(Kitco News) - The gold market is holding its ground against the Canadian dollar as the Bank of Canada leaves interest rates unchanged and adopts a neutral, yet cautious, wait-and-see approach to inflation.As expected, Canada's central bank left its overnight rate unchanged at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.At the same time, the BoC struck a relatively positive tone in its outlook for the Canadian economy.“Canada’s economy is showing signs of improvement. Growth is picking up and inflation is projected to ease gradually from its recent spike. There are still important risks and uncertainties related to the war in the Middle East and US trade policy,” the central bank said in its Monetary Policy Report.Because of heightened uncertainty, the BoC provided little forward guidance in its statement.“Governing Council will continue to assess the strength of the Canadian economy and the outlook for inflation, and is prepared to adjust monetary policy as needed. The Bank is committed to maintaining Canadians’ confidence in price stability through this period of global upheaval,” the central bank said.The BoC's rate decision is having little impact on domestic gold prices, as the precious metal continues to follow broader market trends. Spot gold, denominated in Canadian dollars, last traded at C$5,712.21 an ounce, up 0.24% on the day.In comparison, spot gold, denominated in U.S. dollars, last traded at US$4,062.20 an ounce, up 0.26% on the day.The gold market is holding its ground as inflation pressures begin to ease, giving global central banks room to maintain relatively neutral monetary policies.

(Kitco News) – Silver enjoys a unique combination of ongoing supply deficits, rising industrial and monetary demand, and tight physical market conditions, which offer multiple vectors for prices to appreciate, according to Paul Wong, managing partner and market strategist at Sprott Inc.In a recent analysis of the precious metals market, Wong noted that silver prices recorded their largest monthly decline since September 2011 in June.“For the quarter ended June 30, silver fell $16.57/oz, or -22.04%, the worst quarter since the first quarter of 2020 during COVID panic selling,” he noted. “Silver’s selling wave in June tracked gold’s plunge and was driven by the same macro forces: an expectedly hawkish Fed raising short-term rates and the U.S. dollar. Silver easily broke below support levels in a near-waterfall pattern, suggesting capitulation-driven selling sentiment.”But Wong still sees silver in a very strong position from a fundamental as well as a technical standpoint.“Despite the recent wrenching volatility, over a multi-decade period, the silver chart remains among the most bullish chart patterns we are aware of,” he said.“Silver’s price behavior over recent weeks reminds investors that it is one of the most volatile parts of the precious metals complex,” Wong wrote. “The sharp correction may have tested sentiment, but silver’s long-term bullish fundamentals appear unchanged. These rest on the combination of constrained supply and growing demand.”Wong noted that the silver market has been running persistent structural deficits for several years in a row. “Annual supply shortfalls have steadily reduced inventories,” he said. “Unlike many commodities, there are few large new mining projects that could materially alter the medium-term supply outlook. Silver supply is relatively inelastic even as demand continues to expand.”In an interview with Kitco News this week, Wong said that Sprott projects these supply deficits will continue for the foreseeable future.“Right now, it's been running deficits for seven or eight years, and it'll probably continue to run deficits for seven or eight years going forward,” he said.Sprott believes that while silver's sharp price pullback has soured sentiment, it has not altered the structural bull case.“Several secular growth trends support demand,” Wong wrote in the report. “Solar panel manufacturing, electrification, electric vehicles, AI infrastructure, data centers and a wide range of technology applications underpin industrial demand for silver. Military consumption is also becoming increasingly important as silver's conductivity and strategic importance gain recognition across defense supply chains. Even in a slower economic environment, many of these end markets are likely to remain supportive.”Wong told Kitco News that massive bets in the options market played a big part in silver’s parabolic rally, and the unwinding of these positions also magnified the price decline that followed.“Until you get rid of all these crazy options positions, it's more of a meme stock than a commodity in the short term,” he said. “But eventually what happens is you'll shake out the option guys.”Wong said he’s encouraged to see that the silver options market is getting back to the normalized range.“If you [look at] call options outstanding, open interest, and you run a standard deviation bar, I think it reached four or five standard deviations above their norm,” he said. “They're back to about close to mean now.”And monetary demand for silver is also increasing alongside that of gold. “Investors often focus on gold as the primary monetary metal, but silver has historically participated in periods of currency debasement and monetary uncertainty,” he wrote in the report. “In this environment, silver benefits due to its growing appeal as an alternative store of value, essentially a higher-beta expression of the same themes that support the gold market.”Silver’s physical market dynamics also remain constructive. “Tightness in physical inventories and ongoing delivery pressures have reinforced the view that physical demand remains strong relative to available supply,” he wrote. “As more metal flows toward Asian markets and physical ownership continues to gain importance, paper-market pricing mechanisms may become less influential over time.”And despite silver’s dramatic selloff, he said this kind of dramatic price action is not unusual for the gray metal. “Silver has shown significantly greater volatility than gold due to its smaller and less liquid market,” Wong said. “Sharp drawdowns are a normal feature of silver bull markets, not evidence that the underlying fundamentals have failed. Historically, some of silver's strongest advances have occurred following periods of severe volatility and investor frustration.”He also told Kitco News that in the same way that the gold price has enjoyed a rising floor as its relatively inelastic monetary demand has grown, the silver price will likely benefit from the same higher price floor as its essential industrial applications – and its own monetary demand – gradually crowd out less essential uses such as photography, silverware, and some jewelry applications.“When the percentage becomes more essential input, its inelasticity will rise with it,” he said.Sprott views the overall long-term price outlook for silver in a very positive light. “Silver's unique combination of persistent supply deficits, expanding industrial demand, increasing monetary relevance, and tight physical market conditions provides multiple avenues for future appreciation,” the report stated.

