Gold set for lower weekly close on dimmed rate cut expectations, Alaska summit hopes

OUTSIDE MARKET DEVELOPMENTS: All eyes are on Alaska today as Presidents Trump and Putin meet to try to hash out a ceasefire between Russia and Ukraine. Before leaving Washington, DC, acknowledge the importance of the meeting, posting “HIGH STAKES!!!” on TruthSocial.

U.S. trade price inflation warmed in July, led by a 0.4% rise in the import price index. This heightened worries that tariffs may be stoking inflation following Thursday's much hotter-than-expected PPI print.

Chicago Federal Reserve President Austan Goolsbee told CNBC that this week's inflation data “put in a note of unease.” Goolsbee is a centrist hawk and would like to see another month of data to confirm that the economy remains on the “golden path” of moderating inflation and a stable labor market. 

While hopes for a 50 bps Fed rate cut in September have faded, the market continues to believe a 35 bps cut is in the offing. Fed funds futures put the probability at 90.6%. Just over 50 bps of cuts are priced in by year-end.

Retail sales rose for a second straight month. While encouraging after the weakness seen in the spring, consumers remain cautious compared to last year. Ongoing uncertainty about trade policies and inflation is certainly a contributing factor.

Markets are tilted toward risk-off today, but the DJIA still reached a record high. Profit-taking is evident in the S&P500 and NASDAQ, after those indexes set record highs earlier in the week.

Retail Sales rose 0.5% in July, in line with expectations, versus a positive revised +0.9% in June (was +0.6%). Ex-auto +0.3%, in line wth expectations, versus a revised +0.8% (was +0.5%).

Empire State Index rose 6.4 points to a nine-month high of 11.9 in August, above expectations of -1.0, versus 5.5 in July. "New orders and shipments increased. Delivery times lengthened significantly, and supply availability worsened somewhat," according to the report.

Import Price Index +0.4% in July, above expectations of UNCH, versus a revised -0.1% in June (was +0.1%). Ex-petro +0.3% versus a revised -0.2% in June (was UNCH).

Export Price Index +0.1% in July, above expectations of UNCH, versus +0.5% in June.

Industrial Production slipped 0.1% in July on expectations of UNCH, versus a revised +0.4% in June (was +0.3%). Capacity utilization edged down to 77.5% from 77.7%.

Business Inventories +0.2% in June, in line with expectations, versus UNCH in May.

Michigan Sentiment (prelim) fell to 58.6 in August, below expectations of 62.2, versus 61.7 in July. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$1.90 (+0.06%)
5-Day Change: -$55.43 (-1.63%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,451.50 - $3,495.89
Weighted Alpha: +31.91

Gold remains entrenched within the range that has dominated since May. The yellow metal is holding above the midpoint of that range but appears poised for its first lower weekly close in three.



Gold softened this week as inflation readings caused rate cut expectations to ebb, providing some support for the dollar. However, the dollar index is set to close lower on the week, and the threat of revived inflation should help underpin gold.

If President Trump can secure a ceasefire in Ukraine, gold would see additional selling pressure. If the Alaska summit stokes hopes for a peace deal between Russia and Ukraine,  more intense selling would be likely as safe-haven positions get unwound.

Thursday's low at $3,332.10 marks initial support and stands in front of the midpoint of the three-month range at $3,313.56. Below that, the convergence of the 100-day moving average and the lower limit of the triangle pattern at $3,307.16/$3,300.00 protects important lows at $3,270.50 (30-Jul) and $3,256.02 (30-Jun).

A rebound above the 20-day moving average at $3,356.43is needed to set a more favorable tone within the range. Thursday's high at $3,373.02 must be cleared to allow for renewed tests above $3,400.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.202 (-0.53%)
5-Day Change: -$0.497 (-1.30%)
YTD Range: $28.565 - $39.517
52-Week Range: $27.732 - $39.517
Weighted Alpha: +32.26

Silver was unable to sustain the push to three-week highs on Thursday and appears on track for a lower weekly close. Unexpectedly weak economic data out of China is weighing on both copper and silver. 



The breach of Wednesday's low at $37.862 and convincing dive below the 20-day moving average leaves Tuesday's low at $37.567 vulnerable to a test. Below that, a challenge of the 50-day MA at $37.307 would become likely.

A rise back above the 20-day MA at $38.082 would ease short-term pressure on the downside somewhat. Thursday's high at $38.728 now protects the previously targeted $38.826 Fibonacci level. Above the latter, the 14-year high at $39.517 (23-Jul) and $40 would be back in play.


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.