The Overnight Report: Gold & Silver Hit Air Pocket

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The Dow Jones index took the positive mantle overnight with the sell-off in gold and silver being the talk of the tape as hot money flowed out of previously invincible precious metals.

Post a new record high, ASX200 futures are pointing to a weaker start for Wednesday.

Good Morning,

The ASX200 reached a new record high on Tuesday, up 63pts to 0.7% to 9,094.7.

Rare earth miners sold off as gold and iron ore miners continued their rally. That stopped overnight.

Consumer staples were the laggards on the day. That too might well reverse today.

What happened overnight, NAB Markets Today Research

Gold and silver have grabbed the overnight headlines with falls of -5% and -6% respectively. The biggest one day falls for both precious metals since the early days of the pandemic (March 2020) albeit with no obvious news catalyst for the sell-off. 

US stocks closed with the S&P500 and NASDAQ both little changed, having recovered from an early afternoon hit on the quote from President Trump hitting the wires that ‘maybe a meeting with Xi won’t happen’. 

The S&P sector performance shows consumer discretionaries the main gainer up 1.3% followed by industrials up 0.9%, with utilities down -1%, communication services down -0.9%, and materials down -0.7%, the biggest losers. 

There’s a classic market adage that goes something like ‘when financial news moves from the business pages to the front page, the top is near’. 

Wednesday’s correction in the gold (and silver) price might be best seen in this context. Given the parabolic nature of the run up since September and the knowledge that much of the latest buying spree has been from retail or other private sector investors via ETFs (US$26bn worth in September alone) a dash for the profits window was inevitable at some point soon, temporary or otherwise. 

Even with the overnight shakeout, gold is still up 57% year to date, far outpacing Bitcoin up 17% or any of the major global stock indices (the latter led by the Hang Seng up 30% YTD and the Nikkei 24%).

With data flow still restricted by the ongoing US government shutdown, Canada’s CPI has been the main data point of interest overnight. Headline CPI rose to 3.2% in September from 1.9% in August against 2.2% expected with the average of the Median and Trim measures 3.15% against 3.0% expected and 3.05% in August. 

Ahead of the release, Canadian money markets had -19bps of easing priced for the 29 October meeting and -27.5bps by December, since reduced to -18bps and -25bps respectively.

Early afternoon in Japan yesterday, Sanae Takaichi succeeded in becoming Japan’s first female prime minister, to very little market fanfare having been flagged at the weekend as likely following news of an agreed tie-up between the LDP and the Ishin (Innovation) party. 

Following her appointment, Takaichi reportedly repeated her recent comments regarding monetary policy, saying that the BoJ will maintain close coordination and communication with the government, adding “I believe the BoJ should retain discretion over the tools of monetary policy”. 

Pricing for an October rate cut has virtually evaporated, less than -1bp now priced from -7bp prior, but a December hike is currently priced with a 76% probability of 25bps, up from 64% on Tuesday.

Also newsworthy is Takaichi’s choice of Finance Minister, Satsuki Katayama, also the first female to hold the position.

We wait to hear what if any views she extols on BoJ policy, though on the currency, worth noting that back in March, Katayama told Reuters Japan’s economic fundamentals suggest the yen’s real value was closer to YEN120-130 per dollar than the then-prevailing levels near YEN150. That won’t happen without (much) more BoJ policy normalisation.

In other news, the first visible fall-out from the recent decision by the US Commerce department under Howard Lutnick to impose US$100,000 application fees for H-1B visas has been visible via Walmart saying it has paused job offers to candidates requiring an H-1B.

In commodities outside precious metals, industrial metals are mixed, copper down -1.5%, leading the LMEX index down -0.3%, while zinc and aluminium are both slightly stronger and iron ore flat.

Oil is up 0.7% for WTI (0.5% for Brent) after the US energy department announced it was buying one million barrels for the SPR.

ANZ Bank Australian Morning Focus, Commodities Extract

Gold and silver suffered the steepest selloff in years as investors locked in profits from the recent historic rally.

Spot gold prices were down as much as -6.3% during the session, the biggest decline in more than 12 years. The plunge brought an abrupt halt to a surge that has seen it reach record highs over the past week. 

Since the start of September, it has gained 26% as investors piled into the sector amid rising expectations of outsized interest rate cuts by the Fed. This has been supported by mounting geopolitical, economic and financial uncertainties. 

