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Gold consolidates within yesterday's range as focus shifts to May jobs data

OUTSIDE MARKET DEVELOPMENTS: CBO scoring of the House-passed reconciliation bill revealed that taxes will be cut by $3.75 trillion and the deficit will increase by $2.4 trillion over the next decade. While the White House is questioning the veracity of the results, concerns about the fiscal situation in the U.S. are escalating. Even Trump ally Elon Musk roundly criticized the legislation as a "disgusting abomination.”

The legislation is currently in the hands of the Senate, which is likely to make significant amendments. At that point, the two houses of Congress will need to reconcile the differences. President Trump's desire to have the legislation on his desk by the Fourth of July is looking questionable.

Today's ADP Employment Survey undershot expectations by a significant margin. This offsets the better-than-expected JOLTS print from Tuesday, leaving downside risk for Friday's NFP report.

Services PMI beat expectations, but the ISM number was a miss. These data temper some of the growth optimism stemming from manufacturing data beats earlier in the week. Rises in the price components increase inflation worries.

The net effect of today's data is a modest uptick in rate cut expectations as reflected by Fed funds futures. The futures are pricing 55 bps by year-end.

The Bank of Canada held steady on rates, as was widely expected. BOC Governor Macklem acknowledged that Q2 growth would be substantially weaker in the face of tariff headwinds. "There was a clear consensus to hold policy unchanged as we gain more information," he said.

MBA Mortgage Applications fell 3.9% in the 30-May week, versus -1.2% in the previous week. The 30-year mortgage rate fell to 6.92% from 6.98% in the previous week.

ADP Employment Survey showed a private payrolls increase of just 37k in May, well below expectations of +120k, versus a revised +60k in April (was +62k). This was the weakest print since the 53k decline in March 2023.

S&P Global Services PMI was revised up to 53.7 for May, versus a 52.3 flash and 50.8 in April. Prices charged jumped to a 33-month high of 58.6 from 53.0 in April.

Services ISM fell 1.7 points to 49.9 in May, below expectations of 52.0, versus 51.6 in April. That leaves the index in contraction (albeit slightly) for the first time since last June. Prices paid surged 3.6 points to a 30-month high of 68.7, versus 65.1 in April.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$2.28 (-0.07%)
5-Day Change: +$87.60 (+2.66%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +48.67

Gold is trading higher within Tuesday's range, buoyed by heightened fiscal worries and signs of revived inflation from the services sector. A tilt toward more dovish Fed expectations and a weaker dollar provide additional underpinnings for the yellow metal.



New highs for the week above $3,389.78 would bode well for expected tests back above $3,400. Additional tiers of resistance at $3,416.97 (78.6% retracement of the corrective decline) and $3,431.63 (08-May high) protect the all-time high at $3,495.89.

A convincing move to new record highs above $3,500 would shift focus to $3,596.20 based on a Fibonacci projection. However, such a move would also return considerable confidence to the longer-term objective at $4,000.

On the downside, Tuesday's low at $3,338.34 and the $3,324.40/28.00 zone protect the 20-day moving average at $3,293.76. Penetration of the latter would favor further consolidation into the lower half of the range.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.157 (-0.45%)
5-Day Change: +$1.449 (+4.40%)
YTD Range: $28.565 - $34.783
52-Week Range: $26.524 - $34.853
Weighted Alpha: +19.65

Silver remains consolidative within the upper half of Monday's impressive $1.805 range, supported by persistent strength in gold, a softer dollar, and some hope that direct talks between President Trump and China's Xi this week will ease trade tensions.



Key resistance marked by the high from October at $34.853 successfully contained the upside earlier in the week, leaving the broader range intact. While Monday's strong surge leaves the short-term bias in favor of further attacks on the upside, recent volatility has the trade on edge.

Failure to muster a breakout in short order is likely to lead to position squaring ahead of the weekend. That would send the white metal back below $34 with potential to the $33 congestion zone.

A breakout above $34.783/853 would confirm that the uptrend is back underway, targeting $36.169 initially based on a Fibonacci projection. A long-standing retracement level at $35.217 provides an intervening barrier. Surther out, $40 silver would look increasingly appealing.


