Gold looks poised for a higher weekly close, while silver is set for its 3rd straight lower weekly close

OUTSIDE MARKET DEVELOPMENTS: Today's CPI report showed U.S. consumer prices rose 0.2% in January, below expectations of +0.3%, versus +0.3% in December. The annualized rate of inflation dropped to 2.4%, on expectations of 2.5%, versus 2.7% y/y in December. That's the slowest pace since May 2025.

Core CPI rose 0.3%, in line with expectations, slightly warmer than the +0.2% print in December; 2.5% y/y, down from 2.6% in December. That's the slowest annual pace of core inflation since March 2021.

Rate cut expectations that dimmed following the NFP beat earlier in the week have rebounded slightly, but not significantly enough to alter the policy outlook reflected by Fed funds futures. The Fed is likely on pause through the first half of the year. A half-point of easing is still favored by year-end,  with the first 25 bps cut not fully priced until September. 

While odds for a third 25bps cut in 2026 edged up, risk appetite remains subdued as the market digests Thursday's tech/AI selloff. The trade remains concerned about overvaluation and expectations for large capital expenditures.

President Trump confirmed that he is repositioning a second carrier group to the Middle East "in case we don't make a deal" with Iran on its nuclear program. After meeting with Israeli Prime Minister Netanyahu on Thursday, Trump said he 
preferred a diplomatic deal with Iran, but would keep military options open. Tensions remain high.

Netanyahu insists that any deal must include vital elements for Israel's security beyond a halt to Iran's nuclear activities, including strict limits on its ballistic missiles, and curbs on its support for regional proxies. While Bibi noted that Iran "made a mistake last time by not reaching an agreement," he was skeptical that a new comprehensive deal could be reached. 

Monday is Presidents' Day. Long holiday weekends are often somewhat disruptive to markets, primarily due to reduced trading volume, lower liquidity, and potential for increased volatility or exaggerated price moves. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$32.14 (+0.65%)
5-Day Change: +$42.91 (+0.86%)
YTD Range: $4,310.83 - $5,595.02
52-Week Range: $2,835.23 - $5,595.02
Weighted Alpha: +78.92

Gold has rebounded into the holiday weekend, buoyed by geopolitical tensions and a soft dollar. Much of Thursday's selloff has been retraced, and the yellow metal remains poised for a second straight higher weekly close, but the comparative weakness in silver today is troubling.



While price action remains confined to the previous day's range (inside day), a close back above the 20-day moving average looks likely. While the bull camp will view that as encouraging, I wouldn't be surprised to see prices moderate ahead of the long weekend. As we saw on Thursday, some longs are quick to hit the exits on any sign of technical weakness.

If gold can sustain gains above the 20-day, look for renewed tests above $5,100 early in the week ahead. A breach of Wednesday's high at $5,117.94 would clear the way for a true test of the 61.8% retracement level at $5,141.08. Above the latter, $5,200, and the 78.6% retracement level at $5,340.72 would attract.

On the downside, initial support is marked by the 20-day MA at $4,974.96. Below that, today's Asian low at $4,890.72 protects the low for the week at $4,882.43. Given that volatility remains high and the bulls still have some trepidation, a drop back to the $4,800 zone remains a possibility.

While it does seem likely that we're in for further consolidation within the broad $5,595.02/$4,406.69 range, I continue to believe the dominant trend is up. Ronald-Peter Stöferle and Mark J. Valek of Incrementum concur, writing, "In our view, the sharp pullback, while large on the surface, becomes more reasonable in light of recent dynamics and still allowed gold to post an impressive +12.75% in USD for the month. Combined with broad strength across all currencies we track, this remains typical of a healthy bull market and signals a correction after a vertical move rather than a trend reversal."

I might quibble with their use of the term "typical," as a three-day decline of more than $1,000 is anything but. That being said, I have a lot of respect for the analysis generated by Incrementum. Their Monthly Gold Compass can be found here.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$2.039 (+2.71%)
5-Day Change: +$0.203 (+0.26%)
YTD Range: $64.140 - $121.630
52-Week Range: $28.565 - $121.630
Weighted Alpha: +157.00

Silver edged to a new low for the week in Asian trading before rebounding into the range. While a higher daily close seems likely, the white metal appears on track for a third consecutive lower weekly close, as well as a close back below the 50-day moving average.



A comparatively buoyant gold market, a slightly more dovish Fed outlook, and a soft dollar provide some support. Still positive fundamentals like structural supply deficits, strong investment and industrial demand, and geopolitical/macro support lend credence to the belief that the underlying trend remains positive.

However, the magnitude of the recent volatility has stoked considerable trepidation amongst market bulls, making them reluctant to recommit to the upside, perhaps especially ahead of a long holiday weekend. Ongoing concerns about the tech/AI sector – and the potential knock-on effects for industrial demand – add additional uncertainty to the outlook.

The failure of the market to sustain midweek gains above the 38.2% retracement level at $86.101 leaves the $90 zone well protected for the time being. We may have to see the 70-handle again to trigger renewed bargain hunting.

The halfway back point of the entire decline at $92.885 probably needs to be cleared to truly reinvigorate the bull camp. The declining 20-day MA will bolster the significance of the $90 zone as an intervening barrier early in the new week.

Choppy, volatile trading is likely to persist. Keep your arms and legs inside the ride at all times!


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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