Gold and silver build on last week's strength

OUTSIDE MARKET DEVELOPMENTS: Market focus this week is squarely on U.S. inflation data. Signs of ongoing moderation, along with last weeks dissapointing jobs report, could further temper hawkish Fed expectations.

The trade is anticipating modest upticks in both CPI (Wednesday) and PPI (Thursday) in July as the Middle East ceasefire failed to hold and oil prices rebounded. However, consensus estimates have annualized headline and core inflation rates continuing to moderate.

Steady policy versus a 25 bps rate hike is now about a 50/50 proposition at the September FOMC meeting (16-Sep). Prospects for tightening were at 55% on Friday and 67% a week ago.

The Warsh Fed has been quite adamant that it has “no tolerance for persistently elevated inflation.” Their preferred measure of inflation (PCE price index) doesn't come out until 26-Aug, but it remains well above the 2% target.

Warsh has described high inflation as an “undue burden” and a “tax” on households and businesses, insisting that “inflation is a choice” that monetary policy can and will correct. Apparently, a 2% "tax" is acceptable. For now, the higher-for-longer bias prevails with easing off the table for the foreseeable future.

Uncertainty over a potential Iran-Oman deal to reopen the Strait of Hormuz sparked a rebound in oil prices today. Brent spot is testing back above $90. While Iran says an agreement on new shipping lanes is near finalization, it insists the waterway stays closed until the U.S. grants further concessions such as sanctions relief and compensation for strikes.

Additionally, Yemen’s Iran-backed Houthis have escalated attacks in recent days, claiming a drone strike on Saudi Aramco’s Jazan refinery that caused a fire and launching missile and drone assaults on the Yemeni government-held Red Sea port of Mokha that killed several people. The group has also targeted other sites in Yemen and claimed strikes related to their declared naval blockade on Saudi-linked shipping amid rising regional tensions.

U.S. stocks are drifting near recent record highs amid caution ahead of key inflation data and persistent Middle East tensions. However, strong corporate earnings – especially in tech and AI-related companies – and tempered rate hike expectations continue to underpin the market.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$6.49 (-0.15%)
5-Day Change: +$277.81 (+6.85%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,311.66 - $5,595.02
Weighted Alpha: +19.27

Gold remains well bid to start the week, adding to the solid gains recorded last week. Friday's July NFP miss and substantial negative revisions to June and May lessened the likelihood of a Fed rate hike in September, weighing on yields and the dollar.



Friday's high at $4,371.06 stands in front of the 17-Jun high at $4,381.78 and the 100-day moving average at $4,391.57. Penetration of the latter would shift focus to the 200-day MA at 4502.48. Above that, Fibonacci/chart resistance at $4,584.68/$4,594.43 would be in play.

Global gold ETFs notched a fifth straight week of net inflows. Inflows of 22 tonnes last week were the highest reading since the week ended 3-Apr. Al three major regions saw buying, with Europe leading the charge.

It's encouraging to see revived interest from investors as gold enters a historically strong cyclical period. Evidence is mounting that a corrective low is in place at $3,945.52.

The World Gold Council expects "investment to remain the primary driver of demand growth through the second half, supported increasingly by OTC activity and Asian buying." They also note that central banks "remain on course for another strong year, although likely lower than 2025."

Central bank buying in June accelerated to 51 tonnes, led by Poland and China, versus 41 tonnes in May, and well above the 12-month average of 27 tonnes. Russia and Turkey sold gold in June primarily to raise liquidity – Russia to help finance its budget deficit and ongoing war-related expenses amid sanctions, and Turkey to support the lira and bolster foreign-exchange reserves under pressure from regional energy costs and currency volatility.

Jewellery demand remains subdued as high gold prices continue to impact affordability. However, with gold up more than 20% from Q2'25, spending on gold jewellery was up 14% y/y at $40 bln.

Total gold supply held steady at 1,269 tonnes in Q2, as a 2% year-over-year rise in mine production helped offset a 6% drop in recycling – the latter driven by lower quarter-over-quarter prices that made selling old jewellery less appealing. Solid mining output continues to provide a reliable foundation for the market.

Today's intraday low at $4,313.86 bolsters the significance of Friday's US-session low at $4,306.90. Below that, the lows from Friday and Thursday at $4,230.25 and $4,223.75 offer more substantial supports.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.359 (+0.56%)
5-Day Change: +$5.860 (+10.07%)
YTD Range: $54.778 - $121.630
52-Week Range: $36.976 - $121.630
Weighted Alpha: +41.55

Silver is adding to last week's solid gains, reaching fresh six-week highs, buoyed by yield and dollar weakness stemming from troubling July jobs data that reduced the odds of a rate hike in September. The white metal is garnering additional lift from revived tech/AI capex optimism.



Recent gains above the 20- and 50-day moving averages offer encouragement for the scenario that suggests the low is in, but there's still a long way to go before confidence in the long-term uptrend is restored.

Nonetheless, the convincing push above $65 bodes well for a challenge of the declining 100-day MA at $68.982 and the still-rising 200-day MA at $71.532. The latter closely corresponds to the mid-June high at $71.539, lending significance to this level. Penetration of this level would shift focus to the $80 zone.

Initial support is marked by today's Asian low at $63.004. More substantial support is defined by Friday's low at $61.175 and Thursday's low at $60.887.


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.