Blog posts tagged with 'palladium'

Gold clears $3,400 as haven-driven march higher continues

OUTSIDE MARKET DEVELOPMENTS: While European and UK markets are closed today for Easter Monday, market sentiment is tilted toward risk-off to start the week. U.S. stocks are under pressure amid ongoing trade uncertainty and intensifying pressure from the White House on the Fed and Chairman Powell.

National Economic Council Director Kevin Hassett acknowledged last week that the Trump administration was indeed studying whether they should – and could – fire Powell. "If I want him out, he’ll be out of there real fast, believe me," said Trump.

The threat to Fed independence adds an additional layer to U.S. policy uncertainty, putting further pressure on the dollar. The dollar index dropped to new three-year lows below 98. More than 61.8% of the COVID-era rally has now been retraced, and the 100-month MA has been violated. From a technical perspective, this monthly chart looks grim.



If President Trump successfully ousts Powell, presumably a more dovish central banker would take his place and start pushing for more rate cuts, adding weight to the greenback. A weaker dollar also makes U.S. goods and services cheaper overseas and could help achieve Trump's goal to rein in trade deficits.

There was mixed news on the geopolitical front over the Easter weekend. The 30-hour ceasefire between Russia and Ukraine ended, even though both sides accused the other of violations. Trump expressed some optimism that a peace deal could get done this week, but there were also signals that the administration's patience is wearing thin.

A second round of nuclear talks between the U.S. and Iran occurred on Saturday. Iran said the talks were positive and a third meeting is scheduled for next weekend.

Nonetheless, the Times of Israel reports that Israel is considering a limited attack on Iranian nuclear sites. Any such attack would likely occur without U.S. support.

Leading Indicators fell 0.7% to 100.5 in March, below expectations of -0.5%, versus a revised -0.2% in February (was -0.3%). It was the fourth straight monthly decline and the lowest reading since October 2016.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$67.65 (+2.03%)
5-Day Change: +$172.07 (+5.34%)
YTD Range: $2,607.16 - $3,424.65
52-Week Range: $2,281.97 - $3,424.65
Weighted Alpha: +46.20

Gold continues to march higher, driven by safe-haven interest and a weaker dollar. The yellow metal extended to trade above $3,400 despite the absence of European and UK traders.



The latest round of gains bodes well for the scenario that calls for a test of the next Fibonacci objective at $3,493.00. Just above that, the $3,500 psychological barrier attracts.

Further out, the $4,000 level is looking increasingly attractive. However, the market is quite overbought at this point and vulnerable to a corrective setback.

A minor intraday chart point at $3,369.43 marks first support and protects Friday's high at $3,354.76. Below the latter, today's Asian low at $3,331.40 offers a more formidable downside barrier.

Silver is trading higher, helped by surging gold and new cycle lows in the dollar. However, tests above $33 continue to meet resistance.



A sustained push above $33 is needed to perpetuate the uptrend and keep the white metal on track for a challenge of the late-March high at $34.543. Above that, the cycle high from October at $34.853 would be in play.

On the downside, today's Asian low at $32.428 reinforces support marked by the 50- and 2-day moving averages. More substantial support is defined by several lows from last week at $32.134/125. Last week's low is at $31.833.

While the technical bias remains bullish, global growth risks and recent volatility warrant a measure of caution. 


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.

Good morning. The precious metals are mostly higher in early U.S. trading.

U.S. calendar features Leading Indicators, FedSpeak from Goolsbee. Europe and UK remain closed for the Easter holiday.

Gold notches another new record before retreating on profit taking ahead of the holiday weekend

OUTSIDE MARKET DEVELOPMENTS: On Wednesday, Fed Chairman Powell suggested that the Trump administration's unprecedented trade policies could lead to "higher inflation and slower growth." Stagflation understandably presents a challenge for the central bank.

"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell warned.

Powell went on to indicate that the Fed will remain on pause for the time being. “We are well positioned to wait for greater clarity," he said.

President Trump lashed out, posting on social media that Powell "should have lowered Interest Rates... long ago, but he should certainly lower them now." Trump threatened that "termination cannot come fast enough!"

