Blog posts tagged with 'palladium'

2/25/2025

Gold tumbles below $2,900, silver below $32

OUTSIDE MARKET DEVELOPMENTS: Geopolitical tensions are easing in hopes of a negotiated resolution to the war in Ukraine. “It looks like we’re getting very close,” President Trump said on Monday.

Geopolitical Risk (GPR) Index

The GPR index is declining from a 10-month high and has moved below the 7 and 30-day moving averages. The ruble has set a six-month high against the dollar, reflecting market optimism that a deal will be struck and sanctions on Russia will be lifted.

Putin has already offered aluminum supply and cooperation on energy and rare earths development. Trump posted on TruthSocial that "major Economic Development transactions" between the United States and Russia are being discussed.

Speaking at the White House, French President Macron struck a more cautious tone; pointing out that it was Putin who violated the peace and warning that Russia has a history of violating ceasefire agreements. Nonetheless, he conceded that a deal was "feasible" within the next few weeks.

Meanwhile, a top deputy of Volodymyr Zelenskyy cautioned that Ukraine would not concede any territory. "What I can say is that we, now, are not ready to accept any territorial concessions whatsoever. We have no other option but to say no to a bad peace deal," said Ihor Brusylo.

Given the blood and treasure expended by Russia over the past three years, I don't think Putin can entirely withdraw from Ukraine without political repercussions at home. A lot can still go wrong here.

Despite some optimism on the geopolitical front, markets remain decidedly in risk-off mode. Concerns about the health of the U.S. economy continued to mount due to eroding consumer confidence and rising inflation worries.

“In February, consumer confidence registered the largest monthly decline since August 2021,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “This is the third consecutive month on month decline, bringing the Index to the bottom of the range that has prevailed since 2022." she added.

The Trump honeymoon may be over amid worries about his trade policies, inflation, and brash efforts to cut spending and the size of government. While I believe the federal government headcount needs to be slashed, the angst of more than three million employees, and their family members, can have a consequential ripple effect throughout the broader economy.

Will deregulation and expectations of lower energy costs offset the above? Time will tell...  

S&P/Case-Shiller 20-City Home Price Index slipped 0.13% to 332.2 in December from 332.6 in November. It was the fifth consecutive monthly decline, although the annualized pace of gains accelerated to 4.48% y/y, from +4.35% in November.

FHFA Home Price Index edged up 0.4% in December to 436.1, versus an upward revised 434.3 in November. Annualized appreciation accelerated to a 4.7% pace from an upward revised +4.5% in November (was +4.2%).

Consumer Confidence tumbled seven points to an eight-month low of 98.3 in February, below expectations of 102.8, versus 104.1 in January. It was the third straight monthly decline. Twelve-month inflation expectations surged to a 21-month high of 6.0% from 5.2% in January. The Conference Board cited "the recent jump in prices of key household staples like eggs and the expected impact of tariffs" as contributing factors.

Richmond Fed Manufacturing Index jumped 10 points to 6 in February, above expectations of -3, versus -4 in January. It was the first positive reading in 15 months and the highest in nearly three years. Prices paid ebbed to a 2.23% pace from 2.37%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$13.71 (-0.46%)
5-Day Change: +$4.38 (+0.15%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,025.08 - $2,955.40
Weighted Alpha: +40.16

Gold fell nearly 2% to trade briefly below $2,900, weighed by tempered geopolitical risks and perhaps helped by deleveraging. The losses come a day after I highlighted some warning signs in Monday's commentary.



While scope is seen for additional corrective activity, the underlying trend remains decisively bullish. I'm watching the 20-day moving average at $2,881.07 and chart support at $2,880.05/$2,878.68. Below the latter, the 12-Feb low at $2,869.08 would be in play.

As noted yesterday, there is risk for a protracted corrective phase which could mean $3,000 is on hold for a while. The next couple of sessions will tell us a lot.

A breach of the 20-day moving average on a close basis would suggest potential as low as $2,748.41 (50% retracement of the rally from $2,541,42 to $2,955.40). This level is bolstered by the 50-day moving average at $2,754.32. Good intervening support is noted at $2,800.00/$2,797.26.

A rebound above the halfway-back point of this decline at $2,925.06 would ease pressure on the downside somewhat. While not a guarantee of imminent new highs, it would be viewed as encouraging to the bull camp.

