Gold and silver extended losses on Wednesday before stabilizing somewhat
Apologies for the radio silence during this volatile time. I've been at an IPMI conference at the Colorado School of Mines. This morning, we toured the CSM experimental mine in Idaho Springs, CO.
OUTSIDE MARKET DEVELOPMENTS: The government shutdown, now in its 22nd day, has become the second-longest in history. The Senate has failed eleven times to reach the 60-vote threshold to break the Democrat filibuster. Sen. Jeff Merkley (D-OR) has been filibustering for more than 20 hours, preventing a twelfth vote.
The absence of U.S. economic data due to the shutdown leaves the market to focus on corporate earnings, the shutdown itself, next week's FOMC meeting, and the ebb and flow of trade and geopolitical tensions.
The BLS will reportedly release September CPI data on Friday, as a special exception during the shutdown to support Social Security cost-of-living adjustments. This report was originally slated for release on 15-Oct, and there are some concerns about the veracity of the data.
A 25 bps rate cut is priced in for the October FOMC meeting. An additional 25 bps of easing is widely expected in December as well.
U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will reportedly meet next week in Malaysia to defuse trade tensions ahead of a Trump-Xi summit in South Korea at the end of the month. The WTO is urging de-escalation to avert a 7% hit to global output.
The fragile ceasefire in Gaza continues to hold, despite reports of violations on both sides. Vice President JD Vance is in Jerusalem to advance the return of the bodies of deceased hostages and the resumption of aid.
The planned summit between Trump and Putin to discuss an immediate Ukraine ceasefire was put on hold after Moscow rejected the proposal without Ukraine ceding additional territory. Ukrainian President Zelenskyy reiterated his refusal to surrender land during a recent White House meeting.
The U.S. is considering providing Tomahawk cruise missiles to Ukraine to pressure Russia toward ceasefire talks. Moscow has warned that such a move would represent a "new level of escalation" and severely damage U.S.-Russia relations.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$89.78 (-2.18%)
5-Day Change: -$134.28 (-3.19%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,541.42 - $4,381.21
Weighted Alpha: +54.91
Gold is trading lower for a second straight session, weighed by ongoing profit-taking, this week's uptick in the dollar, and spec selling on the heels of Tuesday's dramatic losses.
On Friday, after warning of the worsening overbought condition, I suggested a retreat to the rising 20-day moving average would be welcomed and good for the underlying uptrend. Mission accomplished, but I would have preferred a more orderly decline.
It's worth noting that last week's low at $4,004.86 has successfully contained the downside thus far. Let's call the $4,000 zone important short-term support.
A potential double bottom has formed on the hourly chart. A breach of an intraday high at $4,161.10 is needed to confirm that pattern, and re-embolden the bull camp. Such a move would shift focus to the halfway back point of the decline at $4,193.38. At that point, I'll reevaluate the technical picture, but some period of choppy consolidation seems likely.
There are likely stops below $4,000 that may still be an attraction. If the $4,000 support zone gives way, look for a quick test of $3,947.99/45.87.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.628 (-1.29%)
5-Day Change: -$4.843 (-9.14%)
YTD Range: $28.565 - $54.465
52-Week Range: $28.565 - $54.465
Weighted Alpha: +57.18
Silver remains defensive and extended losses after recording a more than 7% decline on Tuesday. It was the largest single-day decline since February 2021. 
Despite the volatility this week, today's low is only a two-week low, reflecting a market that rose too quickly to be sustainable. Silver is a small, thinly traded market. When you see rapid gains like we have in recent weeks, you have to be prepared for an even steeper retracement.
I don't want to make light of the current market conditions, because I know some were stung badly by the volatility, but on 15-Oct I wrote the following:
"For what it's worth, I also fielded a press inquiry from Vanity Fair yesterday. There is nothing scientific about this, but when Vanity Fair is asking about the silver market, I feel we're close to at least a short-term top."
The Vanity Fair article was published on 16-Oct, and the high point of the move thus far was reached on 17-Oct. Vanity Fair chose not to include any of my words of caution.
That being said, I stand by the quotes they did use. I still believe in the underlying fundamentals and the uptrend. I'm viewing this week's losses as corrective.
The next support level to watch is $47.343 (7-Oct low). Wednesday's intraday low at $47.551 provides an intervening barrier. If the former gives way, the $46 zone would be the likely attraction.
A short-term close back above the 20-day MA ($49.209) would ease pressure on the downside somewhat, favoring additional retracement to the $50 zone. A rebound above the halfway back point of the decline at $51.008 is needed to return a measure of confidence to the underlying uptrend.
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.