Gold poised for weekly loss as easing of trade and geopolitical tensions stoked risk appetite

OUTSIDE MARKET DEVELOPMENTS: Risk appetite has returned after Russia and Ukraine held their first face-to-face meeting since 2022. Putin did not attend, perhaps signalling a halfhearted commitment. The talks ended without a ceasefire agreement.

However, the two sides reportedly agreed to exchange 1,000 prisoners and to hold a follow-up meeting. "The parties have agreed in principle to come together again," said Turkish Foreign Minister Hakan Fidan.

President Trump concluded a four-day Middle East trip, visiting Saudi Arabia, Qatar, and the UAE, where he was warmly received and secured investment deals worth over $2 trillion. The trip focused heavily on economic agreements, including a $600 bln Saudi commitment and a $200 bln UAE AI deal, while also lifting U.S. sanctions on Syria.

During his trip, the President repeatedly said that Iran can not be allowed to have a nuclear weapon, and indicated they were "very close" to a deal. However, Trump still rattled the sabre, saying there are only two paths forward. "There’s a friendly and a non-friendly, and non-friendly is a violent course, and I don’t want that," he warned.

As I've been saying for several days, markets are eager for fresh positive news on the trade front. President Trump acknowledged that things are progressing too slowly and that tariffs will go up again if deals aren't struck.

Housing Starts rose 0.022M to 1.361M in April, near expectations of 1.362M, versus a revised 1.339M in March (was 1.324M). Permits fell 0.069M to 1.412M. Completions -0.091M to 1.458M.

Import Price Index rose 0.1% in April, above expectations of -0.4%, versus a revised -0.4% in March (was -0.1%); +0.1% y/y, down from +0.8% in March. Ex-petro +0.4% m/m.

Export Price Index rose 0.1% in April, above expectations of -0.4%, versus a revised +0.1% in March (was unch); +2.0% y/y, down from +2.6% in March. 

Michigan Sentiment (Preliminary) fell 1.4 points to a 35-month low of 50.8 in May, below expectations of 53.5, versus 52.2 in April. Year-ahead inflation expectations surged to 7.3%, versus 6.5% in April. "Consumers continue to express somber views about the economy," according to the report.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$64.77 (-2.00%)
5-Day Change: -$143.83 (-4.32%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +34.24

Gold is poised for its biggest weekly loss since the 11-Nov'24 week, as the easing of trade and geopolitical tensions this week stoked risk appetite. While Thursday's rebound into the range faded, the low for the week at $3,127.12 appears protected, at least ahead of the weekend.



A close above the 50-day moving average at $3,169.97 seems likely today, which would provide some encouragement to the bull camp. However, The $3,300 level must be regained to truly return confidence to the underlying uptrend. The 20-day MA comes in at $3,302.21 and the midpoint of the corrective range is at $3,311.51.

A breach of Friday's low at $3,161.16 early in the week ahead would leave $3,127.12 vulnerable to a retest. Below the latter, the next tier of Fibonacci support at $3,076.12 and the $3,000 zone would look increasingly attractive.

Incremtum's In Gold We Trust report thinks a correction as $2,800 is possible without damaging the "long-term Big Long case."  Their price models continue to indicate "the gold bull market still has considerable room to run."


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.505 (-1.55%)
5-Day Change: -$0.686 (-2.10%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +3.16

Silver is defensive to end the week after failing to sustain uptricks above $33 once again. While the white metal should be encouraged by optimism on trade and the reduced growth risks, weakness in gold and a firm dollar provide headwinds.



Given the recent price action, selling above $33 and buying below $32 could be an attractive strategy early in the new week. I'll continue to watch gold for cues; with an expectation that silver will outperform gold on downticks and underperform on upticks.

The 20- and 50-day MAs at $32.730/752 mark resistance once again. However, it's going to be tough to start tilting more aggressively bullish until mutiple tiers of resistance above the market are taken out. The key levels are the high for the year at $34.543 and the 22-year high from October at $34.853.

On the downside, Thursday's low at $31.701 protects the more important $31.338/114 zone, where the 200-day MA corresponds with an important retracement level.


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.