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Gold easier within the range, but underpinned by haven interest

OUTSIDE MARKET DEVELOPMENTS: Recent soft economic data and signs of cracks in the labor market have swung market expectations decisively in favor of a September rate cut. Fed funds futures put the probability at 91.4%, up from 46.7% a week ago and 64.0% a month ago. The trade is currently pricing 57 bps of easing by year-end.

The rise in rate cut expectations since Friday's weak jobs report knocked the dollar index off the nine-week high set last week at 100.26. Just over half of the recent corrective rally in the dollar has already been retraced, and the 20-day moving average is under pressure.



President Trump is poised to name a replacement for Fed Governor Adriana Kugler, who announced last week that she would step down this week. “I have a couple of people in mind,” said Trump. “I’ll be announcing that probably over the next couple of days.”

Former Fed Governor Kevin Warsh and Kevin Hassett, the current chair of the President’s Council of Economic Advisors, are thought to be front-runners for the open position. Either could be tapped down the road to replace Jerome Powell as chairman.

"I’d say Kevin and Kevin, both Kevins are very good,” Trump hinted. If I were a betting man, I'd put my money on Hassett.

Hassett has been more consistently dovish. Warsh, on the other hand, has tilted toward hawkish views in the past. Only recently have his comments on monetary policy been more aligned with Trump.

While a non-voting member of the FOMC this rotation, Minneapolis Fed President Neel Kashkari told CNBC this morning that the central bank is increasingly supportive of a resumption of the easing cycle. "In the near term, it may become appropriate to start adjusting the federal-funds rate,” he said.

Kashkari is a moderate hawk, but acknowledged that "the economy is slowing." He also noted ongoing uncertainty associated with tariffs. He said we may not know the “ultimate effects of tariffs” for "quarters or a year or more.”

Trump tacked on an additional 25% tariff on India that will go into effect in 21 days, as a penalty for its purchases of Russian oil. This is in addition to the 25% tariff that begins tomorrow.

Trump is also threatening to ratchet pharmaceutical tariffs higher to as much as 250%. "We want pharmaceuticals made in our country," Trump told CNBC.

The Russian and Chinese navies are conducting anti-submarine warfare exercises in the Sea of Japan, days after President Trump said he had deployed two nuclear submarines closer to Russia. That move was precipitated by Russian saber-rattling.

U.S. special envoy met with Putin today. The Kremlin said that the meeting was "constructive." Russia faces additional sanctions and tariffs if a ceasefire with Ukraine is not reached by Friday.

MBA Mortgage Applications rose 3.1% in the week ended 1-Aug, versus -3.8% in the previous week. The 30-year mortgage rate 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$17.72 (-0.52%)
5-Day Change: +$94.15 (+2.87%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,381.66 - $3,495.89
Weighted Alpha: +36.85

Gold moderated from yesterday's two-week high as special envoy Steve Witkoff arrived in Moscow with the hopes of negotiating a ceasefire between Russia and Ukraine before President Trump's Friday deadline. However, the yellow metal remains confined within its range, awaiting fresh inputs.



However, several factors continue to underpin gold. Ongoing trade and fiscal uncertainty, persistent geopolitical risks, and rising concerns about growth risks are supporting haven interest. Revived Fed easing expectations are also weighing on the dollar.

With gold in the upper half of that range, and above the 20- and 50-day moving averages, the technical bias tilts to the upside and short-term tests back above $3,400. Formidable chart resistances at $3,435.01 (23-Jul high) and $3,449.13 (16-Jun high) must be cleared to confirm potential back to the record highs around $3,500. An eventual move to new all-time highs would revive confidence in the previously established $4,000 objective.

Bloomberg reports that bullion held in Shanghai Futures Exchange warehouses has nearly doubled in the past month to reach an all-time high. “So many people were piling into futures that prices shot up above physical gold. That created an opportunity for others to step in and deliver gold into the system,” said John Reade of the World Gold Council. It's another sign of resilient demand for gold investments in China, according to Bloomberg.

On the downside, the 20- and 50-day MAs at $3,350.18/46.58 are bolstered by Monday's low at $3,347.21. A breach of this zone would set up a softer tone within the range, highlighting the midpoint of the broader range at $3,313.56.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.035 (-0.09%)
5-Day Change: +$0.689 (+1.86%)
YTD Range: $28.565 - $39.517
52-Week Range: $26.524 - $39.517
Weighted Alpha: +37.79

Silver has edged to a new high for the week, helped by resilient gold, and rising rate cut expectations that have weighed on the dollar. However, resistance at the $38 zone has contained the upside thus far.