With the US government shutdown, the market has been without the weekly CFTC report which shows speculative positions by investors. We assume such positioning had built to substantial levels and ultimately triggered the selloff. Despite this pullback, we still see long-term drivers in place and providing support to prices. 

Copper edged higher in early trading on signs that US-China trade tensions could ease ahead of a meeting between the leaders of the world’s two largest economies. Earlier this week President Trump sought to dial down confrontation with China, predicting the meeting would result in a “fantastic” trade deal. 

However, the prospect of a deal diminished overnight when Trump said his highly anticipated meeting with President Xi next week in South Korea may not happen. He also warned of new tariffs if no deal is reached. This saw copper give up early gains to end the session lower. It has been well supported in recent weeks by supply side disruptions, which have tightened market fundamentals. 

This hasn’t been the case at BHP, which reported a 4% rise in copper production in the three months to September. CEO Mike Henry said the macro-economic signals for commodity demand remain resilient. 

Iron ore prices edged higher as the industry painted a relatively positive picture of demand. BHP expects global demand for the steel making raw material to remain solid, even as it flagged slowing growth in China.

Earlier this week, Chinese data suggested a property sector recovery remains elusive. Home prices fell more steeply in September, despite recent easing measures introduced by major cities to revive the struggling sector. Outside property, fixed asset investment was also weaker, notching up a rare contraction in the nine months to September. 

The uncertainty over US-China trade talks also weighed on sentiment in the crude oil market. A rise in Russian supply also weighed on sentiment.

Seaborne crude shipments from Russia climbed to the highest in 29 months in the past four weeks, reaching 3.82mb/d on 19 October, on a four-week moving average basis. 

However, prices found support in reports that the US is planning to refill its strategic reserve. The US Energy Department announced it plans to buy oil for delivery in December and January, using a portion of the US$171m from Trump’s signature tax and spending law allotted for crude purchases.

The reserve is only about 60% full at 408mbbl. At today’s current prices, that would equate to around 3mbbl. 

European gas prices gained as demand risks return to the market. While European gas storage levels are about 83% full, traders remain on high alert as these are well below historic levels.

Europe is expected to have a relatively mild winter, but there are warnings of calm and foggy conditions, which could reduce wind and solar output.

This would increase dependence on gas for heating

Corporate news in Australia

-Macquarie Group ((MQG)) plans to cut hundreds of smaller fund managers, with assets under $300bn from its $16bn super platform.

-WA’s Equus Energy, formerly Western Gas, has launched an IPO to develop its stalled Equus gas project in the Northwest Shelf region.

-Stonepeak is looking to raise up to $300m for is cornerstone Stonepeak-plus Infrastructure Debt fund.

-Tanarra Capital will vote to spill Bapcor’s ((BAP)) board unless the board commits to appointing a non-executive chair.

On the calendar today:

-JP Sept Trade Bal

-UK Sept CPI

-ADAIRS LIMITED ((ADH)) AGM

-AERIS RESOURCES LIMITED ((AIS)) Sept Qtrly/Investor Call

-APA GROUP ((APA)) AGM

-ARGO INVESTMENTS LIMITED ((ARG)) AGM

-BEFOREPAY GROUP LIMITED ((B4P)) 1Q26 Update/Investor Call

-CODAN LIMITED ((CDA)) AGM

-DRONESHIELD LIMITED ((DRO)) 3Q25 Investor Briefing

-FLETCHER BUILDING LIMITED ((FBU)) AGM

-MAGELLAN FINANCIAL GROUP LIMITED ((MFG)) AGM

-MAAS GROUP HOLDINGS LIMITED ((MGH)) AGM

-MAGELLAN GLOBAL EQUITIES FUND -CUR HEDGED- ((MHG)) AGM

-MICHAEL HILL INTERNATIONAL LIMITED ((MHJ)) AGM

-NATIONAL STORAGE REIT ((NSR)) AGM

-PLAYSIDE STUDIOS LIMITED ((PLY)) AGM

-RELIANCE WORLDWIDE CORP. LIMITED ((RWC)) AGM

-SIGMA HEALTHCARE LIMITED ((SIG)) AGM

-SERVICE STREAM LIMITED ((SSM)) AGM

-VITRAFY LIFE SCIENCES LIMITED ((VFY)) 1Q26 Report

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

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