Gold stable near midrange as white metals surge

OUTSIDE MARKET DEVELOPMENTS: Risk appetite remains elevated as the ceasefire between Israel and Iran continues to hold. President Trump has suggested that talks with Iran will resume next week, boosting market confidence that a longer-lasting peace deal may be struck.

Iran's Supreme Leader made his first appearance since the U.S. attacks. “The Islamic Republic was victorious," he claimed. Adding that the attacks "could not achieve anything significant.” 

U.S. Q1 GDP was revised down to -0.5% in the third report, from -0.2% previously. Overall growth was weighed by a significant downward adjustment in personal consumption expenditures to +0.5% from +1.2%. The GDP Price Index was revised up 0.1% to 3.8%, versus 2.3% in Q4.

The contraction is attributed to a surge in imports associated with tariff front-running. Growth is expected to rebound in Q2, with some estimates, including the Atlanta Fed's GDPNow, above 3%. Other data released this morning was seen as broadly favorable. 

"The economy is in a good place," said SF Fed President Mary Daly on Bloomberg. "The Fall looks promising for a rate cut," she added.

Prospects for a July or September cut continue to creep higher, but a 25 bps cut is still not fully priced until October. Fed funds futures are now implying 64 bps in total cuts by year-end.

Revived dovishness is weighing on yields and the dollar. The dollar index breached last week's low at 97.60, plumbing more-than three-year lows.

Q1 GDP Third Report -0.5% on expectations of -0.2%, versus -0.2% in the second report and 2.4% in Q4.

Durable Orders surged 16.4% in May, well above expectations of +9.0%, versus -6.6% in April. Transportation orders jumped 48.3% on strong Boeing orders from the Middle East. The ex-trans print was a much more modest +0.5%, versus unch in April.

Trade Balance widened to -$96.6 bln in May, outside expectations of -$91.0 bln, versus a revised -$87.0 bln in April (was -$87.6 bln).

Initial Jobless Claims fell 10k to 236k in the week ended 21-Jun, below expectations of 245k, versus 246k in the previous week. Continuing claims jumped 37k to a 43-month high of 1,974k in the 14-Jun week, versus 1,937k in the previous week.

Pending Home Sales Index rebounded 1.8% to 72.6 in May, versus 71.3 in April.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$11.03 (+0.33%)
5-Day Change: -$29.02 (-1.40%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,297.52 - $3,495.89
Weighted Alpha: +43.01

Gold was unable to sustain overseas upticks, leaving gold generally consolidative near the midpoint of the range. Haven interest remains muted as the ceasefire between Israel and Iran continues to hold.



Mounting rate cut expectations are pressuring yields and the dollar, providing an underpinning for the yellow metal. It is also widely believed that central bank demand for gold will remain robust, providing ongoing support.

"After years of record-high central bank gold purchases, reserve managers are doubling down on the precious metal," according to a report by the Official Monetary and Financial Institutions Forum (OMFIF). Meanwhile, interest in the dollar as a reserve asset continues to decline, dropping from the top spot to seventh over the past year.

The macro de-dollarization trend should continue to weigh on the greenback while simultaneously increasing the appeal of gold. The dollar index is seemingly poised to end the month of June below the 100-month moving average, which will bolster confidence in the longer-term upside objectives in gold at $4,000.

A rebound above the 20-day MA at $3,355.67 would bode well for renewed tests above $3,400.00/01.45. Good resistance marked by last week's high at $3,449.13 currently protects the record high around $3,500.00, but an eventual upside breakout remains favored.

On the downside, I'm watching the 50-day MA at $3,324.54 on a close basis.  Below that, more substantial support is marked by recent lows at $3,299.77/97.69. If this level gives way, scope would be seen for additional limited losses to $3,251.28 (29-May low).


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.342 (+0.94%)
5-Day Change: +$0.212 (+0.02%)
YTD Range: $28.565 - $37.288
52-Week Range: $26.524 - $37.288
Weighted Alpha: +29.11

Silver jumped to new highs for the week above $36.351, spurred by risk-on sentiment, lower yields, and fresh three-year lows in the dollar index. White metal bulls were heartened by signs of a resilient U.S. economy, most notably a big jump in durable goods orders.



The 20-day moving average effectively contained corrective downticks this week, keeping focus squarely on the dominant uptrend. Scope is seen for renewed short-term tests above $37.

A push through the $37.288/430 zone is needed to clear the way a test of the next Fibonacci objective at $38.750. Beyond that, $40 is the attraction.

The gold/silver ratio is back below 91. A breach of the recent low at 90.30 (10-Jun) would bode well for a retreat below 90, favoring further silver overperformance, with potential to 87.50.

Today's Asian low at $36.255 now marks first support.  The 20-day moving average is at $35.910 today and should rise to the $36 zone by tomorrow, which will make for important support ahead of the weekend.

PGMs

Platinum has extended to fresh 11-year highs above $1,400, underpinned by strengthening demand and tight supply. Platinum is up a stunning 34% in June thus far. This year is expected to mark a third straight year of deficit.

Underpinned by platinum strength, palladium rose to an eight-month high.


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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