnings rose 0.3%, versus +0.5% in January. The average workweek was steady at 34.1 hours.

Median expectations for Consumer Credit, out this afternoon, is +$14.0 bln.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$8.09 (+0.28%)
5-Day Change: +$49.46 (+1.73%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,146.66 - $2,955.40
Weighted Alpha: +33.33

Gold is consolidating above $2,900 following a benign jobs report. While price action has been confined to last week's range, the yellow metal is poised for a higher weekly close. It would be the ninth higher weekly close of the last ten.

 

Trade uncertainty, geopolitical tensions, more dovish Fed expectations, and dollar weakness continue to provide support. However, the long side of gold remains a crowded trade, suggesting scope for a more protracted correction. A vulnerable stock market poses risks for another bout of deleveraging in gold.

Last week's weekly key reversal (higher high, lower low, close below the previous week's low) and bearish divergences remain troubling technical features. A breach of last week's record high at $2,955.50 is needed to ease my concerns and put the yellow metal back on track for attainment of the $3,000 objective.

The new high for the week today at $2,929.17 is encouraging, but Fibonacci resistance at $2,929.68 (78.6% retrace of the decline from $2,955.40 to $2,835.23) remains intact.

Incrementum AG reported that "Comex gold deliveries skyrocketed to the highest level ever recorded, even surpassing the levels seen during the COVID-19 panic."

Moderating lease rates and a smaller contango suggest market dislocation is ebbing, but the relocation of gold and silver continues. Speculation persists about the "real" reason for massive inflows to the U.S., beyond tariff front running and the simple arb opportunity.

The 20-day MA comes in at $2,911.68 today. I'd like to see a close above this level. Thursday's low at $2,893.31 protects Tuesday's more important low at $2,883.58.

Silver is under modest pressure after setting a two-week high at $32.750 on Thursday. The white metal is poised for a solid weekly gain of around 4%. Silver has notched only two lower weekly closes since the beginning of the year.



The 20-day moving average comes in at $32.191 today and has effectively contained the downside. A retreat below secondary support at $32.002/$31.809 would dishearten the bull camp yet again and could lead to another go at the 100- and 50-day MAs at $31.316/201.

The elusive close above $33 is needed to add credence to the bullish scenario that calls for a retest of October's cycle high at $34.853. This week's high at $32.750 and February's high at $33.340 provide solid intervening barriers.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.