Fed funds futures continue to suggest Trump's wish for lower rates will be granted, but probably not until July. May remains off the table, and prospects for a June cut dimmed after Powell's speech. The implied Fed funds rate for year-end is 3.4775%, indicating market expectations for 90 bps of easing by December.

The ECB delivered a 25 bps rate cut today, noting that "the outlook for growth has deteriorated owing to rising trade tensions." The vote was unanimous, and ECB President Lagarde revealed that a 50 bps cut was discussed.

That suggests a more dovish tilt at the ECB, even though EU plans for considerable spending (led by Germany) on defense and infrastructure provide a significant underpinning for growth. The euro is lower on the day, but remains generally well bid near the top of the recent range.

Without any help from a softer euro, the dollar index remains on the ropes near the three-year low set last week at 99.01. The 61.8% retracement level of the rally from 89.20 (Jan'21) to 114.78 (Sep'22) comes in at 98.97. The 100-month moving average is just below at 98.66. Both levels appear vulnerable, and penetration would have grim implications for the greenback.

Housing Starts tumbled 11.4% in March to 1.324M, below expectations of 1.418M, versus a negative revised 1.494M in February (was 1.501M). Permits fell to 1.482M from 1.459M. Completions dropped to 1.549M from 1.582M.

Initial Jobless Claims fell 9k to 215k in the week ended 12-Apr, below expectations of 226k, versus 224k in the previous week. Continuing claims rose to 1,885k in the 5-Apr week from 1,844k in the previous week.

Philly Fed Index plunged 38.9 points to a one-year low of -26.4 in April, below expectations of 5.0, versus 12.5 in March. "The survey’s indicators for general activity, new orders, and shipments all fell and turned negative. The employment index registered a near-zero reading, suggesting steady employment conditions. Both price indexes continue to suggest overall price increases," according to the report.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$14.43 (-0.43%)
5-Day Change: +$152.43 (+4.80%)
YTD Range: $2,607.16 - $3,354.76
52-Week Range: $2,281.97 - $3,354.76
Weighted Alpha: +46.73

Gold set another new record high at $3,354.76 in Asian trading before profit-taking ahead of the long holiday weekend surfaced. Most markets are closed tomorrow for Good Friday. Eurozone, UK, Swiss, and Scandinavian markets are also closed on Easter Monday.



Despite the intraday setback, the yellow metal is poised for a second straight higher weekly close. Gold has notched higher weekly closes in 14 out of the last 16 weeks. Ten of those weeks saw record highs. Gold hasn't seen consecutive lower weekly closes since December.

Broad global uncertainty stemming from U.S trade policies, which has resulted in a trade war with at least China, continues to stoke safe haven demand for gold. A weak dollar is providing additional support.

This week's push above $3,290.11/$3,300.00 shifted focus to the next Fibonacci objective at $3,493.00, which corresponds closely with the $3,500 longer-term target that the market has been talking about since early in the year. It looks like we may reach $3,500 before many were expecting.

The $3,400 level offers an intervening psychological barrier. Further out, $4,000 is looking increasingly appealing amid robust official sector demand and mounting investment demand.

ANZ Bank raised its year-end gold forecast to $3,600 from $3,200. "Increasing risks of a deeper recession, another turn in the geopolitical landscape, disruptions in global supply chains, fears of rising inflation along with a changing rate outlook suggest that gold will remain on strong footing in the foreseeable future," ANZ noted.

Goldman Sachs and UBS upped their expectations for the yellow metal to $3,700 and $3,500, respectively. With the breach of his $3,300 target, Ole Hansen of Saxo Bank now likes $3,500 as well.

It would likely take a major breakthrough on the trade front (perhaps specifically with China) to diminish haven interest in any meaningful way. While that could result in a significant setback, I would still view any retreat as corrective within the dominant uptrend.

Even if trade deals get sorted out, U.S. trading partners have been sufficiently rattled to perpetuate the de-dollarization trend. Similarly, investors have been unsettled by recent stock market volatility to the point that gold will continue to be viewed as an attractive portfolio addition.

Despite today's probe below $3,300, look for last week's high and close at $3,243.16/$3,238.14 to remain protected. More substantial support is marked by Wednesday's low at $3,229.84.