A climb above $38 would shift focus to the next tiers of Fibonacci resistance at $38.283 and $38.826. Above the latter, potential back to the 14-year high at 39.517 (23-Jul) would be confirmed. Further out, $40 remains a valid target.

Supply/demand dynamics remain broadly supportive. Industrial demand for silver is expected to remain strong, so fluctuations in investment demand will be the source of uncertainty. While YTD gains of more than 30% to reach 14-year highs are certainly appealing to investors, one could argue that the white metal is overextended. Silver's volatility can also scare away investors.

Today's intraday low at $37.698 marks first support and protects Tuesday's low at $37.337. Monday's low at $36.700 is now below the 50-day MA and is the more important level. New lows for the week 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 rebounds within range as weak jobs data revives hopes for rate cuts, dollar falls

OUTSIDE MARKET DEVELOPMENTS: President Trump signed an executive order Thursday evening that raises tariffs on dozens of countries. Although today is the deadline, the new tariffs will not take effect until August 7, reportedly to allow time to update the tariff schedule.

Trump indicated that he is open to more deals even now that the deadline has passed. "It doesn’t mean that somebody doesn’t come along in four weeks and say we can make some kind of a deal," he said.

Weaker-than-expected U.S. jobs data have raised concerns that cracks in the labor market are starting to form. Nonfarm payrolls came in at 73k, below expectations of 102k. The unemployment rate ticked up to 4.2%.

However, back-month revisions of -258k and weakness in the household survey data were troubling. The survey reflected a decline of 260k workers, with the participation rate slipping to 62.2%, the lowest since November 2022. The reversal in immigration flows was likely a contributing factor.

Some manufacturing sector weakness was also revealed in today's data dump. Manufacturing PMI fell into contraction for the first time this year, and ISM hit a nine-month low. The jobs report showed an 11k contraction in manufacturing jobs.

The trade quickly priced in a 25 bps rate cut for September, and 50 bps of easing by year-end is back in play. The dollar index plunged more than 1.5% from a nine-month high in European trading. Yields and stocks are broadly lower, as risk-off sentiment prevails.

Persistent tariff uncertainty is certainly contributing to risk aversion amid ongoing speculation about retaliation risks and inflation implications as the higher levies get deployed. The market now shifts attention to the August 12 deadline for China to finalize a deal.

Nonfarm Payrolls +73k in July, below expectations of +102k, versus a revised 14k in June (was +147k). The unemployment rate rose to 4.2%, versus 4.1% in June. Hourly earnings +0.3%, in line with expectations, versus +0.2% in June. Workweek ticked up to 34.2 hours.

S&P Manufacturing PMI was revised up to 49.8 for July, versus a 49.5 preliminary read and 52.9 in June.  The update confirms the first move into contraction territory this year.

Manufacturing ISM fell 1 point to a nine-month low of 48.0 in July, below expectations of 49.5, versus 49.0 in June. Prices declined to 64.8 from 69.7 in June.

Construction Spending fell -0.4% in June, below expectations of +0.1%, versus a revised -0.4% in May (was -0.3%).

Michigan Sentiment Final was revised down to 61.7, versus a 61.8 preliminary print and 60.7 in June. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$8.60 (+0.09%)
5-Day Change: -$5.47 (-0.16%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,369.10 - $3,495.89
Weighted Alpha: +34.84

Gold surged back into the upper half of the well-defined range, setting new highs for the week. The yellow metal is being spurred by the NFP miss, revived expectations of rate cuts in H2, and retreats in yields and the dollar. 



An uptick in trade uncertainty contributed to risk-off sentiment, boosting haven interest just a day after gold notched its first lower monthly close (albeit minimal) of the year. A close above $3,337.01 is needed to avoid a third consecutive lower weekly close.

The fact that the 100-day moving average and the $3,256.02 low from 30-Jun successfully contained losses earlier in the week bodes well for the longer-term bullish scenario. Today's rebound back above the midpoint of the range, Monday's high, and the 20- and 50-day moving averages offer further encouragement to the bull camp.

I'd like to see a close above those moving averages at $3,340.51/42.29 to confirm scope for renewed probes above $3,400. Minor intervening chart points are noted at $3,352.57 (midpoint of range-within-the-range), $3,372.59 (25-Jul high), and $3,392.11 (24-Jul high).