President Trump reiterated yesterday that he's interested in the gold reserves held at Fort Knox. "We're actually going to Fort Knox to see if the gold is there. Because maybe somebody stole the gold. Tons of gold,” he said.

While I doubt it has been stolen, I do wonder if the Fed can account for all 8,133 tonnes. I also want to know if there are encumbrances on that gold that call into question its ownership.

A comprehensive audit is needed to assure the public that their gold is exactly where it's supposed to be and no other government or entity else has a claim to it. Jan Nieuwenhuijs's open letter to President Trump provides a thorough explanation of why there have been persistent concerns about U.S. gold reserves for decades. 

If Treasury fails to provide said assurances, I think the dollar's position as the global reserve currency would be further eroded. A weaker dollar would further exacerbate inflation and provide yet another driving force behind the dollar-based price of gold.

In such an instance, I'd be thinking seriously about $5,000 gold.

Silver plunged back below $32, weighed by the retreat in gold. Arguably, gold's strength and a resilient U.S. economy were the last underpinnings for silver amid mounting global growth risks and worries of an impending trade war.


  
The tumble below $32 shifted focus to the 11-Feb low at $31.334 and the 100-day MA at $31.257. Below these levels, the halfway-back point of this year's rally comes in at $31.062.

The 61.8% retracement level of the rally from $28.783 to $33.30 is at $30.525 and corresponds closely with the 200-day moving average. These will be levels to watch on move below $31.

A rebound and close above the 20-day MA at $32.095 would ease pressure on the downside somewhat. However, now I want to see a close above $33 – something silver just couldn't muster in recent weeks – before I can feel confident about a retest of the October cycle high at $34.853.


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 ekes out a new record on persistent haven appeal. Silver slips.

OUTSIDE MARKET DEVELOPMENTS: Germany's conservative CDU/CSU alliance won the largest share of the votes in this weekend's snap election. CDU party leader Friedrich Merz is poised to become the next chancellor.

The far-right AfD party received the second most votes, although the CDU/CSU alliance and all other parties have vowed not to invite the AfD into any coalition. The Social Democratic Party (SPD) lost votes both to the right and the further left. In an interesting twist, although they will never work together, the far right and far left parties could hamstring the agenda of the new conservative government.

For example, both the AfD and Die Linke oppose military aid to Ukraine. Together they also could make it difficult to loosen the "debt brake." The throttling of new debt at 0.35% of GDP is keeping Europe's largest economy in recession.

Risk aversion remains elevated in the wake of Friday's U.S. data that reflected eroding consumer and business sentiment, rising inflation expectations, and hints of a weakening labor market. Today's data further stoked risk-off sentiment.

Prospects for the next Fed rate cut are back to July, but that's not providing much relief for the greenback. The dollar index slipped to an 11-week low as the euro was heartened somewhat by the German election results. However, the EU and Germany still face considerable headwinds from weak growth and threatened tariffs.

Meanwhile, the world is watching in real-time as the Trump administration makes radical changes to how the government of the world's largest economy functions. Beyond the headline-grabbing tariffs and slashing of foreign aid, President Trump has urged Elon Musk to be even more aggressive in shrinking the bloated Federal government.

President Trump is meeting with French President Macron today. There is a joint press conference scheduled for 2:00 EST, where global trade may be addressed.

Another round of Russia/Ukraine peace talks is slated to begin tomorrow in Riyadh on Tuesday. Steve Witkoff, the top negotiator for the U.S., has suggested a peace agreement is near. “In any peace deal, each side is going to make concessions, whether it’s territorial concessions, whether it’s economic concessions,” he said.

News also surfaced on Friday that the Wuhan Institute of Virology had discovered a new bat coronavirus similar to COVID. A leak from the Wuhan Institute is widely believed to be the source of the COVID pandemic.

Dallas Fed Manufacturing Index tumbled 22.4 points to a six-month low of -8.3 in February versus 14.1 in January. It was the first negative reading since November. The production index plunged 21 points to -9.1. New orders fell 11 points to -3.5, and capacity utilization slid 14 points to -8.7. The shipments index remained positive but edged down to 5.6.