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 modestly on downtick in trade tensions

OUTSIDE MARKET DEVELOPMENTS: Markets have calmed somewhat after the White House said that Trump and Xi Jinping are likely to speak directly this week. Investors are hopeful that the two leaders can get broader trade negotiations back on track.

Meanwhile, U.S. Commerce Secretary Lutnick said that a mega trade deal with India could be finalised soon. While markets have grown increasingly impatient with progress on trade, Lutnick reminds us that "these kind of deals used to take two or three years, and we're trying to get them done in a month."

Fair enough, it's a big lift. However, it's a lift of the Administration's own making. The UK deal was relatively easy, as the U.S. typically has a trade surplus with them. The tougher deals are with countries that contribute to the massive trade deficit.

Manufacturing activity in China contracted in May as tariffs began to bite. The Caixin/S&P Global manufacturing PMI fell to 48.3, versus 50.4 in April. It was the first drop in eight months and the lowest reading in 32 months.

Amid mounting growth worries in the world's second-largest economy, there are expectations of more stimulus. China's Premier Li Qiang said last week that additional measures are indeed being considered, including some that are "unconventional."

The dollar has retraced some of yesterday's losses, but price action in the index remains confined to Monday's range. Nonetheless, with more than 78.6% of the April/May corrective rally now retraced, considerable credence has been returned to the downtrend that began this year. The dollar index posted five consecutive lower monthly closes this year.

Recent FedSpeak continues to highlight the need for clarity before rates are adjusted further. This strongly suggests that the easing campaign remains on hold. Fed funds futures still imply a 25 bps cut in October, but 50 bps in easing by year-end is no longer fully priced in.

Factory Orders tumbled 3.7% in April, below expectations of -3.2%, versus a negative revised +3.4% in March (was +4.3%). It was the first decline in five months and the biggest drop since January 2024. Inventories fell 0.1% after rising a revised 0.1% in March.

JOLTS Job Openings rose 191k to 7,391k in April, above expectations of 7,100k, versus a revised 7,200k in March (was 7,192k). The data suggest a healthy labor market and imply upside risk for the 125k NFP consensus.

RCM/TIPP Economic Optimism Index rose 2.7% to 49.2 for June on expectations of 49.1, versus 47.9 in May. "A pause on mindless tariffs (that would greatly hinder U.S. exports if implemented) has coincided with rising confidence," said RCM's John Tamny.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$26.50 (-0.78%)
5-Day Change: +$58.31 (+1.77%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +47.70

Gold has retreated from a four-week high of $3,389.78 set in Asia as trade tensions with China cool modestly, providing some lift for the dollar.  However, broader trade and geopolitical risks remain supportive for the yellow metal.



While the dominant uptrend appears to be reasserting itself, important resistance at $3,431.63 (07-May high) must be negated to clear the way for a retest of the record high. The 78.6% retracement level of the recent corrective phase comes in at $3,416.97, and now today's high at $3,389.78 provides an additional intervening barrier.

Central bank gold purchases slowed in April to 12 tonnes. Poland remains the most aggressive buyer year to date. The PBoC added 2 tonnes, marking the sixth straight month of purchases.

The World Gold Council speculates that the slowdown may be attributable to the latest round of record-high prices that reached $3,500 in April. "While the rally to multiple new record highs is unlikely to deter central banks from buying gold – as they tend to be more strategic in nature – it could explain some of the deceleration in the pace of monthly net buying," wrote WGC Senior Analyst Krishan Gopaul.

"Fears about the impact of US tariffs have been the overwhelming factor driving gold in the past few months," says John Reade of the WGC in a conversation with FT Advisor. "There’s a sense that the rules have changed, and in that context gold is being re-evaluated as a strategic asset, not just a defensive one," he added.

It strikes me that central banks already view gold as a strategic asset. Allocations have grown in recent years as emerging countries sought to diversify reserves, reduce reliance on the dollar, and mitigate exposure to sanctions.

High net worth investors are increasingly following the lead of the central banks. "The percentage of high net worth (HNW) investors holding gold has increased from 20% to 38% — a 90% jump in only 15 months," according to State Street Global Advisors.