Silver has retreated to the 20- and 50-day moving averages as traders paired bullish bets ahead of the long weekend. While Wednesday's test above $33 could not be sustained, a close above $32.294 would confirm a second straight higher weekly close.



Today's setback is not surprising in light of silver's recent volatility. Who wants to be long over a holiday weekend two weeks removed from a 13% plunge?

That being said, the magnitude of the rebound since the seven-month low was hit last week at $28.565 has been impressive. More than 61.8% of the plunge from the March high has been retraced, and key moving averages have been regained.

However, the rally speaks as much to silver's volatility as the plunge. Ongoing caution is warranted, but I maintain a bias toward the longer-term uptrend based on the realities of supply and demand.

The Silver Institute reports that industrial demand for silver rose 4% in 2024 to reach a record high of 680.5 Moz. It was the fourth year in a row for record-setting industrial demand.

While overall demand was down 3%, driven by "weakness in physical investment and slightly lower silverware and photographic demand," the market was in deficit for a fourth straight year.

The trade organization believes the market will remain in deficit in 2025, although the gap is expected to tighten to a four-year low of 117.6 Moz. Marginally weaker demand of 1.15 Boz and a forecasted 1.5% increase in supply will account for the narrower deficit.

The Silver Institute does anticipate "a modest recovery in coin and bar demand in some Western markets." That's some potential good news for our clients in the bar and coin space!

As for tariffs, the SI says, "The impact of US tariffs will be a key risk to silver demand this year. An extended period of elevated tariffs, or a further escalation of global trade wars, could lead to significant supply chain disruptions and sharply lower global GDP growth. These will weigh on industrial, jewelry, and silverware demand, though physical investment could benefit from rising safe-haven purchases."

Wednesday's high at $33.050 now provides intervening resistance ahead of the $33.264 Fibonacci level (78.6% retracement of the recent plunge). Penetration of the latter would bode well for tests back above $34, with potential to the 28-Mar high at $34.543, and the key 22-year high from October at $34.853.

On the downside, watch the 50- and 20-day MAs at $32.529/474 on a close basis. The low for the day at $32.134 bolsters Tuesday's low at $32.124. Below that, $32.000 and $31.833 would be in play.


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.

Gold surges above $3,300 as trade tensions continue to ramp

OUTSIDE MARKET DEVELOPMENTS: Trade tensions between the U.S. and China continue to escalate, sapping risk appetite once again. The White House announced that China now faces tariffs up to 245% "as a result of its retaliatory actions."

When retaliation begets retaliation, you've got yourself a trade war. However, China surprisingly appointed a new lead trade negotiator today. Li Chenggang was China's assistant commerce minister during Trump's first term and may have been inserted to help dial down the tensions.

Beijing has signalled that it is open to trade talks. A Bloomberg article said that China requires that the Trump administration first show more respect, have a more consistent position, and appoint a point person for those talks. Two of the three seem antithetical to the preferred tactics of the Trump administration.

Citing "pervasive uncertainty," The Bank of Canada held steady on rates today. "The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations," according to the policy statement.

As central banks continue to evaluate the impact of tariffs, risks to both growth and prices are evident. Nonetheless, the market still expects a 25 bps cut from the ECB on Thursday, although it seems it could be a closer call than many are anticipating.

Fed Chairman Powell will speak to the Economic Club of Chicago later today. It seems unlikely that any of his comments on the policy path will deviate from the 'wait-and-see' tack.

That being said, the Fed remains on an easing path, and the market believes it will continue. Fed funds futures are pricing in 87 bps of cuts by year-end, with the first 25 bps cut likely to come in July.  

MBA Mortgage Applications fell 8.5% in the week ended 11-Apr as the 30-year mortgage rate jumped to a seven-month high of 6.81%. Purchases fell 4.9%, while refis plunged 12.4%.

Retail Sales surged 1.4% in March, in line with expectations, versus +0.2% in February. Ex-auto +0.5% on expectations of +0.4%, versus a revised +0.7% in February (was +0.3%). Auto and parts sales were especially strong at +5.3% as consumers front-ran potential tariffs.

