Blog posts tagged with 'precious metals'

Gold eases from two-week high on rising yields and firmer dollar

OUTSIDE MARKET DEVELOPMENTS: President Trump's tax-cut bill cleared the House by the narrowest of margins early this morning. The legislation now moves to the Senate, which has already signalled its intention to make changes.

“Now, it’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE,” Trump wrote on TruthSocial. However, changes in the Senate will require a return to the House, and another test of the slim GOP majority.

The debate over the "big beautiful bill" has stoked concerns that the plan does little to rein in deficit spending, despite White House claims to the contrary. The CBO says the bill adds $3.5 trillion to the national debt through 2033. And the legislation includes a provision to raise the debt ceiling by $4 trillion.

This all comes days after Moody's cut the U.S. sovereign debt rating from AAA to Aa1. Amid lingering trade tensions, the market was already on edge. In addition, yesterday's $16 bln 20-year auction disappointed, and Treasury yields spiked. This reinforces worries that a "sell America" trade has some momentum.

The S&P Flash PMIs for the EU signalled contraction. While manufacturing improved, the reading remains below the 50 threshold. The services reading dropped to a 16-month low of 48.9. Additionally, the Bundesbank said it expects Europe's biggest economy to remain stagnant through Q2.

This weighed on the euro, which provided some support for the dollar. However, the dollar index remains lower on the week, and the magnitude of the downside retracement already seen returned a measure of credence to the five-month downtrend.

Initial Jobless Claims fell 2k to 227k in the week ended 17-May, below expectations of 230k, versus 229k in the previous week. Continuing claims rose 36k to 1,903k in the 10-May week, versus $1,867k in the previous week.

Chicago Fed National Activity Index fell to -0.25 in April from a revised 0.3 in March (was -0.3). "Three of the four broad categories of indicators used to construct the index decreased from March, and three categories made negative contributions in April," according to the report.

S&P Global Flash Manufacturing PMI rose to 52.3 in May, above expectations of 50.1, versus 50.2 in April. The report signals a fifth straight month of expansion.

S&P Global Flash Services PMI rose to 52.3 in May, above expectations of 50.8, versus 50.8 in April.

Existing Home Sales slipped to a 4.00M pace in April on expectations of 4.10M, versus 4.02M in March.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$25.16 (-0.76%)
5-Day Change: +$68.87 (+2.13%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +44.38

Gold retreated modestly from a two-week high of $3,343.51 in Asia. The yellow metal is being weighed by higher yields and a bit of a bounce in the dollar.



Nearly 61.8% of the one-month correction has been retraced. A breach of this important Fibonacci level at $3.355.02 is needed to clear the way for renewed tests above $3,400 and another run at the $3,500 zone. The overseas high at $3,343.51 now provides an intervening barrier.

Rising concerns about U.S. debt, heightened geopolitical tensions, and a lack of progress on trade have stoked haven demand this week. While a softer dollar is helping the cause, the rising yield environment is seen as a headwind.

The 20-day moving average that was violated on the way up yesterday is now serving as initial support at $3,297.70.  Minor congestion around $3,250 protects the halfway back point of the recent rally, which comes in at $3,235.31.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.652 (-1.95%)
5-Day Change: +$0.351 (+1.08%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +9.98

Silver eked out a seven-week high just above $33.662 (25-Apr high) before retreating back below $33. The white metal was weighed by a setback in gold, a firmer dollar, and heightened EU growth risks.



Better-than-expected U.S. flash PMI readings for the U.S. offset some of the worries about Europe, and silver was able to subsequently regain the 33-handle. Nonetheless, I continue to view upticks above $33 as suspect as long as trade uncertainty prevails.

Resistance at $33.662/69 is reinforced, leaving key highs at $34.543 and $34.853 well protected. With the gold/silver still at historically high levels near 100, the upside for silver seems limited.

On the downside, let's call $33.00/$32.955 first support. The intraday low at $32.694 corresponds closely with the 50- and 20-day moving averages, making for a good downside barrier.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
pgrant@zanermetals.com
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 buoyed by heightened geopolitical tensions and weaker dollar

OUTSIDE MARKET DEVELOPMENTS: A CNN report suggests Israel is preparing to strike Iranian nuclear facilities, citing "multiple US officials familiar with the latest intelligence." This is a geopolitical risk that surfaces with some regularity, but it understandably leads to some risk aversion as it raises the stakes for a broader regional conflict in the Middle East.

Israel certainly always has an evolving plan to take out Iran's nuclear program, although it seems unlikely that they'd act without at least the tacit approval of the U.S. As long as talks between the U.S. and Iran are ongoing, I think Israel is on hold.

That being said, Iran's top diplomat unequivocally stated his country will never stop enriching uranium, a key U.S. demand for a deal. Iran's supreme leader has expressed pessimism about a positive outcome. Maybe that's what's ramping up the probability of an Israeli strike.

Much of the political focus this week has been on getting President Trump's 'One Big Beautiful Bill" across the finish line in the House. A vote could come as soon as today. Speaker Johnson wants the legislation to clear the House by Memorial Day.

Markets are also keen to see further progress on trade. It's been more than a week since the UK trade deal and talks with China were announced. Without some good news on that front, the trade will start tilting back toward risk-off.

MBA Mortgage Applications fell 5.1% in the 16-May week, versus +1.1% in the previous week. It was the first decline of the month. The 30-year mortgage rate rose to a 13-week high of 6.92%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$21.01 (+0.64%)
5-Day Change: +$130.27 (+4.10%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +44.41

Gold is trading higher for a third straight session, underpinned by an uptick in geopolitical risks and continued weakness in the dollar. While last week's range remains intact, the haven bid could increase if more trade deals are not forthcoming.



The rise back above the 20-day MA and into the upper half of the range takes some pressure off the downside and lends credence to a scenario that suggests the corrective low is in place at $3,127.12. Penetrations of secondary resistances at $3,325.08 (12-May high) and $3,346.19 (9-May high) would further bolster confidence among the bulls, favoring renewed tests above $3,400.

More than 61.8% of the corrective rally in the dollar index has been retraced, returning focus to the downtrend. Renewed weakness in the dollar provides additional underpinning to gold.

Today's low at $3,289.50 is bolstered by the 20-day MA and marks initial support. Congestion around $3,250 provides an additional barrier ahead of the lows for the week at $3,206.90/$3,203.52.

Silver has moved more convincingly above $33, setting four-week highs, and bringing important resistance at $33.662 (25-Apr high) within striking distance. The white metal is garnering support from strength in gold and a weaker dollar. Fresh monetary stimulus from China this week provides an additional boost.



However, without the benefit of progress on the trade front, gains above $33 seem technically inspired and remain suspect. Even if new seven-week highs are reached above $33.662, formidable upside barriers loom at $34.543 and $34.853.

Initial support at $33.00/$32.995 now protects the 50- and 20-day moving averages at $32.766/739. Penetration of the latter would leave silver vulnerable to further consolidation back toward $32.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
pgrant@zanermetals.com
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 is firmer within last week's range, as silver probes above $33 again

OUTSIDE MARKET DEVELOPMENTS: China has cut its benchmark lending rates in yet another effort to spur domestic demand. Weak retail sales and home price data indicate that growth risks persist. Further stimulus seems likely, even as trade tensions with the U.S. have moderated.

President Trump said yesterday's calls with Putin and Zelenskyy went well and that ceasefire talks would begin immediately. However, the combatants did not immediately provide corroboration, so the trade remains skeptical.

International pressure on Israel is increasing to end military operations in Gaza and allow aid shipments to resume. Qatar's PM conceded that ceasefire talks in Doha are "going nowhere." President Trump has reportedly expressed frustration with the lack of progress. 

There are no U.S. economic releases on the calendar today, just a lot of FedSpeak. I expect FedSpeak will continue to tilt toward 'no rush'. Atlanta Fed President Bostic said on Monday that the central bank wants more clarity on the economy before it moves on rates.

Fed funds futures are implying 50 bps in cuts this year. The first 25 bps cut is not fully priced in until October.

Treasuries remain under pressure amid concerns about weaker foreign demand and rising supply after the latest downtick in America's sovereign debt rating. The dollar index has retraced nearly half of the four-week corrective rally that culminated with a five-week high near 102 last week.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$4.87 (+0.15%)
5-Day Change: -$9.06 (-0.28%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +40.40

Gold is trading higher for a second session, underpinned by geopolitical risks and lingering trade worries. A softer dollar is providing some additional lift this week.



Today's upside extension pressured the 20-day moving average at $3,288.13. A close above the 20-day would bode well for a move back into the upper half of the one-month range.

A breach of the midpoint of the range at $3,311.51 would suggest potential for renewed tests above $3,400. Additional intervening barriers are noted at $3,325.08 (12-May high) and $3,346.19 (9-May high).

"In a world of heightened uncertainty, owning some gold makes sense," says Aaron Hussein, global market strategist at JP Morgan Asset Management. While Hussein cautions that "gold is not a panacea," JPM sees gold reaching $3,675 by year-end with potential beyond $4,000 by Q2'26.

Congestion around $3,250.00 marks initial support, protecting the lows for the week thus far at $3,206.90/$3,203.52. The 50-day moving average ($3,184.40 today) has gained significance as support over the past week. 


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.143 (+0.44%)
5-Day Change: -$0.347 (-1.05%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +8.05

Silver poked back above $33, buoyed by the latest round of Chinese stimulus, new highs for the week in gold, and an easier dollar. However, the white metal remains confined to last week's range with $33.197 (13-May high) as yet untested.



Silver remains essentially range-bound, and gains above $33 have attracted selling interest in recent weeks. The struggles above $33 leave key resistance levels above $34 increasingly well protected.

The high for May at $33.239 (6-May high) and the late-April high at $33.662 must be cleared to open up potential for a challenge of the high for the year at $34.543 and the 22-year high from October at $34.853.

Despite recent disappointing price action, I remain biased to the upside, largely due to the ongoing supply deficit in silver. In addition, the gold/silver ratio continues to suggest that the white metal is significantly undervalued.

Copper, on the other hand, is in surplus. The International Copper Study Group is forecasting a significant copper surplus of 289,000 MT this year and 209,000 MT in 2026. The ISSG sees increased mine supply and slowing demand as contributing factors.

"In view of uncertainty surrounding international trade policy that is likely to weaken the global economic outlook and negatively impact copper demand, usage growth rates have been revised down," according to the ICSG report.

A significant amount of silver supply is a byproduct of copper mining. If the oversupply of copper leads to a slowdown in copper production, the supply of silver may become even tighter.

The 50- and 20-day moving averages at $32.760/742 provide initial support. Today's low at $32.150 is bolstered by the rising 100-day MA at $32.049.

I think there's still opportunity to play the range in the short term, but I'm inclined to give greater weight to buying strategies in anticipation of an eventual upside breakout. 


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
pgrant@zanermetals.com
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 trades higher on risk-off sentiment, but remains within Friday's range

OUTSIDE MARKET DEVELOPMENTS: Moody's downgraded the U.S. credit rating one notch from AAA to Aa1 late on Friday. Treasuries, stocks, and the dollar begin the week on defense due to heightened risk aversion.

On Meet the Press, Treasury Secretary Bessent downplayed the downgrade. “Moody’s is a lagging indicator — that’s what everyone thinks of credit agencies,” said Bessent.

If anything, Moody's is late to the party. The other two major credit agencies, S&P and Fitch, downgraded the U.S. from their highest ratings in 2011 and 2023, respectively. The national debt was $14.3 trillion in Q2 2011 and had risen to $32.3 trillion in Q2 2023.

“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration,” according to Moody's.

Moody's joining the other two ratings agencies with a one-notch downgrade is arguably an event of negligible significance. However, it is the latest in a long line of warning signs that have historically been disregarded by most politicians in DC. At some point, the debt and funding burden will reach levels where a course correction is no longer an option. 

It may be implied that Moody's doesn't hold out much hope for Trump's "Big Beautiful Bill" to meaningfully address the growing government debt. “We are determined to bring the spending down and grow the economy,” vowed Bessent.

On Sunday, the House Budget Committee passed the reconciliation bill, overcoming challenges from budget hawks within the GOP. The House may vote on the legislation as soon as this week and is expected to split along party lines, making passage dependent on GOP unity.

President Trump spoke with Putin, Zelenskyy, and other European leaders today. After the call, Trump said Russia and Ukraine "will immediately start negotiations toward a Ceasefire and, more importantly, an END to the War."

Leading Indicators fell 1.0% in April, in line with expectations, versus a revised -0.8% in March (was -0.7%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$41.86 (+1.31%)
5-Day Change: +$5.85 (+0.18%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +40.31

Gold is trading higher, boosted by risk-off sentiment stemming from the Moody's downgrade. A softer dollar is providing some additional lift, although price action remains confined to Friday's range thus far.



The inability of gold to sustain the probe below the 50-day moving average provides some encouragement to the bull camp, but it's unclear at this point if the corrective low is in place. A breach of Friday's high at $3,251.05 would allow for a test of previous highs at $3,256.01 and 3,262.11.

A move back above $3,300 would put the yellow metal back above the 20-day MA. The midpoint of the range comes in at $3,311.51.

On the downside, today's low at $3,203.51 protects Friday's low at $3,161.16. Below the latter, the more important $3,127.12 low from last week would be back in play.

Global ETFs saw net outflows of 30 tonnes last week as investors shifted back to riskier assets on optimism that the worst of the tariff uncertainty was behind us. All regions were net sellers. It was the biggest net outflow since the week of 30-Sep'22.

The COT report for last week showed net speculative long positions fell 1.3k to 161.2k contracts, versus 162.5k in the previous week.  It was the fourth straight weekly decline.

Silver is consolidating within Friday's range. A firmer gold price and softer dollar are providing support, but the Moody's downgrade calls to mind the headwind posed to the economy by our massive debt burden.



Selling above $33 and buying below $32 still looks like an attractive short-term strategy until fresh inputs allow the white metal to pick a direction.

The 20- and 50-day MAs at $32.714/758 mark resistance once again. However, there are mutiple tiers of resistance above that limiting the upside. The key levels are the high for the year at $34.543 and the 22-year high from October at $34.853.

On the downside, Friday's low at $31.945 protects Thursday's low at $31.701. More important support comes in at $31.362/114 zone, where the 200-day MA corresponds with an important retracement level.

The latest report showed net speculative long positions declined by 1.5k to 47.8k contracts, versus 49.3k in the previous week. It was the second consecutive weekly decline.

CFTC Silver speculative net positions

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
pgrant@zanermetals.com
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 poised for weekly loss as easing of trade and geopolitical tensions stoked risk appetite

OUTSIDE MARKET DEVELOPMENTS: Risk appetite has returned after Russia and Ukraine held their first face-to-face meeting since 2022. Putin did not attend, perhaps signalling a halfhearted commitment. The talks ended without a ceasefire agreement.

However, the two sides reportedly agreed to exchange 1,000 prisoners and to hold a follow-up meeting. "The parties have agreed in principle to come together again," said Turkish Foreign Minister Hakan Fidan.

President Trump concluded a four-day Middle East trip, visiting Saudi Arabia, Qatar, and the UAE, where he was warmly received and secured investment deals worth over $2 trillion. The trip focused heavily on economic agreements, including a $600 bln Saudi commitment and a $200 bln UAE AI deal, while also lifting U.S. sanctions on Syria.

During his trip, the President repeatedly said that Iran can not be allowed to have a nuclear weapon, and indicated they were "very close" to a deal. However, Trump still rattled the sabre, saying there are only two paths forward. "There’s a friendly and a non-friendly, and non-friendly is a violent course, and I don’t want that," he warned.

As I've been saying for several days, markets are eager for fresh positive news on the trade front. President Trump acknowledged that things are progressing too slowly and that tariffs will go up again if deals aren't struck.

Housing Starts rose 0.022M to 1.361M in April, near expectations of 1.362M, versus a revised 1.339M in March (was 1.324M). Permits fell 0.069M to 1.412M. Completions -0.091M to 1.458M.

Import Price Index rose 0.1% in April, above expectations of -0.4%, versus a revised -0.4% in March (was -0.1%); +0.1% y/y, down from +0.8% in March. Ex-petro +0.4% m/m.

Export Price Index rose 0.1% in April, above expectations of -0.4%, versus a revised +0.1% in March (was unch); +2.0% y/y, down from +2.6% in March. 

Michigan Sentiment (Preliminary) fell 1.4 points to a 35-month low of 50.8 in May, below expectations of 53.5, versus 52.2 in April. Year-ahead inflation expectations surged to 7.3%, versus 6.5% in April. "Consumers continue to express somber views about the economy," according to the report.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$64.77 (-2.00%)
5-Day Change: -$143.83 (-4.32%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +34.24

Gold is poised for its biggest weekly loss since the 11-Nov'24 week, as the easing of trade and geopolitical tensions this week stoked risk appetite. While Thursday's rebound into the range faded, the low for the week at $3,127.12 appears protected, at least ahead of the weekend.



A close above the 50-day moving average at $3,169.97 seems likely today, which would provide some encouragement to the bull camp. However, The $3,300 level must be regained to truly return confidence to the underlying uptrend. The 20-day MA comes in at $3,302.21 and the midpoint of the corrective range is at $3,311.51.

A breach of Friday's low at $3,161.16 early in the week ahead would leave $3,127.12 vulnerable to a retest. Below the latter, the next tier of Fibonacci support at $3,076.12 and the $3,000 zone would look increasingly attractive.

Incremtum's In Gold We Trust report thinks a correction as $2,800 is possible without damaging the "long-term Big Long case."  Their price models continue to indicate "the gold bull market still has considerable room to run."


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.505 (-1.55%)
5-Day Change: -$0.686 (-2.10%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +3.16

Silver is defensive to end the week after failing to sustain uptricks above $33 once again. While the white metal should be encouraged by optimism on trade and the reduced growth risks, weakness in gold and a firm dollar provide headwinds.



Given the recent price action, selling above $33 and buying below $32 could be an attractive strategy early in the new week. I'll continue to watch gold for cues; with an expectation that silver will outperform gold on downticks and underperform on upticks.

The 20- and 50-day MAs at $32.730/752 mark resistance once again. However, it's going to be tough to start tilting more aggressively bullish until mutiple tiers of resistance above the market are taken out. The key levels are the high for the year at $34.543 and the 22-year high from October at $34.853.

On the downside, Thursday's low at $31.701 protects the more important $31.338/114 zone, where the 200-day MA corresponds with an important retracement level.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
pgrant@zanermetals.com
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 rebounds on revived risk aversion, softer dollar

OUTSIDE MARKET DEVELOPMENTS: Market sentiment has swung back toward risk aversion as the euphoria associated with the UK trade deal and tempered tensions with China is wearing off. Markets are craving further progress on the trade front.

Ukrainian President Zelenskyy is in Turkey, ostensibly for direct peace talks with Russia. However, the Kremlin has confirmed that President Putin will not be there. President Trump had suggested his attendance was contingent on Putin being there. It appears these will be much lower-level talks than many had hoped for, dimming the prospects for a deal.

Trade optimism earlier in the week pushed the dollar index to a five-week high near 102. The greenback got some additional underpinning from a Bloomberg report that said U.S. officials were not pursuing a weaker dollar as part of trade negotiations.

U.S. PPI for April stunned with a 0.5% drop, the first negative print in 18 months and the largest in five years. This, combined with the rolloff of the +0.5% print from last April, results in a full percentage point drop in annualized PPI from a revised 3.4% in March to 2.4%. Core PPI tumbled to 3.1% y/y from a revised 4.0%.

Combined with weaker-than-expected CPI in April, there is mounting evidence that inflation risks are no longer a credible excuse to not cut rates. I expect President Trump to say something to that effect today.

So far, the reaction in Fed funds futures has been tepid. The market has priced in 50 bps of easing by year-end, with the first cut likely to come in September. Powell speaks today on the ongoing monetary policy framework review.

Retail Sales rose 0.1% in April on expectations of UNCH, versus a positiive revised +1.7% in March ( was +1.4%). Ex-auto +0.1%, below expectations of +0.3%, versus a revised +0.8% in March (was +0.5%).

PPI -0.5% in April, below expectations of +0.2%, versus an upward revised UNCH in March (was -0.4%); 2.4% y/y, down from an upward revised 3.4% in March (was 2.7%). Core -0.4%, below expectations of +0.3%, versus an upwardly revised +0.4% in March (was -0.1%); 3.1% y/y, versus a revised 4.0% in March (was 3.3%).

Initial Jobless Claims were steady at 229k in the week ended 10-May, above expectations of 226k, versus a revised 229k in the previous week (was 228k). Continuing claims rose 9k to 1,881k in the 03-May week, versus a revised 1,872k in the previous week (was 1,879k).

Philly Fed Index rebounded 22.4 points to -4.0 in May, above expectations of -10.0, versus -26.4 in April.  Prices paid continued to march higher, reaching a 35-month high of 59.8.

Empire State Index fell 1.1 points to -9.2 in May, inside expectations of -10.0, versus -8.8 in April. "Firms continued to expect conditions to worsen in the months ahead," according to the NY Fed.

Industrial Production was UNCH in April, below expectations of +0.2%, versus -0.3% in March. Cap use edged down to 77.7% from 77.8% in March.

Business Inventories rose 0.1% in March on expectations of +0.2%, versus +0.2% in February.

NAHB Housing Market Index fell 6 points to 34 in May, below expectations of 40, versus 40 in April. That ties Nov'23 as the lowest reading since Dec'22. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.74 (-0.02%)
5-Day Change: -$127.92 (-3.87%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +34.00

Gold is recovering from a five-week low of $3,127.12 that was set in Asian trading. The yellow metal is being buoyed by a tilt toward risk-off due to a lack of additional progress on trade, and dimmed hopes for a Russia-Ukraine peace deal.



A slightly easier dollar is helping underpin the yellow metal. However, the dollar index is still higher on the week, and a close above 100.69 would confirm a fourth straight higher weekly close. Dollar strength poses a headwind for gold because it makes the precious metal more expensive for foreign buyers.

Gold overran my secondary support zone at $3,165.84/$3,157.86, and the breach of the 50-day moving average is troubling for the bull camp. While it looks like we'll close back above the 50-day today, the downside remains vulnerable.

The $3,200 zone is support once again with today's low at $3,127.12 providing another barrier ahead of the next tier of Fibonacci support at $3,076.12. Below the latter, the $3,000 zone would be vulnerable to tests.

I do continue to view losses as corrective within the long-term uptrend. Incremenum's annual In Gold We Trust report, released today, agrees.

The much-anticipated report entitled The Big Long posits that a secular bull market is forming and that we are "entering the second half of the golden decade." The Incrementum gold price model targets $4,800 by 2030, and that could be as high as $8,900 in an inflationary scenario.

Incrementum notes that cumulative ETF and central bank demand in Q1 was 470 tonnes, the second highest level since 2010. They also cited the rising influence of emerging Asian markets.

A climb back above $3,300 is needed to ease pressure on the downside and favor renewed tests above $3,400. I still see potential for fresh record highs above $3,500 before the end of H1.

Silver reached a five-week low of $31.701 before renewed buying interest surfaced. The white metal is being helped by the rebound in gold and an easier dollar.



While the probe below the 100-day moving average has not been sustained, it presents additional downside risk to $31.309/114, where the 200-day MA corresponds with an important retracement level. The $32 zone and today's low at $31.701 provided intervening supports.

Persistent failures to hold on to gains above $33 in recent weeks leave upside potential somewhat suspect. That concern is bolstered if the dollar continues to rally.

A close this week back above the 20- and 50-day MAs at $32.733/756 would ease pressure on the downside somewhat, but it would still be tough to get overly bullish given the substantial resistance levels above. Further consolidation would be likely at that point.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
pgrant@zanermetals.com
www.zanermetals.com

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