Gold remains consolidative while silver and platinum add to gains

OUTSIDE MARKET DEVELOPMENTS: Market optimism surrounding U.S.-Sino trade talks is helping keep risk appetite elevated. A delegation, led by Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, is meeting with Chinese counterparts in London today.

“Our expectation is that... immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters,” said National Economic Council director Kevin Hassett on CNBC.

Citing tariff and policy uncertainty, the OECD downgraded U.S. GDP expectations to 1.6% this year and 1.5% in 2026 from 2.2% and 1.6% previously. Global growth expectations were nudged lower to 2.9% for 2025 and 2026, versus previous forecasts of 3.1% and 3.0%.

"Substantial increases in trade barriers, tighter financial conditions, weakened business and consumer confidence, and elevated policy uncertainty all pose significant risks to growth," according to the OECD's latest economic outlook.

Riots erupted in LA over the weekend amid protests against immigration enforcement. There are expectations that anti-ICE demonstrations will occur in other cities this week, including in the nation's capital during Saturday's Flag Day celebration and military parade.

The trade is watching the situation closely to see what additional measures the White House might take to protect Federal agents in LA and elsewhere. There is some concern that we could see a summer of civil unrest similar to 2020.

Russia launched another massive drone and missile barrage against Ukraine on Monday. The attacks from each side have intensified in recent weeks, even as ceasefire talks continue.

Market focus will be on U.S. inflation data this week. Expectations tilt toward the ongoing moderation of price risks, helped by lower oil and gas prices. Tepid inflation readings could increase the likelihood of rate cuts. By that same token, hotter-than-expected inflation would solidify that the Fed is on hold.

Wholesale Sales rose 0.1% in April, below expectations of +0.2%, versus a revised +0.3% in March (was +0.4%). Inventories rose 0.2% on expectations of UNCH, versus a revised +0.3% in March (was +0.4%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$2.02 (+0.06%)
5-Day Change: -$62.56 (-1.85%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,289.43 - $3,495.89
Weighted Alpha: +42.93

Gold is maintaining a consolidative tone to start the week, as trade and growth optimism weigh on haven interest. At the same time, a weak dollar, persistent geopolitical risks, silver and platinum strength, and mounting concerns about U.S. social unrest offer support.



This week's U.S. inflation data could provide some impetus to at least move out of the range within the range. Both hotter inflation and prospects for lower rates are generally supportive for gold, although the latter tends to stoke risk appetite.

The first range is defined as $3,401.81/$3,203.52. The broader range is $3,495.89/$3,127.12. The midpoint of that primary range is at $3,311.51, and we've traded on both sides of that today.

"We need to see a real shock for prices to break away," BofA's Francisco Blanch told Bloomberg Surveillance this morning. Blanch still likes $4,000 as a target, although that now "may be a 2026 story.”

A breach of last week's high at $3,401.81 would bode well for tests of more important resistances at  $3,416.97 (78.6% retracement of the corrective decline) and $3,431.63 (08-May high). Above that, the record high at $3,495.89 would be back in play.

Global ETFs saw a modest inflow of 8.8 tonnes last week, led by North American investors. It was the third straight week of net inflows, suggesting investors remain interested despite a month and a half of price consolidation.

The COT report for last week revealed that net speculative long positions increased by 13.7k to a seven-week high of 187.9k contracts, versus 174.2k in the previous week. It was the third straight weekly increase.

The 02-Jun low at $3,289.46 marks the low for the month thus far and has contained the downside today. The 20-day moving average is at $3,300.10 and is significant on a close basis.

A close below the 20-day and new lows for the month would leave secondary supports at $3,269.21 (50-day MA) and $3,251.28 (29-May low) vulnerable to tests. Below the latter, the low of the first range at $3,203.52 would be in play.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.263 (+0.73%)
5-Day Change: +$1.547 (+4.45%)
YTD Range: $28.565 - $36.399
52-Week Range: $26.524 - $36.399
Weighted Alpha: +26.97

Silver continues its march higher, spurred by last week's major range breakout. The white metal begins the week with a round of fresh 12-year highs that brings the next psychological barrier at $37 within striking distance.



With the $36.568 Fibonacci objective exceeded, confidence in the scenario that calls for a test of the peak from February 2012 at $37.430 has been bolstered. Beyond that, $40 is looking increasingly appealing.

With gold stuck in its range, the gold/silver ratio has plunged to 10-week lows to pressure congestive support around 90. The next tiers of significant support are at 88.858, and a series of lows from early in the year at 87.706, down to 87.192.

Not surprisingly, SLV saw large inflows of 13.05Moz last week as silver took off to the races. Net assets of the fund are now more than $17 bln. The number of ounces in trust stands at 472,914,657.40 as of 06-Jun.

Net speculative long positions surged 7.8k to a 10-week high of 60.8k according to the latest COT report, versus 53.0k in the previous week. It was the third consecutive weekly inflow.

With Investors jumping back on board, this rally may have legs. However, be wary of silver's high volatility and the propensity for institutional investors to punish retail investors when they least expect it.

“With no one in the market able to pinpoint as yet what’s driven the move to 13-year highs…silver has confirmed its reputation as the ‘Devil’s metal,’ leaping without warning and leaving the technical picture very bullish for further gains,” said BullionVault's Adrian Ash.

I believe this was indeed a technical breakout, with bullish supply/demand fundamentals as the backdrop. Demand is expected to outstrip supply for a fifth straight year, according to the Silver Institute. More demand than supply equates with higher prices.

Silver is being helped by strength in copper, amid an uptick in global growth optimism (last week's OECD report notwithstanding), and ongoing worries that copper could still be hit by tariffs. Four-year highs in platinum provide another layer to the story.

On the downside, congestion around $36 and the Asian low at $35.948 mark initial support. Friday's low at $35.654 is a more significant level to watch.


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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