If incoming data reinforce the notion that the labor market is weakening, we could see rate cut expectations for year-end build to 75 bps. That would reinvigorate selling interest in the dollar and provide some lift for gold, putting record highs around $3,500 back in play.

Bottom line, gold remains well contained within the range, and the range-within-the-range, just now in the upper half of the former and right at the midpoint of the latter. It doesn't strike me that a breakout in either direction is imminent.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.222 (-0.60%)
5-Day Change: -$1.196 (-3.13%)
YTD Range: $28.565 - $39.517
52-Week Range: $26.524 - $39.517
Weighted Alpha: +30.50

Silver has caught a bit of a bid, helped by new highs for the week in gold and a weaker dollar. However, price action remains confined to yesterday's range, and a third straight lower weekly close appears to be on tap.



Tests below the 50-day moving average at $36.538 have attracted buying interest over the past two sessions, leaving the $36.257 Fibonacci level intact. However, indications of manufacturing sector weakness and this week's copper rout pose headwinds.

A close above $37 today would ease short-term pressure on the downside. However, the 20-day MA at $37.861 and the halfway back point of the recent correction at $37.902, call it $38, must be regained to reinvigorate the bulls. 


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 stabilizes within the range, near unchanged for July

OUTSIDE MARKET DEVELOPMENTS: President Trump wasted no time in blasting Fed Chair Powell for not cutting interest rates yesterday. "He is TOO LATE, and actually, TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job of Fed Chair,” Trump posted on TruthSocial.

Despite two dovish dissents, the statement signalled some heightened concerns about inflation, leading the market to interpret the decision as a hawkish hold. Governors Christopher Waller and Michelle Bowman favored a 25-basis-point cut, and their dissents leave the FOMC the most divided it has been in more than 30 years.

However, I think the trade discounted the division somewhat. Both Waller and Bowman are on the short list to replace Powell, suggesting they may have merely been trying to increase their appeal to Trump.

The President remains optimistic that easing is in the cards. “I hear they’re going to do it in September," Trump said. I didn't hear anything like that, rather just a reiteration that the Fed remains data-dependent.

The market is increasingly skeptical. Fed funds futures put the probability of a September cut at 37%, down from 46.7% yesterday, 58.4% a week ago, and 75.4% a month ago. Implied easing for year-end stands at 34 bps.

The Fed also expressed concerns about ongoing tariff uncertainty ahead of looming deadlines. That uncertainty manifested in the copper market yesterday.

Copper had risen to record highs near $6 in recent weeks as importers stockpiled ahead of 50% tariffs slated to take effect on Friday. However, yesterday, the Trump Administration unexpectedly announced that refined products such as cathodes would be excluded.

Copper plunged nearly 18% on Wednesday and extended losses another 5% on Thursday. The decline since last week's record high of $5.98436 is nearly 27%. “If cathode is excluded, the arb is over,” said Michael Haigh, head of FIC and Commodity Research at Societe Generale in a Mining.com piece.

  

I believed from the beginning that because copper is so critically important to key U.S. industries, such as automotive, aerospace, defense, power generation/transmission, and building, among others, the White House would ultimately walk back copper tariffs (see 29-Jul and 15-Jul commentary).

I do think it is prudent for the U.S. to boost domestic mining, smelting, and refining capacity to shorten and harden the copper supply chain. If that is Trump's goal, it's a good one. However, this kind of volatility is really counterproductive.

The Fed's favored measure of inflation edged up to 2.6% y/y in June, from 2.4% in May. It was the second consecutive monthly rise since April's seven-month low of 2.2% and backs up the FOMC's heightened worry about price risks.

Fading dovishness has Treasuries on the offer into month-end. Today's bill auctions were poorly subscribed amid expectations of increased supply and therefore higher yields down the road.

This, along with trade optimism, keeps the dollar on the bid. The dollar index set fresh nine-week highs today, trading above 100 for the first time since late May.

The White House announced a trade deal with South Korea. Seoul will pay a 15% tariff, invest $350 bln in U.S. energy and shipbuilding projects, and buy $100 bln in U.S. energy products. U.S. goods imported into South Korea will not be tariffed.

Deals were also reached with Thailand and Cambodia after the Trump Administration applied pressure last week that led to a ceasefire between the neighboring countries that have been embroiled in a long-standing border dispute.