"The ability to hedge against market volatility and persistently low correlation to both equities and fixed income can potentially make gold a compelling portfolio play," says SSGA. That suggests that gold should continue to grow in acceptance among average investors, providing a boost to demand.

The $3,324.40/28.00 zone provides initial support and protects the 20-day moving average at $3,293.35. Penetration of the latter would favor further consolidation into the lower half of the range.

Silver started the week with an impressive rally of more than 5%, reaching seven-month highs. The white metal followed gold higher on rising trade and geopolitical tensions. A weaker dollar provided additional lift, as did the shake-out of stubborn shorts as important resistances were violated.



Key resistance marked by the high from October at $34.853 was approached but remains intact. The white metal has pulled back into the range as gold eased and the dollar firmed on a downtick in trade tensions.

A breach of $34.783/853 is needed to confirm the upside breakout. Such a move would target $36.169 initially based on a Fibonacci projection, with an important long-standing retracement level at $35.217 providing an intervening barrier. However, the longer-term bullish implications of such a range breakout would be to $40, and beyond.

If silver is unable to muster a breakout fairly quickly, I'd look for a retreat to today's low at $34.015. Below that, a return to consolidation around $33 would be likely.


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 surges on haven appeal as trade and geopolitical risks escalate

OUTSIDE MARKET DEVELOPMENTS: On Sunday, Ukraine staged surprise drone attacks on airfields within Russia that destroyed dozens of military aircraft on the ground. This attack comes a week after Russia conducted some of the largest drone and missile strikes of the war against Ukraine.

The war in Ukraine appears to be escalating even as U.S.-sponsored peace talks in Istanbul continue. Heightened geopolitical tensions are contributing to risk-off sentiment.

The market's patience continues to be tested on trade. "You're going to see over the next couple of weeks, really, first class deals for the American worker," said Commerce Secretary Howard Lutnick.

The trade is skeptical. President Trump announced that tariffs on steel and aluminum will double on Wednesday. The 90-day pause on broader tariffs is set to expire early next month, despite ongoing legal challenges to the President's authority to impose those tariffs.

Talks with China have reportedly stalled amid accusations from both sides that the terms of the preliminary agreement are being violated. The White House indicated that Trump and Xi may hold direct talks this week.

The uptick in trade tensions and ongoing fiscal worries have weighed on the dollar. The dollar index has now retraced more than 78.6% of the recent corrective gains, returning considerable credence to this year's downtrend.

S&P Manufacturing PMI was revised down to 52.0 for May, versus a flash reading of 52.3 and 50.2 in April. It was the fifth consecutive print above 50, indicating ongoing expansion.

Manufacturing ISM fell 0.2 points to 48.5 in May, below expectations of 49.3, versus 48.7 in April. Prices edged lower to 69.4 from 69.8 in April.

Construction Spending fell -0.4% in April, below expectations of +0.3%, versus a revised -0.8% in March (was -0.5%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$58.10 (+1.77%)
5-Day Change: +$13.72 (+0.41%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +47.51

Gold surged to fresh four-week highs, boosted by heightened trade and geopolitical risks. Continued weakness in the dollar is providing additional lift.



The breach of resistance at $3,365.41 bodes well for short-term tests back above $3,400. The next tiers of significant resistance are noted at $3,416.97 (78.6% retracement of the corrective decline) and $3,431.63 08-May high). Penetration of the latter would bode well for new all-time highs and a resumption of the dominant uptrend.

A minor intraday chart point at $3,345.45 protects the 20-day moving average, which comes in at $3,296.98 today. Today's Asian low at $3,289.46 protects more important resistances marked by Friday's low at $3,277.18, and Thursday's low at $3,251.28.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.303 (+0.92%)
5-Day Change: -$0.193 (-0.58%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +14.20

Silver jumped to nine-week highs above $34, underpinned by strength in gold and a weak dollar. While today's gains bring key highs at $34.543 and $34.853 within striking distance, ongoing trade tensions continue to pose headwinds.



It would take new 12-year highs above $34.853 to reestablish the uptrend. Such a move would shift focus to Fibonacci/chart resistance at $35.217/348 initially.