Chicago Fed National Activity Index fell 0.21 points to -0.03 in January, versus 0.18 in December. The index has now been in negative territory in nine of the last 12 months. "Two of the four broad categories of indicators used to construct the index decreased from December, and one category made a negative contribution in January," according to the Chicago Fed. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$11.03 (+0.38%)
5-Day Change: +$45.33 (+1.56%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,025.28 - $2,9455.40
Weighted Alpha: +40.42

Gold edged to another all-time high in early U.S. trading, buoyed by persistent geopolitical and trade tensions and a soft dollar. While the yellow metal has now reached record highs in five consecutive weeks, upside momentum has waned.

 

Global gold ETFs saw a massive inflow of 52.4 tonnes last week. North American investors accounted for more than 90% of the net inflows.

 

That ties the 11-Mar'22 week as the biggest net inflow since the week ended 24-Jul'20. When we see retail investors pile into the ETFs in such a way, it can be a harbinger of a protracted correction.

Gold set a record high of $2,065.89 in the 11-Mar'22 week and proceeded to correct more than 20%. It took two years for that high to be exceeded and the uptrend to resume.

The COT report revealed net spec long positioning fell 15.8k to 268.7k contracts from 284.5k in the previous week. It was the second straight weekly decline.

CFTC Gold speculative net positions

While the trend remains bullish at this point, the waning upside momentum, the surge in ETF inflows, and the bearish RSI divergence noted last week are all warning signs. Certainly, a Russia/Ukraine peace deal could significantly sap safe-haven demand. 

While $3,000 may still be a powerful attraction, never underestimate the market's ability to disappoint the most investors possible. Heraeus's weekly newsletter, also notes that "signs of excess frothiness are becoming clearer, despite what appear to be firm fundamental drivers."

Keep an eye on support at $2,919.83, the low for both 21-Feb and 19-Feb. A breach of this level would suggest potential back below $2,900 toward the lows from 17-Feb and 14-Feb at $2,880.05/$2,878.68. I'll reevaluate downside risks if gold falls below $2,900.

On the other hand, a fresh round of record highs could keep $3,000 in play. The next Fibonacci objective comes in modestly higher at $3,037.94.

Silver notched a fifth straight higher weekly close last week, but was unable to sustain gains above $33. The white metal begins this week on its back foot by slipping to a four-session low amid persistent global growth concerns that now include the U.S. economy as well.



A minor chart point at $32.102 protects last week's low at $32.004. The latter corresponds closely with the rising 20-day moving average, which has been an important indicator since the beginning of the year.

A retreat below $32 would be troubling for the bull camp, particularly if the gold market were to no longer be providing the support of consistent record highs. Secondary support in silver is marked by the 11-Feb low at $31.334 and bolstered by the 100-day MA at $31.264.

A sustained move above $33 and breach of the 14-Feb high at $33.340 is needed to revive confidence in the uptrend. The $33.554 Fibonacci level remains an additional barrier ahead of last year's high at $34.853.

The COT report showed an increase of 4.8k in net speculative long positions to a 16-week high of 54.5k contracts, versus 49.7k in the previous week.

CFTC Silver speculative net positions

SLV, the biggest ETF, saw outflows of $125.5M. The ETF has seen just two weekly inflows since the beginning of the year, suggesting retail investors remain skeptical.


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 continues to march toward $3,000. Silver remains below last week's high at $33.34.

OUTSIDE MARKET DEVELOPMENTS: President Trump is considering returning 20% of DOGE savings to American taxpayers and using 20% to pay down debt. DOGE claims that total estimated savings thus far is $55 bln although many claim that figure is inflated.

While I think there are certainly more savings to be found in our bloated federal government, it won't make a dent in a national debt that's now north of $36 trillion. I suppose we have to start somewhere...

The House and the Senate are each advancing separate budget proposals. Trump has thrown his support behind the House's "one big, beautiful bill" approach, with large reductions in both taxes and spending.

The House proposal allows for $3.3 trillion in net deficit increases over 10 years and a $4 trillion increase in the debt limit. While there will be a reconciliation process, I don't see how this proposal honors the President's pledge to balance the budget.

The Senate budget legislation also lacks the comprehensive revenue increases or spending reductions needed to eliminate deficits. Senate Budget Committee Chair Lindsey Graham said he’s “pulling for the House to pull it together," but pointed out that the House bill doesn't make the tax cuts permanent.