Mexico has been granted a 90-day extension to negotiate a trade deal after Presidents Sheinbaum and Trump spoke today. The current 25% tariff rate remains in place, but will not be hiked tomorrow. Could more reprieves be forthcoming?

Trade tensions with Canada escalated after PM Carney said he would recognize a Palestinian state in September. Trump said the Canadian position “will make it very hard” to reach a trade agreement.

The BoJ held steady on rates, as was widely expected. The central bank remains cautious amid domestic political and ongoing trade uncertainties.

Challenger Layoffs rose 14.1k to 62.1k in Jul, from 48.0k in June.

Personal Income rebounded 0.3% in June, above expectations of +0.2%, versus -0.4% in May.

PCE rose 0.3% in June, below expectations of +0.4%, versus a revised unch in May (was -0.1%). 

PCE Chain Price Index rose 0.3% in June, in line with expectations, versus a revised +0.2% in May (was +0.1%); 2.6% y/y, versus 2.4% in May. Core +0.3% m/m, in line with expectations, versus +0.2% in May; 2.8% y/y, unchanged from May.

Civilian ECI rose 0.9% in Q2, above expectations of +0.8%, versus +0.9% in Q1; 3.6% y/y unchanged from Q1.

Initial Jobless Claims rose 1k to 218k in the week ended 26-Jul, below expectations of 222k, versus 217k in the previous week. Continuing claims steady at 1,946k in the 19-Jul week.

Chicago PMI rebounded 6.7 points to a four-month high of 47.1 in July, above expectations of 42.0, versus 40.4 in June. However, the index remained in contraction territory for a 20th consecutive month. 


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$21.19 (+0.65%)
5-Day Change: -$58.71 (-1.74%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,369.10 - $3,495.89
Weighted Alpha: +33.61

Gold fell to a four-week low on Wednesday after the Fed's hawkish hold spurred yields and the dollar. While the yellow metal is firmer today, yields and the dollar continue to pose a headwind. Gold needs to close above $3,303.10 today to avoid its first lower monthly close in seven.

 

Important support marked by the 100-day moving average and the 30-Jun low at $3,270.50/$3,256.02 is holding thus far. This leaves gold well contained within the range that has dominated since mid-May, but further tests of the downside must be considered.

Tests back above $3,300 earlier today met modest selling pressure around the midpoint of the range, leaving the convergence of Monday's high, and the 20- and 50-day moving averages at $3,340.31/43.81 protected. A short-term breach of this level would set a more favorable tone within the range, suggesting potential for probes above $3,400.

The World Gold Council says that investors fueled robust gold demand in Q2, led by ETF inflows, strong interest in bars and coins, and ongoing central bank demand. "Total Q2 gold demand (inclusive of OTC investment) increased by 3% y/y to 1,249t," according to the Gold Demand Trends report.

Bar and coin demand slipped 6% to 306.8 tonnes in Q2, but was up 11% versus Q2'24. Bar and coin investors were "attracted by the rising price and gold’s safe-haven attributes," leading to "the strongest first half for bar and coin investment since 2013."

Total gold supply rose 3%. Initial estimates suggest record mine production of 909 tonnes, while recycling remained subdued.

If support at $3,256.02 gives way, focus would shift to the $3,200 zone. However, I still view the underlying trend as bullish and expect the range low at $3,127.12 (15-May) to remain protected.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.816 (-2.20%)
5-Day Change: -$2.372 (-6.07%)
YTD Range: $28.565 - $39.517
52-Week Range: $26.524 - $39.517
Weighted Alpha: +28.98

Silver has tumbled to a three-week low of $26.287, but still appears poised to notch its third straight higher monthly close. Silver is underperforming today, weighed by the plunge in copper, firm yields, and dollar strength. The gold/silver ratio rebounded to a three-week high of 90.937.



Yesterday's breach of the $37.443 level cleared the way for tests of the next tier of Fibonacci support at $36.954 and the 50-day moving average.  The breach of the 50-day leaves chart points at $36.315 and $36.201 vulnerable to tests.

A rebound of $37 would ease short-term pressure on the downside. However, the 20-day MA and the halfway back point, just shy of $38, must be regained to revive confidence in the longer-term bullish scenario.