The early U.S. low at $33.224 marks first support. Below that, today's intraday low at $32.978 is bolstered by the 20-day moving average. More formidable support is noted at $32.763/725, where last week's low corresponds closely with the 50-day MA.


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 set to end May little changed amid competing fundamentals

OUTSIDE MARKET DEVELOPMENTS: The Court of International Trade's tariff reprieve was short-lived as an appeals court granted a stay. The CIT judgement is "temporarily stayed until further notice while this court considers the motions papers,” the appeals court ordered.

Meanwhile, President Trump has accused China of violating a preliminary trade agreement struck in Geneva earlier in the month, which had dialed back tensions between the world's two largest economies.

"...China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY," the President wrote on TruthSocial.

Trade tensions may be escalating, with geopolitical and fiscal risks still elevated. Markets head into month-end with a bias toward risk aversion, but U.S. shares are poised for monthly gains.

The U.S. trade balance narrowed dramatically in April to a 19-month low of -$87.6 bln from a record-wide -$162.3 bln in March. Goods exports rose 3.4%, while imports plunged a record -19.8% to $276.1 bln after importers front-ran tariffs in preceding months.

Personal income remained strong in April, providing ongoing support for disposable income and consumption. The PCE inflation ratcheted lower to 2.1% from 2.3% in March.

The Atlanta Fed's GDPNow estimate for Q2 growth was adjusted significantly higher to +3.84% from +2.18% previously. In light of today's data, I expect many analysts to raise their expectations for Q2 growth.

Despite the modest contraction in Q1 GDP, optimism of a growth rebound in Q2, and taming inflation leaves the Fed sidelined. Fed funds futures continue to suggest potential for a 25 bps rate cut in October and 50 bps in total cuts by year-end.

Goods Trade Balance narrowed sharply to -$87.6 bln in April, well inside expectations of -$141.5 bln, versus a revised -$162.3 bln in March (was -$162.0 bln).

Personal Income rose 0.8% in April, above expectations of +0.3%, versus a positive revised +0.7% in March (was +0.5%). PCE rose 0.2%, in line with expectations. The PCE chain price index rose 0.1% m/m, dropping the annualized pace of inflation to 2.1%. Core inflation fell to 2.5% y/y from 2.7% in March.

Chicago PMI fell 4.1 points to 40.5 in May, below expectations of 45.0, versus 44.6 in April. 

Michigan Sentiment was revised up 1.4 points to 52.2 for May, versus 50.8 preliminary read, unchanged from a 34-month low of 52.2 in April.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$22.46 (-0.68%)
5-Day Change: -$52.94 (-1.58%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +43.68

Gold heads into the end of the week and month-end, generally consolidative. The yellow metal is poised to end the week lower after trading within the confines of last week's range. Gold is essentially unchanged from April, with an inside month set to be confirmed.



While today's economic data moderated growth risks, trade tensions seem to be back on the rise. Geopolitical and fiscal worries remain elevated, and the mix of fundamental influences has kept gold within recent ranges.

From a technical perspective, price action since the record high was established in April still appears to be corrective within the long-term uptrend. A breach of last week's high at $3,365.41 would bode well for a move back above $3,400 with potential for fresh record highs and continuation of the dominant trend.

A close below the 20-day moving average at $3,290.84 would suggest modest vulnerability for the week ahead. Thursday's low at $3,251.28 will be bolstered by the 50-day MA by midweek. If this level gives way, potential would be for further retracement toward $3,206.90/$3200.00.

Silver continues to straddle the $33 level. While a weekly loss is likely, the white metal seems on track for a higher monthly close.



President Trump called out China for violating a preliminary trade agreement, hiking trade tensions once again. This provides a headwind for silver, keeping the gold/silver ratio elevated near 100.

I'm still watching the 20-day moving average at $32.957 and the 50-day $32.696 as short-term support. The low from 22-May at $32.694 bolsters the latter.

On the upside, a breach of the 22-May high at $33.690 is needed to clear the way for tests above $34. However, key highs at $34.543 and $34.853 are seen as formidable resistances.


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.