Gold consolidates gains near record levels amid heightened risk appetite

Outside Market Developments: This week's inflation data were mixed. While PPI cooled, headline CPI accelerated, and core CPI was steady. Nonetheless, the trade continues to believe the Fed will resume its easing campaign when the FOMC meets next week.

Initial jobless claims jumped 27k last week to 263k. That's the highest claims print since October 2022, stoking worries 
about labor market weakness. Prospects for 75 bps in cuts by year-end have risen to 77.3%, versus 68.1% yesterday and 45.8% a week ago.

The rise in dovish Fed expectations amid robust corporate earnings – particularly in the tech sector – has underpinned risk appetite. Major U.S. stock indexes have set record highs today. The dollar remains defensive, with the dollar index setting a seven-week low earlier in the week.

Meanwhile, the ECB held rates steady, as was widely expected. The policy statement noted that "Inflation is currently at around the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged."

ECB President Lagarde emphasized a meeting-by-meeting strategy, noting that the disinflationary process is complete and risks to growth are more balanced, signaling the potential end of the rate-cut cycle. She believes that headwinds posed by tariffs and a stronger euro will fade next year.

CPI rose 0.4% in August, above expectations of +0.3%, versus +0.2% in July; 2.9% y/y, versus 2.7% in July. Core +0.3%, matching expectations, versus +0.3% in July; +3.1% y/y, unchanged from July.

Initial Jobless Claims jumped 27k to a multi-year high of 263k in the week ended 6-Sep, above expectations of 235k, versus a revised 236k in the previous week (was 237k). Continuing claims were unchanged at 1,939k in the 30-Aug week.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$18.46 (-0.51%)
5-Day Change: +$79.61 (+2.25%)
YTD Range: $2,607.16 - $3,673.51
52-Week Range: $2,511.35 - $3,673.51
Weighted Alpha: +42.43

Gold is consolidating the push to all-time highs seen earlier in the week as strong risk appetite weighs on safe-haven interest. However, the yellow metal is holding near record levels, underpinned by persistent fiscal and geopolitical worries, Fed easing expectations, and a weaker dollar. 



Tuesday's high at $3,673.51 stands in front of my next upside objectives at $3,700 (psychological), $3,730.44 (Fibonacci), and $3,743 (measuring objective). Above the latter, $3,800 would attract, and with each new high, $4,000 gold looks increasingly likely.

Bloomberg notes that the inflation-adjusted record from 1980, when gold hit $850 (equivalent to about $3,590 today), has now been surpassed. This year's 40% increase has been driven by investor concerns over the US economic path, the metal's role as a hedge against inflation and a weakening dollar, as well as potential Fed rate cuts and robust buying from central banks.

Today's intraday low at $3,614.69 protects $3,600, and the low for the week at $3,580.13. More substantial support is found at the $3,512.36/$3,500.00 zone, where the low from 4-Sep corresponds with the record high previous to the breakout.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.107 (-0.26%)
5-Day Change: +$0.512 (+0.98%)
YTD Range: $28.565 - $41.664
52-Week Range: $28.557 - $41.664
Weighted Alpha: +40.41

Silver has extended to fresh 14-year highs, buoyed by rate cut bets and a weaker dollar. The white metal is often viewed as a less expensive safe-haven alternative to high-flying gold.



The convincing breach of the important $41.610 Fibonacci level lends considerable credence to the bullish scenario that calls for an eventual push to the record highs around $50. Intervening barriers are noted at $42, $43, $43.352 (Sep'11 high), and $44.167 (Aug'11 high).

Minor intraday support at $41.470 protects the low for the day at $40.901. Wednesday's low at $40.734 should help keep the low for the week at $40.547 at bay.


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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