Minutes from the January 28–29 FOMC meeting were released yesterday and reflected a high level of uncertainty. Contributing factors to that uncertainty were "reduced downside risks to the outlook for the labor market and economic activity, increased upside risks to the outlook for inflation, and uncertainties concerning the neutral rate of interest, the degree of restraint from higher longer-term interest rates, or the economic effects of potential government policies."

"Business contacts in a number of Districts had indicated that firms would attempt to pass on to consumers higher input costs arising from potential tariffs," according to the minutes. This reinforces broad expectations that tariffs will contribute to inflationary pressures.

The minutes confirm that the Fed is inclined to remain on hold until more progress is made on inflation. Fed funds futures continue to suggest the September FOMC meeting as the most likely timing for the next 25 bps rate cut. 

Safe-haven assets will continue to benefit from trade tensions, and the attendant global uncertainties and price risks. However, persistent optimism about the U.S. economy has generally underpinned risk appetite.

Philadelphia Fed Index tumbled 26.2 points to 18.1 in February, below expectations of 20.0, versus a nearly three-year high of 44.3 in January. "The indicators for current activity, new orders, and shipments remained elevated. On balance, the firms indicated an increase in employment, and the price indexes remained above their long-run averages," according to the report.

Initial Jobless Claims rose 5k to 219k in the week ended 15-Feb, above expectations of 215k, versus a revised  214k in the previous week. Continuing claims rose 24k to1,869k in the 8-Feb week from 1,845k in the previous week,

Leading Indicators fell 0.3% 101.5 in January, below expectations of unch, versus -0.1% in December. The gains in November and December remain the only increases since Feb'24.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$15.36 (+0.52%)
5-Day Change: +$13.20 (+0.45%)
YTD Range: $2,607.16 - $2,954.53
52-Week Range: $2,016.41 - $2,954.53
Weighted Alpha: +43.19

Gold notched a second new all-time high for the week as trade tensions continue to drive haven interest. A new 10-week low in the dollar index is providing support as well. Comments this morning from Treasury Secretary Bessent on gold revaluation knocked the yellow metal off its highs, but that dip is attracting further buying interest.



There's been a fair amount of buzz in recent weeks about the possible revaluation of U.S. gold reserves from the legacy statutory price of $42.22 an ounce to a more realistic figure. Such a move would likely provide a floor for the gold price and help perpetuate the dominant uptrend.

When asked about it on Bloomberg, Secretary Bessent said, "I promise you, that’s not what I had in mind.” While perhaps disappointing to gold bugs, his statement doesn't undermine the uptrend.

President Trump and Elon Musk have revived decades-old questions about U.S. gold reserves. "We’re going to go to Fort Knox and make sure the gold is still there,” vowed Trump on Wednesday. “If the gold isn’t there we’re going to be very upset,” he added.

Today, Treasury's Bessent assured Americans that U.S. gold reserves are right where they're purported to be. “All the gold is there,” he said.

Elon Musk is in favor of an audit. "Maybe it’s there, maybe it’s not. That gold is owned by the American public! We want to know if it’s still there," he wrote on X this week. 

Bessent claimed “We do an audit every year,” seemingly dispelling a widely held belief that the last audit of the gold in Fort Knox occurred in 1974. The trade is going to want some detail on those alleged annual audits. 

Bessent did not address concerns that there are lease claims on those reserves.

Today's overseas high at $2,954.53 now defines an intervening barrier ahead of the targeted $3,000 level. Beyond that, the next Fibonacci level comes in at $3,037.94.

The intraday low from early U.S. trading at $2,927.49 marks first support and protects yesterday's low at $2,919.83. Tuesday's low at $2,894.21 stands in front of more significant support at $2,880.05/$2,878.68.

Silver continues to struggle on upticks above $33, leaving the fifteen-week high set last week at $33.340 protected. More record highs in gold and a soft dollar are providing support, but global trade and growth concerns continue to pose a headwind.



A close above $33 would bolster confidence in the bullish scenario, favoring a breach of chart/Fibonacci resistance at $33.340/$33.554. Such a move would return focus to last year's high at $34.853.

An intraday chart point at $32.869 protects the low for the day at $32.651. A retreat below $32 from here would be troubling for the bull camp.


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 retreats from a fresh record high. Silver fails to sustain gains above $33 again.