Industrial Production fell 0.3% in March on expectations of -0.2%, versus a revised +0.8% in February (was +0.7%). Capacity utilization fell to 77.8% from 78.2% in February.

NAHB Housing Market Index rose one point to 40 in April from 39 in March. The future sales index fell 4 points to 43, versus 47 in March.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$74.61 (+2.31%)
5-Day Change: +$232.19 (+7.54%)
YTD Range: $2,607.16 - $3,315.65
52-Week Range: $2,281.97 - $3,315.65
Weighted Alpha: +45.88

Gold surged to new record highs above $3,300 on the latest escalation of trade tensions between the U.S. and China, even as there was some glimmer of hope for bilateral trade talks between the two largest economies. Persistent weakness in the dollar and expectations for an ECB rate cut tomorrow provided additional lift for the yellow metal.



The next big round number is $3,400, but the breach of the $3,290.11 Fibonacci objective shifts focus to $3,493.00 (261.8% retracement of the last meaningful correction). That would bring gold within striking distance of the often-mentioned $3,500 target.

With each new high, $4,000 gold is looking increasingly attractive. Gold is already up more than 27% YTD. Does it have an additional 20% rise in it this year? 

It wouldn't be unprecedented. Gold's largest annual percentage gain was 74%. This occurred in 1979 as investors sought shelter from surging inflation and geopolitical tensions.

Arguably, recent weeks of trade turmoil are further incentive for de-dollarization, which should perpetuate robust official sector gold demand. China, in particular, appears to be eschewing dollars and Treasuries as reserve assets, but they certainly aren't alone.

UK export data reveals that China bought 50 tonnes of gold from Britain in February. Societe Generale estimates that a "staggering" 700 metric tons have now been brought into China over the past two years, according to a Reuters article by Mike Dolan.

"The rotation from U.S. Treasuries into gold seems like something we can loosely correlate and somewhat keep track of – and the selling of Treasuries matching that of gold exports to China is something we can't help but take notice of."

If China plans to swap Treasuries for gold, they have a lot more ammo to use that could fuel the rally for some time to come. However, long gold is now the most crowded trade, supplanting the 'magnificent-seven' tech stocks.

That comes as gold once again proved itself to be an excellent hedge in times of stock market volatility. Investors have taken notice and are reallocating accordingly.

Silver traded briefly with a 33-handle for the first time in nearly two weeks. The white metal is being dragged higher by the latest record highs in gold, rebounding copper, and a weak dollar.



As gold soars out of reach for some investors, silver is frequently viewed as a less expensive safe-haven alternative. Those investors must keep in mind that silver is primarily an industrial metal and is a much smaller, more thinly traded market than the gold market.

The volatility seen in the last two weeks alone is indicative of silver's higher beta. Gold is a far superior haven.

With silver back above the 50- and 20-day moving averages, confidence continues to swing back in favor of the bull camp. A breach of the $33.264 Fibonacci level (78.6% retracement of the recent plunge) would bode well for tests back above $34, with potential to the 28-Mar high at $34.543. At that point, the 22-year high from October at $34.853 would also be in play.

The aforementioned MAs now mark first support at $32.539/527. Below that, the highs from earlier in the week at $32.368/382 bolster today's Asian low at $32.276.


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.

Gold consolidates recent gains, as silver remains firm above the midpoint of the recent range

OUTSIDE MARKET DEVELOPMENTS: The Commerce Department is investigating semiconductor and pharmaceutical imports from a national security perspective. This is thought to be a precursor to another round of tariffs with the goal of repatriating those critical industries to the U.S.

President Trump indicated that he was considering pausing tariffs on cars to give the industry time to adjust their supply chains. This comes on the heels of last week's sweeping 90-day pause on levies on goods imported from most countries and the exemption of electronics from China.

While the White House says all these concessions are temporary, there is a sense that a more pragmatic approach to trade has emerged in the wake of last week's volatility. Reportedly, there has also been progress in getting new trade deals negotiated.

Individual companies are also making plans to increase production in America. Nikkei reports that Honda is considering shifting auto production to the U.S. from Mexico and Canada so that 90% of the cars sold here are made here.

