Gold and silver consolidate ahead of this week's Fed decision
5-Day Change: -$25.16 (-0.59%) YTD Range: $2,607.16 - $4,381.21 52-Week Range: $2,585.51 - $4,381.21 Weighted Alpha: +59.27 Gold is consolidating in the lower half of last week's range, weighed by a firmer dollar and some level of Fed policy uncertainty for next year. While a 25 bps rate cut is favored for Wednesday, the guidance and the dots will likely determine the yellow metal's next move.  A more dovish tilt from the Fed this week would weigh on the dollar and push gold back toward record levels. On the other hand, if guidance is more hawkish, I'd look for further consolidation within the broader $3,887.03/$4,381.21 range. Overall, the outlook for gold remains very constructive, with an eventual upside breakout of the range favored. The yellow metal has been one of the best-performing assets of the year, gaining more than 60% YTD. While there may be some temptation for institutional investors to book some of those profits ahead of year-end, the significant driving forces behind this year's rally are expected to carry over into 2026. Ongoing U.S. policy uncertainties (e.g., tariffs, fiscal pressures from $1.8T deficits) and global tensions continue to underpin demand. Central bank gold buying remains robust, even though the pace is off from the previous three years. Y-t-d reported central bank gold buying trails the previous three yearsCumulative reported gold buying, tonnes*  The World Gold Council believes "markets are largely pricing in a continuation of the status quo." In their 2026 Gold Outlook, they go on to note that "the frequency of tail risk events is on the rise. Whether such developments trigger risk-on or risk-off sentiment could play a decisive role in shaping performance across asset classes and gold’s role as a strategic diversifier." On the upside, Friday's high at $4,259.21 reinforced last week's high set on 01-Dec at $4,264.30. Penetration of the latter would bode well for a retest of the all-time high at $4,381.21. A Fibonacci level at $4,275.46 provides a minor intervening barrier. Today's dip below Friday's low at $4,192.63 leaves $4,175.89 (4-Dec low) and $4,164.99 (3-Dec low) vulnerable to tests. The rising 20-day MA now bolsters this area. The 50-day comes in at $4,083.06. SILVER OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.025 (-0.04%) 5-Day Change: +$0.326 (+0.56%) YTD Range: $28.565 - $59.331 52-Week Range: $28.565 - $59.331 Weighted Alpha: +107.50 Silver is consolidating within Friday's range, well within striking distance of record levels and the $60 objective. A firmer dollar and caution ahead of this week's Fed decision may limit the upside for the time being, but the trend remains unquestionably bullish.  While more hawkish forward guidance could trigger a corrective pullback, dips are still likely to be viewed as buying opportunities. As noted on Friday, revived concerns about AI sector overvaluation remain a downside risk as well. Friday's record high at $59.331 now protects the targeted $59.966/$60.000 level. Beyond that, there's a very long-standing Fibonacci objective at $60.417 (127.2% retracement of the entire move from the 2011 high at $50 to the 2020 low at $11.703). Today's Asian low at $57.638 protects more significant tiers of support at $56.999 (5-Dec low), $56.509 ($-Dec low), and last week's low at $56.232. If the latter were to be violated, former highs at $54.465/390 would be 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. |
