Blog posts of '2025' 'May'

Gold regains $3,300 on rising geopolitical tensions

OUTSIDE MARKET DEVELOPMENTS: Houthi rebels in Yemen fired a ballistic missile on Sunday that struck near Tel Aviv's Ben Gurion airport. The famed Iron Dome defense system failed to intercept the projectile. Israel has vowed retaliation.

Also over the weekend, Israel's security cabinet voted unanimously to ramp up operations in Gaza. The plan is now to capture and reoccupy the entire Gaza Strip.

"The plan will include, among other things, the capture of the Strip and holding the territories, moving the Gazan population south for its defence, denying Hamas the ability to distribute humanitarian supplies, and powerful attacks against Hamas," the official said.

The UN has scheduled a high-level meeting for June to discuss a two-state solution to the Israeli-Palestinian conflict. A couple of weeks ago, UN Secretary-General Guterres worried that “the promise of a two-state solution is at risk of vanishing altogether." That opportunity may indeed be gone.

President Trump continues to suggest that deals are in the offing with some key trading partners. He also hinted at walking back tariffs on China during an interview on Meet the Press. “At some point, I’m going to lower them, because otherwise, you could never do business with them, and they want to do business very much,” Trump said.

However, Trump indicated he had no plans at this time to speak directly with Xi Jinping. This has the market worried that the trade war between the U.S. and China will continue for some time.


S&P Global Services PMI was revised down to 1 17-month low of 50.8 in the final read for April, versus 51.4 flash and 54.4 in March.

Services ISM rose 0.8 points to 51.6 in April, above expectations of 50.2, versus 50.8 in March. