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
[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.