Gold weighed by latest retreat from tariff threats, lower yields, firmer dollar
OUTSIDE MARKET DEVELOPMENTS: Days after threatening 50% tariffs on the EU, President Trump announced over the weekend that those tariffs are on hold until July 9 to allow for trade talks. Markets have swung once again from risk-off to risk-on.
However, diminished trade tensions are being offset to some degree by heightened geopolitical risks. Over the weekend, Russia conducted some of its largest drone and missile strikes of the war against Ukraine.
The attacks jeopardize ongoing ceasefire negotiations and prompted Trump to say that Putin had gone "absolutely crazy." The White House is said to be considering additional sanctions on Moscow.
German Chancellor Merz said there were "no longer" range restrictions on arms supplied to Ukraine. This suggests Germany will provide weapons to Ukraine with the ability to strike deep within Russia.
Meanwhile, Israel said that it plans to occupy 75% of Gaza within two months, pushing the Palestinian population into three small "safe" zones. The IDF's goal is to destroy Hamas's military wing and its remaining infrastructure.
Durable Orders fell 6.3% in April, inside expectations of -7.9%, versus a negative revised +7.6% in March (was +9.2%). It was the biggest drop since October, due in large part to a 17.1% plunge in transportation orders. orders. Orders ex-trans rose 0.2%. Shipments +0.4%.
Case/Shiller Home Price Index rose 1.1% to 338.9 in March, versus a revised 336.2 in February. The annualized pace of appreciation slowed to 4.1% y/y from 4.5%.
FHFA Home Price Index slipped 0.1% in March. It was the first decline since January 2024. Annual appreciation decelerated to a 3.7% pace, versus 3.9% in February.
Consumer Confidence rebounded 12.3 points to 98.0 in May, well above expectations of 87.0, versus a revised 85.7 in April (was 86.0). It was the first gain in six months as tariff worries cooled.
Dallas Fed Index rebounded 20.5 points to -15.3 in May, versus -35.8 in April. It was the first gain in three months, although the index remained in negative territory for the fourth straight month. "Higher-than-usual price pressures continued in May, while wage growth remained slightly subdued," according to the report.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$48.28 (-1.44%)
5-Day Change: +$4.07 (+0.12%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +42.99
Gold starts the holiday-shortened week on defense, following President Trump's latest retreat from tariff threats. The yellow metal is being weighed by heightened risk appetite, lower yields, and a firmer dollar.
However, rising geopolitical tensions are providing some counterbalance to the dip in trade worries. Support at $3,288.09/87.50 (20-day MA, 22-May low) has contained the downside thus far, leaving the yellow metal in the upper half of last week's range.
Penetration of this level would leave gold vulnerable to further retracement to the $3.250.00/$3,246.26 zone, where minor chart support corresponds with the halfway back point of the recent rally. The rising 50-day moving average comes in at $3,217.85.
Global gold ETFs saw net inflows of 3.2 tonnes. It was the first weekly inflow in three with European buying of 6.7 tonnes offsetting modest outflows in North America and Asia.
The COT report for last week showed net speculative long positions rose 2.8k to 164.0k contracts, versus 161.2k in the previous week. It was the first uptick in spec long positioning in five weeks.
The magnitude of the gains last week returned considerable credence to the underlying uptrend. A close above the 20-day MA would keep the technical bias tilted toward the upside. A breach of the 50% retracement level of this week's setback at $3,327.35 would bode well for the anticipated tests back above $3,400.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.592 (-1.77%)
5-Day Change: -$0.170 (-0.51%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +9.42
Silver retreated below $33, weighed by weakness in gold and a firmer dollar. However, trades with a 32 handle were short-lived, with the trade encouraged by the reduction in trade tensions.
Support marked by the convergence of the 20- and 50-day moving averages at $32.756/718 was left untested. Today's intraday low at $32.828 now provides an intervening downside barrier.
Nonetheless, gains above $33 remain suspect as they have consistently attracted selling interest. Last week's seven-week high at $33.690 stands in front of key resistances at $34.543 and $34.853.
The latest COT report showed that net speculative long positions rose 2.2k to 50.0k contracts last week, versus 47.8k in the previous week. It was the first weekly rise in three and drove net spec long positioning to a seven-week high.
While the range is intact, slight emphasis remains on buying into dips in anticipation of trade deals eventually getting struck. This will moderate global growth risks and underpin demand for the white metal.
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.