OUTSIDE MARKET DEVELOPMENTS: U.S. and Russian delegations met in Riyadh to discuss ending the war in Ukraine. Ending sanctions on Russia was reportedly discussed as part of a peace deal. Kyev and Europe are angry that they do not have seats at the table.

"They've had a seat for three years and a long time before that. This could have been settled very easily," said President Trump. Suggesting Ukraine carries some of the blame for the conflict is a sharp departure from the unequivocal support from the previous administration.

Tensions between the U.S. and Europe are on the rise due to Trump's unilateral action on Ukraine and threats to withdraw from NATO. Vice President Vance also berated European leaders in Munich last week, emphasizing the erosion of free speech rights. "What I worry about is the threat from within — the retreat of Europe from some of its most fundamental values, values shared with the United States of America," he said.

While China is likely cheered by the discord, one of the goals of Trump's foreign policy is to fracture the tighter bond that developed between Russia and China in recent years. However, Trump's method of making blustering statements before walking back to more moderate positions has strained long-standing alliances.

After shifting focus to matching reciprocal tariffs last week, President Trump floated 25% tariffs on cars, chips, and pharmaceuticals on Tuesday. The constantly changing landscape is keeping trade tensions elevated.

FOMC minutes from the January meeting come out later today. I expect the minutes to be consistent with recent FedSpeak, including Chair Powell's testimony before Congress: The Fed has more work to do on inflation and is hence in no hurry to cut rates further.

Fed funds futures continue to suggest there will only be one 25 bps rate cut this year. That move isn't fully priced in until September.

MBA Mortgage Applications fell 6.6% in the week ended 14-Feb, versus +2.3% in the previous week. Purchases notched a fourth straight weekly decline. Refinancings slumped after two weekly gains. 30-year mortgage rates edged lower to 6.93% from 6.95%.

Housing Starts tumbled 9.8% to 1.366M in January, below expectations of 1.394M, versus an upward revised  1.515M in December (was 1.499M). Permits rose a scant 0.07%, but completions jumped 7.6%. Affordability remains a headwind amid high mortgage rates and building material cost uncertainties.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.32 (-0.01%)
5-Day Change: +$24.12 (+0.83%)
YTD Range: $2,607.16 - $2,946.39
52-Week Range: $2,015.17 - $2,9446.39
Weighted Alpha: +42.29

Gold edged to a new all-time high in overseas trading, buoyed by persistently high trade angst, heightened geopolitical tensions, and a soft dollar. It was the first new record high in six sessions.



Albeit modest, the recent setback relieved the overbought condition somewhat, allowing for the latest round of gains. However, upside follow-through has been limited thus far and I suppose we can't rule out a potential double top just yet. I'm also keeping an eye on a potential bearish RSI divergence.

That being said, today's breach of the $2,943.10 Fibonacci level (161.8% retracement of the decline from $2,789.68 to $2,541.42) bodes well for attainment of the long-standing $3,000 objective. Above the latter, the next Fibonacci level comes in at $3,037.94 (200% retrace).

Goldman Sachs has raised its year-end target to $3,100, citing central bank buying as a key driver. They mentioned $3,300 has a more bullish target if economic and trade uncertainty escalates.

Gold shipments from Singapore to the U.S. surged 27% in December, the highest level in nearly three years. This is further confirming evidence of the massive flows of gold from global centers to the U.S. since the November election.

Yesterday's low at $2,894.21 marks initial support. More significant support is found at $2,880.05/$2,878.68.

Downticks are likely to continue to attract buying interest.

Silver probed briefly back above $33 helped by another new record high in gold and a soft dollar. However, gains could not be sustained, leaving last week's four-month high at $33.340 well protected.



A breach of chart/Fibonacci resistance at $33.340/$33.554 is needed to perpetuate the two-month uptrend and confirm potential back to last year's high at $34.853. I'd settle for a close above $33 to bolster my confidence.

Trade uncertainty continues to stoke global inflation and growth worries, weighing on demand prospects for silver. 

Today's Asian low at $32.562 has been slightly exceeded. A breach of the midpoint of this week's range at $32.537 would suggest additional downside potential back to $32.414/400.

More important supports are marked by Tuesday's low at $32.102 and Monday's low at $32.004. A retreat below $32.00 would put the 20-day moving average at $31.702 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.

