Gold edges higher to pressure $3,400 amid rising concerns about Fed independence

OUTSIDE MARKET DEVELOPMENTS: President Trump said on Tuesday that he will soon have a "majority" of his nominees on the Fed board of governors as he moved this week to fire Governor Lisa Cook. Apparently, Cook is not going to go without a fight.

“Once we have a majority, housing is going to swing, and it’s going to be great,” Trump said. Keep in mind, there were only two dovish dissenters among the 12 voting members of the FOMC at the July meeting.  Nonetheless, Trump's maneuvering raises concerns about the central bank's independence.

Treasury Secretary Bessent has renewed his call for Fed Chairman Powell to initiate an internal investigation, including the circumstances surrounding the allegation of mortgage fraud levied at Cook. “I’ve encouraged Chair Powell to do this on an internal basis before there is an external review,” Bessent said.

Cook is accused of declaring two separate properties to be her owner-occupied primary residence to secure more favorable financing. This does constitute mortgage fraud, and if the allegation is unfounded, Cook should produce the documents and put the matter to rest.

“We haven’t heard her say ‘I didn’t do it,’ — she just keeps saying, the president can’t remove her,” Bessent said. “If a Fed official committed mortgage fraud,” they should not be serving at one of the main US financial regulators, he added.

Meanwhile, New York Fed President John Williams (centrist) says every FOMC meeting is "live," implying that the central bank could indeed resume its easing campaign as soon as September. Fed funds futures continue to price in just over 50 bps in rate cuts by year-end.

Analysts expect Nvidia to report strong earnings after the close today, which could highlight Intel's competitive lag. A miss could weigh on the tech sector.

MBA Mortgage Applications fell 0.5% in the 22-Aug week, versus -1.4% in the previous week. The 30-year mortgage rate ticked up to 6.69% from 6.68%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$17.79 (-0.52%)
5-Day Change: +$33.03 (+0.99%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,474.08 - $3,495.89
Weighted Alpha: +33.24

Gold edged to a new high for the week and is threatening resistance at $3,400.00/03.42. The yellow metal is being buoyed by rate cut expectations, scope for a more dovish tilt to the FOMC, and a soft dollar.

The move above the upper boundary of the symmetrical triangle pattern earlier in the week created a more bullish technical bias. While gold remains confined to the range that was established during the April/May period, the record high is now just over $100 away.

A breach of the 8-Aug high at $3,403.42 would shift focus to $3,435.01 (23-Jul high). The 16-Jun high at $3,449.13 is another key barrier ahead of the all-time high from 22-Apr at $3,500.

Today's intraday low at $3,374.11 protects chart/moving average support at $3,351.54/47.10. The important 100-day moving average at $3,330.06 provides an intervening barrier ahead of last week's low at $3,311.66.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.402 (-1.04%)
5-Day Change: +$0.382 (+1.01%)
YTD Range: $28.565 - $39.517
52-Week Range: $27.732 - $39.517
Weighted Alpha: +33.89

Silver caught a bid in front of $38, helped by firmness in gold and a softer dollar. While now higher on the day, the white metal is still lower for the week.



Expectations for strong Nvidia earnings could also be providing some support. Silver is an important component in AI chips and data centers due to its exceptional electrical and thermal conductivity.

The Silver Institute released a report compiled by Metals Focus yesterday that touts physical silver investment as an increasingly important component of global demand. The report focuses on the top four physical silver markets: The U.S., India, Germany, and Australia.

"The scale of US buying has been astounding, with a combined total of 1.5 billion ounces (Boz) of silver purchased by retail investors between 2010 and 2024," according to the report. Metals Focus acknowledged that U.S. demand is in a lull, but expects interest to improve slightly in H2.

Macroeconomic uncertainties stemming from President Trump's trade and fiscal agendas have stoked renewed interest in safe-haven assets this year. His perceived efforts to infringe on the independence of the Fed are also contributing to the haven bid.

Metals Focus believes that if Chairman Powell is prematurely ousted from the Fed, it "would likely weigh on the dollar, to the benefit of silver (and gold) prices."

Today's European low at $38.103 reinforces the significance of the 20-day moving average at $37.983. The 50-day MA comes in at $37.583.

A breach of Friday's high at $39.062 would lend credence to the scenario that calls for a retest of the 14-year high at $39.517 (23-Jul) and a push to $40.


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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