Gold and silver remain volatile and defensive after Friday's rout
OUTSIDE MARKET DEVELOPMENTS: Market conditions remain quite volatile following Friday's rout. In these conditions, my primary responsibility is servicing our hedging clients and managing risk. It's been difficult to find the time to write, so I have to keep it short today.
While month-end profit-taking may have gotten the ball rolling on Friday, forced liquidations – stemming in part from multiple CME margin hikes in recent weeks – began to cascade the stops. When all was said and done, gold ended Friday's session down nearly 9%, while silver ended down a startling 26%.
Some attributed last week's losses to President Trump tapping former Fed Governor Kevin Warsh to replace Jerome Powell as Fed Chairman when Powell's term ends in May. Warsh's hawkish past may have been a contributing factor to the initial profit-taking, but it certainly didn't warrant such a massive sell-off.
Warsh has historically tilted hawkish, but more recently, he has expressed support for easing to boost growth. Warsh also favors shrinking the Fed's balance sheet and avoiding "mission creep" beyond core mandates of price stability and maximum employment.
While concerns about Fed independence will persist, Warsh is a known entity and is not seen as a devoted Trump acolyte. His pick is generally viewed as "market-friendly," and should get Senate confirmation without too much difficulty.
The needle hasn't really moved much in terms of rate cut expectations in the wake of last week's hold and the Warsh announcement. Fed funds futures continue to price just under 50 bps of easing this year, with the first 25 bps cut not fully priced until September.
The dollar index extended to fill the upside gap at 97.45 that was left a week ago. However, last week's tumble to four-year lows leaves the downside vulnerable.
Risk appetite remains broadly elevated with stocks and yields trading higher. However, extreme volatility in the metals may keep bulls that got stung sidelined for a bit.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$126.10 (-2.58%)
5-Day Change: -$311.34 (-6.22%)
YTD Range: $4,310.83 - $5,595.02
52-Week Range: $2,773.33 - $5,595.02
Weighted Alpha: +65.64
Gold posted an impressive 13% gain in January, despite Friday's plunge, leaving the low for the year at $4,310.83 protected, at least for the time being. While the yellow metal ended last week more than 12% off the $5,595.02 record high, the weekly loss was less than a 2%!
Gold extended below the 20-day moving average and the 50-day as well before rebounding intraday. The burning question on everyone's mind: Is the low in?
It's too early to tell, but in a normal market, reversion to the 20-day and 50-day would be considered reasonable corrective activity. However, gold had diverged from those key MAs dramatically in recent weeks, spurred by safe-haven demand, a weak dollar, and an absolutely insane silver market.
I'd like to see a close above the 50-day MA today. A close above the 20-day MA would be even more encouraging for long-term bulls. Ideally, I'd like to see the market stabilize between $4,400 and $5,000 for some period, allowing the market to catch its breath and reevaluate the situation.
In the back of my mind is a belief that the underlying fundamentals remain broadly supportive, perhaps most notably the well-established de-dollarization trend. If central banks accelerate their buying on this dip, that will tell us a lot.
February is the tail end of peak Indian wedding season. The retreat in gold seems likely to stimulate Indian demand, as well as Lunar New Year (17-Feb) buying.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$2.404 (-2.82%)
5-Day Change: -$24.469 (-23.58%)
YTD Range: $71.429 - $121.630
52-Week Range: $28.565 - $121.630
Weighted Alpha: +167.37
Silver plunged an unnerving 26% on Friday, but still posted a more than 19% gain for the month of January. A massive key reversal formed on the weekly chart, suggesting downside follow-through was likely today.
Similar to gold, the 20-day and 50-day MAs were exceeded before the market recovered somewhat. A close above the 50-day would be mildly encouraging. A close back above the 20-day, more so.
The low for the year at $71.429 was approached overnight, but remains intact thus far. I'd like to see a range form between $70 and the halfway back point of the plunge at $96.657 (so far). However, the much more volatile silver market is a tougher one to call.
Emboldened bears may look to run stops below $70, which could put the rising 100-day MA at $62.242 in play. Such a downside extension would keep the pressure on gold as well. Stay buckled up and be prepared for continued volatility.
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.
Good morning. The precious metals are sharply higher in early U.S. trading.