2/14/2025

Gold and silver retreat on retail sales miss, but higher weekly closes still seem likely 

OUTSIDE MARKET DEVELOPMENTS: Data this week revealed that inflation is back on the rise. However, retail sales plunged 0.9% in January, suggesting growth risks are also on the rise. While industrial production beat expectations, we're already seeing downward revisions to Q1 GDP expectations.

Treasury yields dove on the retail sales miss, dragging the dollar lower as well. The dollar index fell to nine-week lows below 107.00. 

If the economy is weakening, upward pressure on prices should moderate. Fed Chairman Powell told Congress this week that the central bank was in no hurry to ease further as there was more work to do on inflation. Rate cut expectations got pushed out to December, but after the weak retail sales print, the market is now pricing in a September cut.

Trade worries continue to dominate. President Trump is looking to impose reciprocal tariffs as soon as April, arguing that many trading partners treat the U.S. unfairly.

Citing WTO average external tariffs rates, a BBC article suggests he has a point. At 3.3%, the U.S. has one of the lowest average external tariff rates. The countries that have initially been in Trump's crosshairs have the following average tariff rates: China 7.5%, Mexico 6.8%, EU 5.0%, Canada 3.8%.

Retail Sales tumbled 0.9% in January, well below expectations of -0.1%, versus a positive revised +0.7% in December (was +0.4%). Ex-auto fell 0.4% on expectations of +0.3, versus a positive revised +0.7% in December (was +0.4%).

Import Price Index rose 0.3% in January, below expectations of +0.4%, versus a revised +0.2% in December (was +0.1%).

Export Price Index surged 1.3% in January, well above expectations of +0.3%, versus an upward revised +0.5% in December (was +0.3%).

Industrial Production +0.5%, above expectations of +0.3%, versus a positive revised 1.0% in December. Cap use rose to a five-month high of 77.8% from 77.5% in December.

Business Inventories fell 0.2% in December, below expectations of UNCH, versus +0.1% in November.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$2.63 (+0.09%)
5-Day Change: +$64.73 (+2.26%)
YTD Range: $2,607.16 - $2,940.10
52-Week Range: $1,990.62 - $2,940.10
Weighted Alpha: +43.85

Gold approached the record high at $2,940.10 in London trading on Friday, but was unable to break through leaving a potential double top. Nonetheless, the yellow metal appears poised for a seventh straight higher weekly close.



This week's U.S. data was highlighted by revived inflation and then today's retail sales miss stoked worries about faltering growth as well. While Q1 GDP expectations have been trimmed modestly, expect to hear more mentions of 'stagflation' in the week ahead.

Growth risks, trade tensions, lower yields, and a weaker dollar should all foster continued haven demand. I suspect the downside is limited and this setback will attract buying interest.

Wednesday's low at $2,869.08 is the confirmation point for the small double top. A breach of this level would open up potential to secondary supports at $2,860.70/$2,855.32 and $2,840.60/$2,839.69.

As noted in recent commentary, the market had also become quite overbought. A period of corrective/consolidative action would relieve that condition and bode well for the still-expected attainment of the $3,000 objective.

Silver surged to a fifteen-week high of $33.340 in London trading, but gains above $33 could not be sustained as U.S. retail sales disappointed. A close above $32.343 is needed to secure a third straight higher daily close, although the white metal does appear poised for a fourth consecutive higher weekly close.

 

While dislocation in the gold market has been a hot topic in recent weeks, similar conditions also emerged in the much smaller and more thinly traded silver market. Moves tend to be amplified in silver.

Spread traders have been short silver against gold and that started to unwind this week and accelerated during today's Asian session. The gold/silver ratio reached nearly a two-year high above 92 on Tuesday. The ratio was off more than 3% at the intraday low of 87.757.

Silver's breach of last week's high at $32.590 in Asia also confirmed the violation of an important Fibonacci level. That move targeted the next retracement level at $33.554 (78.6% retrace of the decline from $34.853 to $28.783).

Silver nearly got there before sellers stepped in and drove the market back below $33. While today's move returns additional credence to the longer-term uptrend, the sharp intraday retreat is going to give the bulls some pause.

A move back below $32 from here would put the important 20-day ($31.427), 100-day ($31.208), and 20-week ($31.199) moving averages back in play.

Today's high at $33.340 now provides an intervening barrier ahead of the $33.554 Fibonacci level. A short-term breach of the latter would bode well for a retest of October's high at $34.853.


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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