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 slides to four-week lows as trade and economic optimism weigh on haven demand, boost dollar

OUTSIDE MARKET DEVELOPMENTS: U.S. data continue to reflect an economy on a solid footing. This is stoking risk appetite, but may have implications for interest rates as the FOMC hashes out monetary policy ahead of this afternoon's decision.

U.S. GDP rebounded to 3.0% in Q2, after tariff front-running led to a contraction of 0.5% in Q1.  The GDP price index surprised with a drop to 2.0% from 3.8% in Q1. Better-than-expected growth and a significant slowdown in inflation; that's a great report.

The ADP employment survey showed a rebound of 104k to private payrolls, exceeding expectations. The labor market continues to look resilient. Median expectations for Friday's jobs report are +102k.

The Fed is widely expected to hold steady on policy, but today's data provides some additional fodder for consideration. The sharp drop in the price index arguably provides some clearance for easing, but the Fed's favored measure of inflation doesn't come out until tomorrow.

The potential for dovish dissent could provide some drama today. One FedWatcher I know and respect suggested Powell could tailor the statement to get a unanimous vote, but that suggests to me that it would have to be a statement with a dovish tilt.

The Bank of Canada held steady in line with expectations, amid ongoing trade uncertainty and a looming deadline. "While some elements of US trade policy have started to become more concrete in recent weeks, trade negotiations are fluid, threats of new sectoral tariffs continue, and US trade actions remain unpredictable," said the statement.

President Trump is holding to the August 1 deadline, when tariffs will increase for trading partners that have not struck trade deals. Trump called out India specifically, saying that 25% tariffs will take effect on Friday. He also threatened an additional "penalty" because India buys so much military equipment and energy from Russia.

MBA Mortgage Applications fell 3.8% in the week ended 25-Jul, versus +0.8% in the previous week. The 30-year mortgage rate ticked down to 6.83% from 6.84%.

ADP Employment Survey rebounded to +104k in July, above expectations of +82k, versus a revised -23k in June (was -33k).

GDP (Advance) rebounded 3.0% in Q2, above expectations of +2.3%, versus -0.5% in Q1. The chain price index fell to 2.0%, below expectations of 2.6%, versus +3.8% in Q1.

Pending Home Sales Index fell 0.8% to 72.0 in June, below expectations of +0.3%, versus -1.8% in May. The annualized rate fell to -2.8%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$2.94 (+0.09%)
5-Day Change: -$82.08 (-2.42%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,369.10 - $3,495.89
Weighted Alpha: +33.41

Gold has slipped below $3,300 to four-week lows as trade and economic optimism pushed the dollar index to nine-week highs. Today's solid economic data further eroded safe-haven interest in the yellow metal.



Secondary support at $3,284.61 (9-Jul low) is within striking distance. A breach of this level would shift focus to the 100-day moving average at $3,267.60 and solid chart support at $3,256.02 (30-Jun low). If these levels are taken out, the $3,200 zone would be in play.

Gold remains entrenched in the range, and while decisively in the lower half, today's Fed decision could spark an intraday rebound. A close above $3,300 would set a more favorable tone within the range. The midpoint is at $3,311.51.

New highs for the week above $3,343.81 would put gold back above the 20- and 50-day moving averages, and bode well for renewed tests above $3,400. Formidable chart resistances at $3,435.01 (23-Jul high) and $3,449.13 (16-Jun high) must be negated to put the record high around $3,500 back in play.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.217 (-0.57%)
5-Day Change: -$1.673 (-4.26%)
YTD Range: $28.565 - $39.517
52-Week Range: $26.524 - $39.517
Weighted Alpha: +33.54

Silver fell to a three-week low, weighed by weakness in gold, softer copper, and nine-week highs in the dollar. Nearly 50% of the recent leg-up to 14-year highs has now been retraced, and the white metal is trading below the 20-day moving average. 



Further slippage seems likely, unless the Fed adopts a more dovish bent this afternoon. Economic data seem to provide some cover to do so, but despite recent trade agreements, uncertainty prevails ahead of the August 1 and August 12 (China) tariff deadlines.

If the 50% retracement level at $37.443 is penetrated, focus would shift to the 61.8% Fibonacci level at $36.954. Below the latter, the rising 50-day MA at $36.408 would be in play.

A close today back above the 20-day MA would ease pressure on the downside somewhat, but $38.00 will probably have to be regained to reinvigorate the bull camp. New highs for the week above $38.316 would suggest a corrective low is in place.


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.