Gold and silver jump to multi-week highs on rising de-escalation hopes

OUTSIDE MARKET DEVELOPMENTS: This morning, both President Trump and Iran's Foreign Minister said that the Strait of Hormuz is fully open. While the U.S. naval blockade continues, Trump believes a deal to end the war would come "soon." 

Arguably, Iran's credible threats against shipping in the Strait are its primary source of leverage, so the fact that it's open suggests there has been progress toward a peace deal, or at least an extension of the ceasefire. The U.S.-brokered ceasefire between Israel and  Lebanon further moderates regional risks.

Risk-on sentiment prevails, as oil tumbled to multi-week lows. The tempering of inflation concerns saw prospects for a Fed rate cut later in the year rise.

Major U.S. stock indexes have extended gains. The S&P 500 and Nasdaq have set new all-time highs, while the DJIA has moved back within striking distance of 50,000.

The dollar index slid to seven-week lows driven by revived rate-cut bets and diminished haven interest. A breach of support at 97.50/49 would favor additional retracement toward 96.64/49.



The March retail sales report is the highlight of next week's U.S. data. Median expectations call for a 1.3% m/m rise. With the calendar generally light next week, the market will continue to take its cues from Middle East and Washington headlines.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$3.23 (-0.07%)
5-Day Change: +$113.64 (+2.39%)
YTD Range: $4,100.32 - $5,595.02
52-Week Range: $3,127.12 - $5,595.02
Weighted Alpha: +46.70

Gold advanced to four-week highs on Friday and appears on track for a third straight higher weekly close. The yellow metal is being buoyed by Middle East de-escalation hopes, rebounding rate cut expectations, and a weaker dollar.



Ongoing progress in resolving the Iran conflict should support gold prices in the week ahead. That said, any major setback would likely cause gold to give back some of its recent gains.

The 50-day moving average at $4,892.81 has capped the upside thus far. Penetration is needed to clear the way for a challenge of the $4,915.17 retracement level. Above that, a move back above $5,000 would be likely, returning considerable confidence to the underlying uptrend.

On the downside, intraday congestion just below $4,800 protects the overseas low at $4,768.46. More substantial supports are marked by Tuesday's low at $4,740.30, and the low for the week from Monday at $4,645.10.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.870 (+1.12%)
5-Day Change: +$6.020 (+7.92%)
YTD Range: $61.036 - $121.630
52-Week Range: $31.701 - $121.630
Weighted Alpha: +144.73

Silver jumped to a five-week high in U.S. trading, driven by broad risk-on sentiment after news broke that the Strait of Hormuz was open. Revived hopes for a Fed rate cut this year, and a weaker dollar added to the bid. The white metal is poised for a fourth consecutive higher weekly close. 



The breach of a short-term Fibonacci objective at $82.887 and the decisive move above the 50-day MA bode well for additional retracement toward $84.183 (38.2% of the entire decline off the $121.630 all-time high). Beyond the latter, $90 and the halfway back point of this year's drop at $91.333 would be in play.

First support is the $80 area, which should keep intraday support at $79.617 at bay. Friday's overseas low at $77.828 now provides a good intervening barrier ahead of lows from earlier in the week at $75.400 and $72.792.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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