U.S. calendar features Balance of Trade, Initial Jobless Claims, Q3 Productivity and ULC (final), Factory Orders, Fed Balance Sheet.
Gold surges to new all-time highs, as silver takes a pause
Outside Market Developments: Focus today is on the Fed decision. While the central bank is widely expected to hold steady, the trade will still try to glean insight into future moves from the policy statement and Powell's presser.
Fed funds futures suggest the Fed may be on hold into H2, amid resilient growth and sticky inflation that remains above target. The next rate cut isn't fully priced until September.
Although unlikely to be mentioned today, there is still considerable concern about Fed independence. President Trump wil have the opportunity to replace Powell as chairman when his term ends in May.
BlackRock's Chief Investment Officer, Rick Rieder, lept passed "the Kevins" (Warsh and Hassett) as the new favorite to take over the helm of the Fed. Rieder has advocated for more aggressive rate cuts to get to a neutral Fed funds rate of 3%.
The market remains tilted toward risk-on, bolstered by persistent enthusiasm for tech and AI. Microsoft, Meta, and Tesla report earnings after the close today.
The potential for another partial U.S. government shutdown remains high as funding for several key agencies, including the Department of Homeland Security, expires at midnight on Friday. Senate Democrats have vowed to block that funding amid opposition to DHS/ICE deportation actions, including the recent shootings.
Shut-down risks are contributing to recent pressure on the dollar. Recent central bank jawboning and "rate checks" also weighed on the greenback. However, Treasury Secretary Bessent said on CNBC this morning that the U.S. is "absolutely not" intervening in the currency market to support the Japanese yen.
The dollar index tumbled to four-year lows on Tuesday. The breach of last year's low at 96.22 reestablishes the dominant downtrend in the greenback. While the DX is trading modestly higher within Tuesday's range today on Bessent's comments, the technical damage has been done. 
Scope is seen for a short-term test of the 95.09/00 level. Below that, a secondary retracement level at 94.67 would be in play.
MBA Mortgage Market Index fell 33.9 points to 363.30 in the week ended 23-Jan, versus 397.20 in the previous week. The 30-year mortgage rate rebounded to 6.24% from 6.16% in the previous week.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$80.50 (+1.55%)
5-Day Change: +$469.35 (+9.71%)
YTD Range: $4,310.83 - $5,311.38
52-Week Range: $2,745.87 - $5,311.38
Weighted Alpha: +100.25
Gold set new all-time highs for the eighth consecutive session, buoyed by relentless haven demand. While the dollar firmed today after Bessent's comments on intervention, yesterday's breach of key support should continue to provide a tailwind for the yellow metal.
Gold is outperforming silver today and is up nearly 10% over the last five sessions. Additionally, weighted alpha has cracked the 100 threshold for the first time in my memory. Upside momentum seems likely to carry the day, even as the market becomes increasingly overbought.
That overbought condition may lead to a corrective pullback, but at this point, the trade is disinclined to try to pick a top. They continue to view short-term setbacks as buying opportunities.
With Fibonacci objectives at $5,180.79 and $5,268.49 satisfied and exceeded, focus now shifts to the $5,400 psycholical barrier. Above the latter, additional b-g-round-numbers at $5,500 and $5,600 stand in front of the next Fibonacci level, which comes in at $5,674.97.
On the downside, intraday support at $5,242.07/41.12 protects today's Asian low at $5,157.93. Below that, congestion around $5,100 should help keep the more important $5,000 level at bay.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.413 (+0.37%)
5-Day Change: +$18.332 (+19.69%)
YTD Range: $71.429 - $117.705
52-Week Range: $28.565 - $117.705
Weighted Alpha: +343.64
Silver is taking a bit of a pause, allowing gold to play some catch-up. While the last record high was set on Monday, the white metal is still up nearly 20% over the past week!
The gold/silver ratio has stabilized somewhat after testing below 44 on Monday, a level not seen since August of 2011. That being said, there's nothing to suggest at this point that a low is in place. With more than 78.6% of the entire rally from 31.707 (Apr'11 low) to 126.433 (Mar'20 high), potential is in fact all the way back to that low.
Several more sessions of congestion in silver would go a long way toward calming the market. Maybe that's too much to ask for at this point.
The CME is raising margin rates once again from 9% to 11% for hedges, and 12.1% for spec trades. The CME is also attempting to address the market access issue by launching a 100-ounce silver contract.