Reduced trade and recession angst have contributed to improved risk appetite, and the major U.S. stock indexes are modestly higher on the week. Although stocks are still well off their highs for the year amid ongoing uncertainty.

Fed funds futures continue to suggest at least 75 bps in easing is in the offing this year. Prospects for a 25 bps in June have dimmed recently, leaving July as the most likely timing for that first cut.

The dollar index is trading higher today, but upticks are seen as corrective after the greenback plunged to three-year lows on Friday. Uncertainty associated with President Trump's policies, and the sometimes erratic nature of their deployment, have reduced the haven appeal of both the dollar and Treasuries. This seems to be accelerating the de-dollarization trend that is already underway.

Trump may view a weaker dollar as a benefit to reducing the trade deficit, as it makes U.S. goods and services cheaper for foreign buyers. Of course, that FX benefit is eroded when U.S. trading partners apply retaliatory tariffs.  

Emire State Index rebounded 11.9 points to -8.5 in April, above expectations of -12.0, versus -20.0 in March. "New orders fell modestly, and shipments edged lower. Delivery times held steady, and supply availability worsened. Inventories continued to expand. Employment was little changed," according to the New York Fed.

Export Price Index was unchanged in March, in line with expectations, versus a revised +0.5% in February (was +0.1%). 

Import Price Index fell 0.1% on expectations of unch, versus a revised +0.2% in February (was +0.4%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$9.33 (+0.29%)
5-Day Change: +$241.58 (+8.10%)
YTD Range: $2,607.16 - $3,243.89
52-Week Range: $2,281.97 - $3,243.89
Weighted Alpha: +40.48

Gold is higher, but narrowly confined within Monday's range. With a new record high set just yesterday, focus remains on the upside amid ongoing haven interest and a weak dollar.



With some level of calm in global markets today, the haven bid has been reduced somewhat. However, elevated trade tensions, persistent price and growth risks, and the ongoing de-dollarization trends that are contributing to central bank demand are seen as broadly supportive.

The massive influx of physical gold into Comex warehouses that started earlier this year as an attempt to avoid tariffs and then turned into a self-perpetuating arbitrage trade is starting to reverse itself. News that gold would be exempt from tariffs caused the arb opportunity to evaporate as the large contango between spot and futures began to normalize.

Bloomberg reports that "Comex stockpiles fell each day last week, with Friday’s outflow the biggest in more than a year and worth about $700 million." Without the big price incentive to keep physical metal in New York, look for gold to redistribute back to gold trading hubs in London, Asia, and the Middle East.

I think the redistribution will happen gradually based on demand, as there are costs associated with flying gold around the world. At this moment, there aren't premiums at other centers that would draw the gold back.

Chinese demand for gold was robust in March. The World Gold Council reported that gold ETFs attracted C¥5.6bn in inflows in March, contributing to record Q1 inflows. Meanwhile, the PBoC added 2.8 tonnes to reserve holdings. It was the fifth straight month of official sector gold buying.

Yesterday's low at $3,198.36 protects more important support marked by Friday's low at $3,174.99. The old record high from 03-Apr at $3,264.72 provides a secondary downside barrier to watch.

On the upside, today's overseas high at $3,231.37 stands in front of Monday's record high at $3,243.89. Penetration of the latter would keep gold on track for a push to the next Fibonacci objective at $3,290.11. Beyond that, $3,300 and $3,500 remain valid objectives.

Silver remains generally well bid in the upper half of the broad $34.543/$28.565 range. The white metal managed to eke out a new high for the week, but consolidating gold and ongoing worries about global growth risks are containing the upside thus far.



The 50- and 20-day moving averages are converging just above the market at $32.515/583. A push through this area could provide further confidence to the bull camp, leading to a challenge of the 78.6% Fibonacci level at $33.264.

On the other hand, a retreat below today's low at $32.125 would set up a retest of $31.895/833.  Below the latter, more formidable support marked by the midpoint of the range and the 100-day MA at $31.554/$31.477 comes into play.


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.

Gold backs off from another new all-time high

OUTSIDE MARKET DEVELOPMENTS: Markets were somewhat relieved by Friday's announcement that smartphones, computers, and other electronics imported from China are excluded from reciprocal tariffs. President Trump subsequently clarified via TruthSocial, "There was no Tariff exception announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff “bucket.”"

