Gold higher despite a firmer dollar, as silver continues to surge
OUTSIDE MARKET DEVELOPMENTS: Like last week, market focus is once again on monetary policy with several key central bank decisions slated for Thursday. It looks like it's going to be a mixed bag, with expectations favoring a BoJ hike, a BoE cut, and a steady ECB.
The BoJ has the potential to be the most disruptive to markets. Hawkish forward guidance has the potential to trigger the unwinding of yen carry trades, which could, in turn, lead to increased volatility in highly leveraged markets, such as tech stocks and silver.
The delayed release of U.S. employment data for October and November broadly reinforced the notion that the labor market is cooling. Nonfarm payrolls for October fell by 105k, but rebounded by 64k in November. The jobless rate jumped to a four-year high of 4.6%.
Government layoffs (tied to administration efforts to reduce federal workforce size) accounted for the bulk of the headline weakness in October and contributed to the subdued recovery in November. While private payrolls displayed some modest resilience, expectations for further Fed rate cuts in 2026 increased modestly.
It still looks like the Fed will be on pause early in the new year. Fed funds futures have nearly fully priced in a 25 bps cut for June. We'll hear FedSpeak from Waller, Williams, and Bostic today.
Recent U.S.-led talks in Berlin have yielded significant progress on a proposed peace framework, including NATO-like security guarantees for Ukraine. While territorial concessions remain a sticking point, the heightened prospect for peace has stoked risk appetite.
Meanwhile, the U.S. is ramping up pressure on Venezuela with the announcement of a naval blockade of all sanctioned oil tankers entering or leaving the country. This follows recent actions, including the seizure of a Venezuelan oil tanker, new sanctions on Maduro's family members and shipping entities, and lethal strikes on alleged drug-trafficking vessels.
U.S. MBA Mortgage Applications fell 3.8% in the week ended 12-Dec, versus +4.8% in the previous week. The 30-year mortgage rate edged up to a three-week high of 6.38% from 6.33% in the previous week.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$14.16 (+0.33%)
5-Day Change: +$106.15 (+2.51%)
YTD Range: $2,607.16 - $4,381.21
52-Week Range: $2,585.51 - $4,381.21
Weighted Alpha: +66.03
Gold is firm above $4,300 and within striking distance of record levels, buoyed by fresh all-time highs in silver and heightened expectations that the Fed will continue its easing campaign in 2026. A firmer dollar poses a bit of an intraday headwind.
The dollar index set an 11-week low on Tuesday before catching a bid today. Expectations for further easing keep the greenback's dominant downtrend in focus. A breach of chart/Fibonacci support at 97.87/82 would bode well for a retest of the cycle low at 96.22 and record highs in gold.
New highs above $4,381.21 would shift focus to $4,400 initially. However, such a move would bolster confidence in previously established objectives at $4,515.63 and $5,000.
Tomorrow's central bank decisions, particularly the BoJ's, could foster some short-term volatility. If the markets swing broadly toward risk-off, gold could initially face some deleveraging pressure, but setbacks into the range are likely to attract buying interest amid ongoing safe-haven and portfolio diversification appeal.
Intraday support marked by the London low at $4,307.30 protects the Asian low at $4,302.25. Let's call first support down to $4,300. The low for the week set on Tuesday at $4,272.52 is a more important level to watch. Friday's low at $4,258.43 provides an additional intervening barrier ahead of the formidable $4,200 zone.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$2.159 (+3.39%)
5-Day Change: +$4.190 (+6.78%)
YTD Range: $28.565 - $66.509
52-Week Range: $28.565 - $66.509
Weighted Alpha: +149.26
Silver surged to yet another all-time high, shrugging off today's firmer dollar and worries that hawkish signals from the BoJ tonight could trigger the unwind of yen carry trades. That could lead to broader deleveraging, perhaps particularly in markets like silver that are already considered overextended.
Silver was up just shy of 130% YTD at today's high. The white metal is up more than 16% this month, setting up potential that silver will end the year with double-digit percentage gains in three of the last four months of 2025.
Silver has been spurred by persistent global supply deficits, combined with explosive industrial demand from solar panels, electric vehicles, electronics, and data centers. The rally has been further fueled by strong safe-haven and investment inflows amid economic uncertainty, a weaker U.S. dollar as the Fed resumed its easing campaign, and robust physical buying and ETF accumulations.
These trends are likely to continue into 2026, but as hot money continues to chase, prospects for a violent correction are on the rise. While the trend may be your friend, a measure of caution is certainly warranted at these levels.
The next objectives on the upside are at $68.868 (Fibonacci), $69, $70, and $73.668 (Fibonacci).
Today's early U.S. low at $65.133 now provides a minor intervening barrier ahead of $65, and the previous record high at $64.650. The low for the day set in Asia at $63.703, protects more important lows at $62.205 (16-Dec low), $61.682 (15-Dec low), and $60.835 (12-Dec low). The rising 20-day MA is well protected below $58.
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.