Gold and silver tumble to new lows for the year

OUTSIDE MARKET DEVELOPMENTS: Wall Street is ending October under pressure as a deepening tech selloff – sparked by disappointing results from Amazon and Intel – reignites investor doubts about the massive AI spending binge and whether those investments will deliver adequate returns anytime soon.

Risk-off sentiment is triggering broader deleveraging, with forced selling spilling into precious metals, crypto, and other risk assets, while Treasuries emerge as the clear beneficiary of safe-haven flows. The 10-year Treasury yield fell about 6 bps to 4.93%.

Oil prices remain elevated on Friday, with WTI crude trading around $104 and Brent at five-month highs above $118, supported by persistent Middle East supply risks tied to the Iran conflict. Rumblings of possible renewed U.S. military actions after next week’s midterms are providing additional lift, even as intermittent diplomatic signals have provided periodic relief

High oil prices, along with this week's hot PCE and strong Q3 GDP prints, mean the higher-for-longer rate scenario prevails. The Fed, ECB, and BoJ all delivered hawkish holds, while the BoC hiked by 25 bps.

“While overall financial conditions are tighter, I’m unwilling and unable to call them tight,” Fed Chairman Warsh said during Wednesday’s press conference. Though he reiterated that he doesn't believe in forward guidance, the remark signals he still views policy as insufficiently restrictive and is open to further tightening.

The October pause and the expressed desire to see more data suggest the Fed is comfortable making decisions on a meeting-by-meeting basis. As a result, the probability of a December hike actually moderated somewhat to 76%, from more than 80% pre-FOMC.

Markets next week will primarily focus on the U.S. midterm elections on Tuesday, which could reshape control of Congress and influence fiscal policy expectations. Alongside the political drama, key economic data will draw attention, including the ISM manufacturing and services surveys, JOLTS job openings, ADP employment figures, and Friday’s October nonfarm payrolls report, all of which will help shape views on growth, the labor market, and the Fed’s path ahead of year-end.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$42.27 (-1.05%)
5-Day Change: -$39.15 (-0.98%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,929.37 - $5,595.02
Weighted Alpha: -8.18

Gold fell to new lows for the year and new 52-week lows, amid higher oil prices that continue to stoke inflation worries and expectations of further central bank rate hikes. Deleveraging pressures stemming from stock market losses are adding additional pressure. The yellow metal is poised for its third straight lower weekly close, and the second consecutive monthly loss.



Gold has been trading more like a risk asset, selling off alongside equities amid rising real yields, a stronger dollar, and shifting rate expectations, rather than acting as a reliable hedge in the current environment. Treasuries seem to be garnering the bulk of the safe-haven interest, although today's softer yields and setback in the dollar have failed to provide much support.

This is discouraging to investors who have relied on the historic inverse correlation with equities to provide cushioning when stocks sell off. I expect significant gold ETF outflows will be confirmed this week and may continue next week.

The rising 100-week moving average at $3,869.40 is the next support level I'm watching. It's been three years since gold traded below this indicator. If the 100-week MA gives way, the $3.741.31 Fibonacci objective would be the next attraction.

The trade is on the hunt for the much-touted central bank bid. The downside will remain vulnerable until it's found. Potential may be as low as the halfway-back point of the post-COVID rally at $3,605.58.

Today's U.S. high at $3,955.01 marks initial resistance. Above that, previous lows at $3,976.53/$3,978.82 protect today's high at $4,026.15, the high for the week at $4,081.08, and the falling 20-day MA at $4,100.60.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$1.637 (-3.14%)
5-Day Change: -$3.844 (-7.13%)
YTD Range: $50.129 - $121.630
52-Week Range: $46.885 - $121.630
Weighted Alpha: -16.78

Silver plunged nearly 6% to trade below $50 for the first time since last November amid ramped-up higher-for-longer rate expectations, heightened worries about the tech/AI sector and broad deleveraging pressures. The white metal is on track for a third lower weekly close and its second straight monthly loss.



With the 127.2% Fibonacci retracement projection at $50.337 negated along the way, the 150% retracement level at $46.618, which corresponds closely with the 52-week low at $46.885, may be the next attraction. Below that, the low end of the bear channel will be just above $45 next week and protects the 161.8% retracement level at $44.689.

The gold/silver ratio rebounded more than 15% in October to trade at 11-month highs above 79. The 80 level is the next attraction for the ratio, suggesting silver weakness may continue into next week.

Like with gold, I think investors are becoming increasingly disillusioned with silver. This risks further outflows from silver ETFs and physical holdings, potentially prolonging price weakness even as the structural supply imbalance persists.

That's a lot of gloom and doom, which is sometimes indicative that a bottom is near. While I wouldn't recommend trying to catch the falling knife, silver hasn't been this oversold in more than three years. Scope is seen for a corrective bounce, but we're a long way from levels that would return any confidence to the long-term uptrend.

I'd call first resistance $50. Above that, the U.S. high at $50.571 and the high for the day at $52.224 stand in front of this week's high at $54.593 (28-Oct).

PGMs

This week both platinum and palladium extended their declines amid sticky U.S. inflation data and rising expectations of further Fed rate hikes, which kept real yields elevated and weighed on non-yielding precious metals. Platinum slipped more than 7%, to reach 12-month lows just shy of $1,400. Meanwhile, palladium fell nearly 6% to trade below $1,000 for the first time since June  2025. Near-term pressure on the PGMs is likely to persist from elevated rates and soft auto demand, though platinum’s tighter supply balance leaves it better positioned for a recovery than palladium if industrial conditions improve.

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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