Gold (August) / Silver (September)

Gold, yesterday’s close: Settled at 2428.9, up 8.2

Silver, yesterday’s close: Settled at 30.936, down 0.226

In recent days, Gold futures have shown significantly more buoyancy than Silver. In fact, Gold reached a high of 2448.5 this morning, shortly before stronger than expected Retail Sales data batted it back. This is about 1% from Gold’s record high of 2477, whereas Silver has struggled below $32 and more than a dollar (about 3%) from its 33.05 peak on May 21st, not to mention a level nearly 50% from Silver’s record high. The Gold/Silver ratio broke a critical area of support in the first half of May as Silver showed significant strength into $33 and since bottoming on May 29th it has consolidated (because Silver is the denominator, a lower ratio shows Silver outperforming). Over the last three sessions, Gold has diverged, and this brings the ratio near the upper-end of its range over the last two months and will prove to be a critical time for the precious metals. We are currently in a seasonally supportive time for metals and economic data has broadly trended softer, which has been supportive to the narrative Fed cuts and thus a tailwind to metals. In fact, the CME Group FedWatch Tool has shown nearly a 60% probability the Fed cuts three time this year. However, a failure of Silver to participate will certainly make it a difficult environment for metals to perform.

Bias: Neutral/Bullish

Resistance: 2445-2449.1***, 2455***, 2461.7***, 2471.3-2477****

Pivot: 2433

Support: 2428.9-2430.4***, 2415.7-2419.1***, 2406.1**, 2396.1-2401.5***

Silver (Sept)

Resistance: 31.23-31.28**, 31.45-31.53***, 31.69-31.80***, 31.98**

Pivot: 31.00                                  

Support: 30.62-30.84***, 30.45-30.54***, 30.34**, 30.00-30.17****

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