Additionally, China stoked trade war worries by announcing it would halt the export of rare earth minerals to the U.S. China controls about 90% of the global production of these critical elements. 

While uncertainty remains high, risk appetite was generally improved to begin this holiday-shortened week. Whether that optimism can be sustained remains to be seen.

National Economic Council Director Kevin Hassett said this morning that more than 10 countries have made "amazing" trade deal offers that are being considered. Hassett also believes there is no chance of a recession this year.

High-level discussions over the weekend between the U.S. and Ian about its nuclear program were described as  "constructive." With a second round of talks slated for April 19, geoplitical risks have been dialed back marginally.

Aside from FedSpeak, today's U.S. economic calendar is empty. Except for Asia, global markets will be closed on Good Friday. Europe and the UK will be closed on Easter Monday as well.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$23.63 (-0.73%)
5-Day Change: +$228.36 (+7.66%)
YTD Range: $2,607.16 - $3,243.89
52-Week Range: $2,281.97 - $3,243.89
Weighted Alpha: +39.72

Gold set a new all-time high of $3,243.89 in overseas trade before retreating into the range. Last week, the yellow metal notched a 6.6% gain, its biggest since the COVID crisis five years ago.



I believe today's setback is just profit taking, stemming from improved risk appetite, and the short-term overbought condition that developed into Friday's close. The trade will be looking for opportunities to buy on this setback.

Ongoing trade and geopolitical uncertainty, along with the absence of a strong alternative in the safe-haven space, should continue to drive demand. Softer yields and persistent dollar weakness provide additional underpinnings.

Global ETFs saw net inflows of 52.1 tonnes last week. It was the eleventh straight weekly inflow, and the third largest since July 2020.  North Americans were the biggest buyers, but Asian investors accounted for 39% of last week's inflows, enticed by the drop in price at the beginning of the week and a weaker dollar.

Net speculative long positions dropped 37.7k contracts to an 11-month low of 200.7k in the 11-April week according to the latest COT report. It was the second straight weekly decline in spec long positioning as leveraged traders were probably rattled by last week's price volatility.

CFTC Gold speculative net positions

Gold traded briefly below $3,200, but Friday's low at $3,174.99 does not appear to be in immediate jeopardy. Secondary support is marked by the old record high from 03-Apr at $3,264.72. 

The high from early U.S. trading at $3,226.20 now protects the record high from Asian trading at $3,243.89. Penetration of the latter would keep gold on track for a push to the next Fibonacci objective at $3,290.11.

The $3,300 level remains a valid target. Each new high also bolsters confidence in the longer-term target of $3,500.

UBS hiked its 12-month gold forecast to $3,500 on Friday, citing expectations for "additional demand from central banks, institutions and investors following current events.” It was the bank's second upward revision this year.

Silver continues to trade in the upper half of the broad $34.543/$28.565 range for the year that was established during the preceding three volatile weeks. Some optimism on the trade front, strength in gold, and a weak dollar are providing support.



While more than 61.8% of the decline from the late-March high has already been retraced, the 50- and 20-day moving averages are converging just above the overseas high and conspiring to limit the upside. Those MAs come in at $32.508 and $32.660 today.

The COT report for last week revealed a 10.8k decline in net speculative long positions from 57.3k to a 10-week low of 46.5k contracts. It was the second consecutive weekly decline.

CFTC Silver speculative net positions

Today's low from early U.S. trading at $31.895 fortifies the London low at $31.833. More important support is marked by the midpoint of the range and the 100-day MA at $31.554/$31.465 


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.

Haven demand drives gold to record highs above $3,200, silver follows to regain $32

OUTSIDE MARKET DEVELOPMENTS: The trade war between China and the U.S. continues to escalate. Beijing raised retaliatory tariffs on all U.S. goods to 125%.

President Trump lifted tariffs on Chinese goods to 125% on Wednesday, but that's on top of 20% fentanyl-related levies already in place. The White House confirmed that tariffs on Chinese goods currently stand at 145%.