Today's Asian high at $116.092 now provides an intervening barrier ahead of Monday's recod high at $117.705. Beyond the latter, psychological barriers at $118, $119, $120, etc protect the next Fibonacci projection at $128.721.
Today's earlier U.S. low at $110.582 protects the $110.00 zone. Below that more important supports are found at $105.086, $103.437, and $102.445.
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.
Gold and silver continued their marches higher on haven interest and weaker dollar
OUTSIDE MARKET DEVELOPMENTS: Market focus this week is on the two-day FOMC meeting that begins on Tuesday. The Fed is widely expected to be on hold, amid signs of a resilient economy and sticky, but stable inflation.
The trade is no longer pricing 50 bps of additional easing in 2026. Futures imply a Fed funds rate of 3.1975% at year-end, or 42.75 bps of easing. The next 25 bps cut is not fully priced until September.
The unrelenting safe-haven-driven rally in the precious metals is going to be another highlight this week. Gold, silver, and platinum all start the week at record levels.
Precious metals are attracting haven demand as relations between the U.S. and NATO allies continue to deteriorate over President Trump’s desire for Greenland. Trump is also threatening 100% tariffs on Canadian imports after the Carney government agreed to a limited trade deal with China. Concerns about Fed independence persist as well.
The dollar index gapped lower on the open, reaching levels not seen since mid-September. The Fed was reportedly checking the USD-JPY rates late last week, suggesting that U.S. and Japanese policymakers were coordinating to stem recent yen losses, raising the risk of direct intervention.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$102.37 (+2.05%)
5-Day Change: +$401.71 (+8.60%)
YTD Range: $4310.83 - $5,110.24
52-Week Range: $2,732.23 - $5,110.24
Weighted Alpha: +88.58
Gold exceeded the $5,000 target in overseas trading, spurred by strong safe-haven demand, a weak dollar, and another dramatic surge in silver. If sustainable, today would mark the sixth straight daily gain.
Focus later in the week will be on the Fed policy announcement on Wednesday. A hold is widely anticipated. Perhaps only an exceptionally hawkish statement, suggesting the next move could be a hike, would be sufficient to trigger a much-needed correction in gold. That seems unlikely.
Gold-backed ETFs continue to attract investor interest. The ETFs saw inflows of 34.5 tonnes in the week ended 23-Jan. All regions were net buyers, but Asian investors led the charge last week. It was the twelfth straight weekly inflow.
The push above $5,000 shifted focus to the $5,180.79 Fibonacci objective. If this level also gives way, $5,200 and the next Fibonacci level at $5,268.49 would be in play. While the market remains quite overextended and vulnerable to correction, the trade seems inclined to remain focused on buying strategies.
On the downside, intraday support at $5,055.20/53.21 protects the more important $4,990.67/66 level. Secondary support is marked by Friday's low at $4,900.53.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$6.071 (+5.88%)
5-Day Change: +$14.717 (+15.60%)
YTD Range: $71.429 - $110.874
52-Week Range: $28.565 - $110.874
Weighted Alpha: +330.85
Silver surged dramatically right from the open, notching new all-time highs above $110. During the U.S. session, the white metal traded with a 170-handle before selling pressures surfaced.
One might argue that this market has become detached from reality, but one could also say that this is a market that is repricing reality after five years of supply deficits. The market accelerated dramatically to the upside after China imposed export controls at the start of the new year.
So, where is the price reality? Industrial users are already thrifting as best they can. Average silver loadings for photovoltaic cells, for example, were reportedly reduced 20% in 2024 alone. Further cuts likely occurred in 2025. However, because of silver's unique properties, substitution is not expected to make a meaningful dent in demand.
Even with today's more than $6 retreat from the highs, the white metal is still up nearly 6% today. The midpoint of today's massive $14 range is at $110.542. Despite the magnitude of the sell-off, I can't say with any degree of certainty that even a short-term high is in place. A lower close (below $103.419) would be a little more telling from a technical perspective.
Today's Asian low at $103.379 protects the $100 zone. More substantial support is marked by Friday's low at $96.184.
A close above $112 would be suggestive of further strength. Another round of new highs above $117.705 would favor a push to $120, with potential to the next tier of Fibonacci resistance at $128.721.
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.
