Gold slides to 5-week lows as fear trades continue to get unwound

OUTSIDE MARKET DEVELOPMENTS: Canada has suspended almost all of the retaliatory tariffs imposed on U.S. goods, according to a Bloomberg article. Reduced trade worries, along with easing geopolitical risks, have contributed to a global sense of relief, boosting market sentiment and risk appetite this week.

On the geopolitical front, the ceasefire between India and Pakistan is holding, and the countries have exchanged prisoners. “Just days ago, my administration successfully brokered a historic ceasefire to stop the escalating violence between India and Pakistan, and I used trade to a large extent to do it,” President Trump said in Riyadh.

Direct peace talks between Russia and Ukraine are slated to take place in Turkey beginning Thursday. Whether Putin and Trump will attend remains unknown. "(Putin) would like me to be there, and that's a possibility... I don't know that he would be there if I'm not there. We're going to find out," Trump said.

MBA Mortgage Applications rose 1.1% in the week ending 9-May, versus an 11% surge in the previous week. The 30-year mortgage rate edged up to 6.86% from 6.84%.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$15.28 (-0.47%)
5-Day Change: -$185.54 (-5.51%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +34.06

Gold has come under additional pressure, dropping to a five-week low. The yellow metal continues to be pressured by the unwinding of fear trades triggered by President Trump's tariffs, and some optimism about the upcoming peace talks between Russia and Ukraine.



The breach of support at $3,209.84/$3,204.91 (Monday's low/01-May low) leaves gold vulnerable to additional losses toward $3,165.84/$3,157.86, where an important Fibonacci level corresponds with the 50-day moving average. So far, a minor chart point at $3,175.09 (11-Apr low) has contained the downside.

I initially suggested a symmetrical triangle was likely to form, but today's fresh corrective lows now have me thinking bull flag or descending wedge. These patterns would also be considered continuation patterns within the longer-term uptrend, but suggest we will have to endure a deeper correction.

If $3,209.84/$3,204.91 gives way, the next significant tiers of support are at $3,076.12 (Fibonacci) and $3,000. The 100-day moving average is at $2,972.83 today, but should rise to bolster the $3,000 zone by next week.

Former support at $3,204.91/$3,209.84 now marks first resistance. Minor intraday highs at $3,237.98/40.26 provide an additional barrier ahead of today's overseas and yesterday's highs at $3,256.01/62.11.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.744 (-2.27%)
5-Day Change: -$0.222 (-0.68%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +4.01

Silver is back under pressure within the range after failing once again to sustain gains above $33 on Tuesday. The white metal is being weighed by weakness in gold and a modestly firmer dollar.



If traders don't have the wherewithal to take silver higher even amid revived trade and economic optimism, it is suggestive of heightened downside risk. The white metal could remain in the recent range and await fresh news, or it could trade lower to shake out weak longs and seek additional buying interest.

The latter becomes more likely if support at $31.969/923 (Monday's low/100-day MA) gives way. At that point, a breach of the $31.762 low from 01-May would also be likely, shifting focus to $31.281/114, where the 200-day MA corresponds closely with 50% retracement of the rally from $28.565 07-Apr low) to $33.622 (25-Apr high).

Minor intraday resistances at $32.400 and $32.589 protect the 20- and 50-day moving averages at $32.724/757. The overseas high at $32.961 is an additional barrier ahead of $33.


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.