Gold consolidates in the upper half of its range, buoyed by a weak dollar and strong silver 5-Day Change: +$46.53 (+1.12%) YTD Range: $2,607.16 - $4,381.21 52-Week Range: $2,585.51 - $4,381.21 Weighted Alpha: +61.08 Gold continues to consolidate in the upper half of its range, underpinned by rising rate cut expectations and a weaker dollar. Fresh record highs in silver provide additional support.  Monday's push to six-week highs has already returned considerable credence to the underlying uptrend, but the trade seems inclined to remain cautious and monitor incoming data leading up to next week's FOMC meeting. The Fed's favored measure of inflation comes out on Friday. New highs for the week above $4,264.30 would put the $4,275.46 Fibonacci level to the test. Above the latter, gold's all-time high at $4,381.21 would be back in play. Further out, $4,515.53 and $5,000 remain valid objectives. Tuesday's low at $4,164.99 now provides intervening support ahead of last Friday's low at $4,153.68. The rising 20-day moving average comes in at $4,122.12. SILVER OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.093 (-0.16%) 5-Day Change: +$5.007 (+9.39%) YTD Range: $28.565 - $58.974 52-Week Range: $28.565 - $58.974 Weighted Alpha: +107.63 Silver reached another all-time high, but the intraday rally faltered just shy of $59. The white metal has reached record levels in three of the last four sessions, buoyed by robust fundamentals, expectations for a rate cut next week, and a weaker dollar.  You can see on the chart that silver began the year just below $29. The price has more than doubled as of Monday! A Bloomberg article notes that silver gains have been amplified by robust industrial demand in sectors such as electric vehicles, solar panels, batteries, and electronics. That accounts for more than half of the total demand. On top of that, investors use it to hedge against inflation, political uncertainty, currency weakness, and heavy national debts, which have fueled massive ETF inflows exceeding 100 million ounces. John Ciampaglia, CEO of Sprott Asset Management, says, "Silver is the Rodney Dangerfield of the precious metals—it gets no respect." The more than 30% plunge in the gold/silver ratio from nearly a five-year high of 107.21 in April to a four-year low of 71.662 today suggests investors are finally coming to grips with the realities of supply and demand. While silver has retreated into the range intraday, the trade seems inclined to view short-term setbacks as buying opportunities. A hot PCE inflation number is probably the greatest risk for a more sustained correction ahead of next week's FOMC meeting. The delayed nature of that report arguably adds a degree of uncertainty to the market consensus of +0.3% m/m. Personally, I think the data will reflect sticky but not terribly troubling inflation. Nonetheless, it wouldn't be surprising to see some profit-taking ahead of the data. Today's intraday low at $57.567 provides an intervening support level ahead of Tuesday's low at $56.597 and the low for the week at $56.233. Below the latter, the next significant support is marked by the old high at $54.465. 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. |