(Kitco NewsWire) - Spot gold and silver prices are sharply higher ahead of the North American market open Tuesday, as a softer-than-expected U.S. CPI report reduced Fed-rate pressure and helped metals recover despite another spike in crude oil tied to U.S.-Iran tensions. At the time of writing, spot gold was trading near $4,089.10 an ounce, up 2.22%, while spot silver was trading near $59.12, up 2.78% on the session.Gold’s early range was $3,985.00 to $4,101.50, leaving the metal back above the $4,000 area and testing the $4,091 resistance zone identified in the latest technical setup. Silver’s early range was $56.76 to $59.45, with the metal recovering the $58.00 area and testing resistance near the 50-period moving average.This morning’s CPI report shifted market positioning back in favor of precious metals. Headline CPI fell 0.4% in June after rising 0.5% in May, the largest monthly decline since April 2020, while the 12-month rate slowed to 3.5% from 4.2%. Core CPI was unchanged on the month and eased to 2.6% year over year from 2.9%. The data undercut the inflation scare that followed last week’s oil rally and Wednesday’s Fed minutes, reducing pressure on traders to price another near-term Fed hike. The 10-year Treasury yield remained in the 4.6% area but moved off its early highs, while the U.S. dollar index softened as the market faded part of the higher-for-longer trade.The Strait of Hormuz situation is best characterized as open transit under severe military and shipping risk, not a normal operating environment and not a fully resolved blockade. Oil prices jumped again after the U.S. and Iran traded strikes, with Brent crude near $86.73 and Nymex WTI near $80.55 in early trade. The latest escalation keeps a geopolitical risk premium under oil and a defensive bid under gold, but the soft CPI print has changed the immediate market transmission. For gold and silver, lower inflation data is now offsetting the oil-driven inflation channel; for broader markets, the setup is oil bid, equities mixed, yields off their highs and the dollar softer.Traders are watching Fed Chair Kevin Warsh’s congressional testimony, follow-through in Treasury yields after the CPI print and any further disruption to Hormuz shipping lanes. A sustained break above the $4,091 to $4,107 resistance area would improve gold’s short-term setup, while another oil spike would keep the market focused on whether energy inflation reappears in July data.The key outside markets see Nymex WTI crude oil prices sharply higher and trading around $80.55 a barrel, while Brent crude was near $86.73. The U.S. dollar index is softer. The yield on the benchmark 10-year U.S. Treasury note is trading near the 4.6% area.Technically, spot gold bulls' next upside price objective is to push prices back above $4,091, with a sustained move targeting the 50-period moving average near $4,087 and then $4,140. Bears' next near-term downside price objective is a break below $3,959, with deeper downside targets at $3,942 and then $3,886. First resistance is seen at $4,091 and then at $4,140. First support is seen at $4,021 and then at $3,959.Spot silver bulls' next upside price objective is to drive prices back above the 50-period moving average near $59.61, with a move above that level targeting $61.71 and then $62.81. The next downside price objective for the bears is a break below $57.73, with deeper downside targets at the $56.00 to $58.00 accumulation zone and then $55.60. First resistance is seen at $59.61 and then at $61.71. Next support is seen at $57.73 and then at $55.60.

(Kitco News) – New Federal Reserve Chair Kevin Warsh used the opening statement of his first testimony before Congress to present a positive depiction of the state of the economy, and a vision for monetary policy centered on the price stability side of the central bank’s dual mandate.“The Fed's number one objective is to get monetary policy right—or as near to it as we possibly can,” Warsh told the Committee on Financial Services of the U.S. House of Representatives. “That is our clear and constant aim, the star we steer by. And if we get policy right—and we will—the inflation surge of the last five years will be a thing of the past.”The Fed chair said that while monthly price fluctuations are inevitable, “underlying inflation over longer time horizons is determined largely by monetary policy,” adding that the members of the FOMC “have no tolerance for persistently elevated inflation.”Warsh painted a positive picture of the U.S. economy, saying that “economic activity is expanding at a solid pace,” that “household consumption growth is moderate,” while manufacturing output has moved up steadily this year,” but noted that the housing sector “continues to lag.”The Fed chair characterized surging business investment as the “most striking feature of the economy right now.” “The rapid pace—which appears to be accelerating—reflects, in large part, the construction of data centers and the immense demand for the AI-related equipment and software that fill them,” he said. “We at the Fed are monitoring the implications for inflation and the labor market.”Turning to the supply side, Warsh said that productivity growth has been strong, and that strength began before the current gains from AI adoption. “America's labor market appears broadly stable. Job creation has kept pace with the workforce. The unemployment rate is low and has changed little over the past year,” he said. “We're seeing relatively few layoffs, only slight variance in the rate of job vacancies, and solid growth in nominal wages.”The Fed chair also referred to the five task forces he appointed to explore ways to improve their conduct of monetary policy. “We have a duty to point the institution forward—to take a fresh look at current practices to make sure we are serving our objectives,” he said. “The purpose here is to equip the Fed to make better decisions in monetary policy and to put these years of high inflation behind us.”