Gold consolidates below $3,400 as silver surges to 13-year highs above $37
OUTSIDE MARKET DEVELOPMENTS: President Trump posted an ominous warning to residents of Tehran last night, urging them to "immediately evacuate." Israel claims to have air superiority over much of Iran after neutralizing much of the country's air defenses over the past several days.
This leaves Iran quite vulnerable, with the IDF able to attack with impunity using conventional munitions. Meanwhile, Iran continues to fire limited and expensive ballistic missiles at Israel, where a large percentage are intercepted.
With the Israeli air force able to linger over Iran, each Iranian missile launch presents an opportunity to take out another launcher. Reportedly, a third of Iranian launchers have already been destroyed.
Iran's defensive and offensive capabilities are being systematically deteriorated, not to mention their nuclear program. Tehran is reportedly keen on a ceasefire and a return to the negotiating table, which has ratcheted down geopolitical risks.
President Trump departed the G7 summit in Alberta early, presumably to deal with the Israel-Iran conflict. The summit has not generated any breakthroughs, underscoring the fragility of global cooperation amid trade disputes, regional conflicts, and shifting alliances. G7 members did commit to continued dialogue.
The two-day FOMC meeting begins today. The Fed is widely expected to remain on hold when policy is announced tomorrow. At this point, Fed funds futures aren't fully pricing in a rate cut until December as growth risks have generally moderated, today's economic data notwithstanding.
China's retail sales surged 6.4% in May – the strongest print since December 2023 – boosted by government subsidies. However, consumer sentiment remains weak, suggesting this level of consumption may not be sustainable.
Retail Sales fell 0.9% in May, below expectations of -0.6%, versus a negative revised -0.1% in April (was +0.1%). Ex-auto -0.3% on expectations of +0.2%, versus UNCH in April. Tariff distortions were highlighted by a 3.5% drop in vehicle sales.
Industrial Production fell 0.2% in May, below expectations of UNCH, versus a revised +0.1% in April (was UNCH). Capacity utilization slipped to 77.4% from 77.7%.
Business Inventories were unchanged in April, in line with expectations, versus +0.1% in March.
Import Price Index was unchanged in May, inside expectations of -0.3%, versus +0.1% in April.
Export Price Index fell 0.9% in May, below expectations of -0.2%, versus +0.1% in April.
NAHB Housing Market Index fell 2 points to 32 in June, below expectations of 36, versus 34 in May. According to the report, "37% of builders reported cutting prices in June, the highest percentage since NAHB began tracking this figure on a monthly basis in 2022."
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$12.23 (+0.36%)
5-Day Change: +$64.26 (+1.93%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,295.86 - $3,495.89
Weighted Alpha: +46.68
Gold is modestly defensive below $3,400 on elevated risk appetite and a firmer dollar. However, the yellow metal remains slightly more than $100 off the record high, underpinned by geopolitical risks, persistent trade uncertainty, U.S. fiscal and political worries, and a generally weak dollar.
While gold remains within the broad range, last week's initial push above $3,400 returned a measure of credence to the underlying uptrend. Scope remains for new record highs above $3,500, which would bode well for an upside extension to the $3,596.20 Fibonacci objective.
The World Gold Council's latest Central Bank Gold Reserves survey reinforces the notion that official demand will continue to be an ongoing bullish driver. According to the survey, "95% of respondents believe that global central bank gold reserves will increase over the next 12 months."
Additionally, "a record 43% of respondents also believe that their own gold reserves will also increase over the same period." No survey participants "anticipate a decline in gold holdings."
Setbacks within the well-defined range will likely be viewed as buying opportunities. The first level of support I'm watching is $3,344.27/$3,43.31, where the low from June 12 and the 20-day moving average. Secondary tiers of support are noted at $3,320.62 and $3,300.00/$3,297.69.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.763 (+2.1%)
5-Day Change: +$0.304 (+0.83%)
YTD Range: $28.565 - $37.178
52-Week Range: $26.524 - $37.178
Weighted Alpha: +29.37
Silver surged to new 13-year highs above $37 on China's retail sales beat, shrugging off the modest dip in gold and a slightly firmer dollar. The gold/silver ratio appears poised for another challenge of support around 90.
Today's gains bring the February 2012 high at $37.430 within striking distance. A breach of this level would bode well for a push to the next Fibonacci projection at $38.750. Beyond that, $40 looks increasingly enticing.
The early-U.S. low at $36.816 marks first support. Another minor chart point at $36.592/514 protects recent lows at $36.183/065.
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.