Trump paused reciprocal tariffs on other countries for 90 days to provide time for ongoing negotiations. "USTR has informed us that there are maybe 15 countries now that have made explicit offers that we're studying and considering and deciding whether they're good enough to present the president," said White House Economic Advisor Kevin Hassett.

"Everybody wants to come and make a deal, and we're working with a lot of different countries, and it's all going to work out very well," predicted President Trump. Some are sceptical that all these new trade deals can get done in three months, but I believe progress will beget a longer pause if necessary.

Nonetheless, uncertainty prevails, which will continue to roil markets. "In the 129-year history of the Dow Jones Industrial Average, the index has closed higher or lower by at least 1,000 points just 31 times. Four of those times happened in the past week," noted CNN.

Global uncertainty and concerns about the Trump administration's tactics have undermined the appeal of U.S. assets. While this week's Treasury auctions were fairly well received, the 10-year yield surged to eight-week highs above 4.5% amid evidence that foreign holders of U.S. debt are accelerating their retreat from Treasuries.

FX flows typically follow higher yields, but the dollar index has fallen to three-year lows. Haven interest in the foreign exchange market has shifted to the Swiss franc, yen, and to a lesser degree, the euro.

The franc has reached a 14-year high against the greenback, gaining nearly 8% since the beginning of April. The SNB is under increasing pressure to slow the franc's rise via a rate cut or direct intervention.

While U.S. inflation cooled in March, the needle hasn't moved much in terms of Fed policy expectations. Fed fund futures continue to price 75 bps in easing by year-end, with the first 25 bps cut likely to come in July.

PPI fell 0.4% in March, below expectations of +0.2%, versus a revised +0.1% in February (was unch); 2.7% y/y, down from 3.2% in February. Core -0.1% on expectations of +0.3%, versus +0.1% in February (was -0.1%); 3.3% y/y, versus 3.5% in February.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$36.83 (+1.16%)
5-Day Change: +$186.00 (+6.12%)
YTD Range: $2,607.16 - $3,231.83
52-Week Range: $2,281.97 - $3,231.83
Weighted Alpha: +43.06

Gold marched to new record highs above $3,200, boosted by persistent haven flows and a weaker dollar. With a weekly range of more than $275, I think we can say it's been one heck of a week!



My takeaway is that gold remains the haven asset of choice, and that gets amplified when Treasuries and the dollar fall out of favor. However, those initial deleveraging sell-offs in gold make for a wild ride.

With other countries less inclined to hold dollars and Treasuries as reserve assets, the appeal of gold is heightened. Global central banks have been on a buying spree for nearly two years, and that trend seems likely to accelerate in light of recent events.

The 127.2% retracement level of this week's corrective plunge at $3,219.91 has been exceeded, shifting focus to the next Fibonacci level at $3,290.11. Beyond the latter, $3,300 attracts. Recent price action also lends additional credence to the longer-term target at $3,500.

While the dominant uptrend has fully reasserted itself, I wouldn't be surprised to see some profit-taking ahead of the weekend. Initial support is marked by the early U.S. low at $3,211.77, which protects the low for the day at $3,174.99, and the old record high at $3,264.72. I'd call $3,200.00 a minor downside barrier as well.

Silver is trading back above $32, pulled higher by resurgent gold, the plunge in the dollar, and perhaps some optimism that deals will get worked out with most of our trading partners. The white metal is poised to close higher on the week after initially plunging to a seven-month low on Monday.



Silver is back above the 200- and 100-day moving averages, and nearly 61.8% of the two-week plunge has already been retraced. A breach of $32.259 Fibonacci level would bode well for tests of the 50- and 20-day MAs, which are going to converge around $32.50 early next week. Above the latter, the next tier of Fibonacci resistance is at $33.264.

I have always maintained that gold is the best option for wealth preservation. Silver's volatility over the past two weeks puts an exclamation point on that position! I believe investors will be gun-shy when it comes to silver for some time to come. Caution remains warranted for both the bull and the bear camps.

Given the magnitude of the gains since Monday's low, it seems likely that we'll see some profit taking ahead of today's close. The early U.S. low at $31.267 is the first level of significant intraday support. The low for the day at $31.039 seems well protected, but I guess you really never know with silver these days. 


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.