Gold heads for a second straight lower weekly close on diminished haven bid

OUTSIDE MARKET DEVELOPMENTS:  The U.S. and China have confirmed that the framework for a trade deal has been agreed to, further stoking risk appetite heading into the weekend.

Citing a Ministry of Commerce spokesperson, Chinese state media reports that "China will review and approve applications for the export of eligible controlled items in accordance with the law, and the US will remove a series of restrictive measures imposed on China accordingly."

Arguably, a deal with China significantly dials back trade war risks and creates momentum for the Trump administration. Commerce Secretary Howard Lutnick said that ten more trade deals are in the offing, with the President keen to finalize them by the July 9 deadline. 

The Israel/Iran ceasefire continues to hold, which has significantly diminished geopolitical risks this week. U.S. special envoy Steve Witkoff said earlier in the week that the White House is seeking a “comprehensive peace agreement.” Economic incentives are reportedly being discussed to get Iran back to the negotiating table.

Witkoff also hinted that a number of additional Middle East countries would be joining the Abraham Accords, normalizing relations with Israel. Then, out of left field, the White House announced that it had brokered a peace deal between Rwanda and the Democratic Republic of Congo.

President Trump's “big, beautiful bill” has stalled in the Senate after the Parliamentarian determined that the provision that cuts billions of dollars in federal Medicaid payments violated the Byrd Rule. That means the legislation can no longer be passed with a simple majority.

Even if the Senate can pass its version of the bill, it's not clear if the House will sign off on the amended version. Getting the “big, beautiful bill” to President Trump's desk by Independence Day appears to be increasingly unlikely.

Personal income and PCE unexpectedly dipped in May. While the Fed's preferred measure of inflation ticked higher, price risks remain well anchored.

While geopolitical, trade, and growth risks have moderated, leading to risk-on sentiment every day this week, U.S. fiscal uncertainty remains a concern. On top of that, Fed easing later in the year is looking increasingly likely. 

Personal Income fell 0.4% in May, below expectations of +0.3%, versus a revised +0.7% in April (was +0.8%).

PCE -0.1% in May, on expectations of +0.2%, versus +0.2% in April.

PCE Price Index rose 0.1%, in line with expectations, versus +0.1% in April; 2.3% y/y, up from 2.3% in April. Core +0.2% on expectations of +0.1%, versus +0.1% in April; 2.7% y/y, up from 2.6% in April.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$42.62 (-1.28%)
5-Day Change: -$94.34 (-2.97%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,319.85 - $3,495.89
Weighted Alpha: +38.98

Gold has fallen to four-week lows as ebbing geopolitical, trade, and growth risks sap the haven bid. The yellow metal is poised for a second consecutive lower weekly close.



Rising expectations of Fed easing are further stoking risk-on sentiment, to the detriment of the yellow metal. Nonetheless, gold remains well within the range that has been in place since mid-May, with U.S. fiscal uncertainty and a weak dollar providing some underpinning.

The breach of support at $3,299.77/97.69 amounts to a convincing move into the lower half of the range. Secondary support at $3,251.28 (29-May low) was approached, but has contained the downside thus far. Penetration of this level would leave gold vulnerable to the $3,200 zone.

Despite today's setback, the dominant trend is still perceived to be bullish. A rebound into the upper half of the range, above $3,311.51 would return a measure of confidence to that trend.

Important resistances for the week ahead are noted at $3,355.11 (20-day MA), $3,391.95 (Monday's high), and $3,400.00/01.45 (minor). Last week's high at $3,449.13 marks a more important barrier that protects the record high around $3,500.00.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.660 (-1.80%)
5-Day Change: +$0.074 (+0.21%)
YTD Range: $28.565 - $37.288
52-Week Range: $26.524 - $37.288
Weighted Alpha: +26.56

Silver fell back below $36, weighed by heightened risk appetite that knocked gold to four-week lows. However, the white metal is clinging to a weekly gain with help from continued signs of a resilient U.S. economy and a weak dollar.



The brief intraday probe below the 20-day moving average could not be sustained, leaving more important chart supports at $35.707 and $35.369 protected. I'll be watching the 20-day ($36.150) on a close basis today.

A rebound above Thursday's high at $36.759 is needed to clear the way for renewed tests above $37. The $37.288/430 zone must be cleared to perpetuate the uptrend and shift focus to the $38.750 Fibonacci objective. Beyond the latter, $40 attracts.


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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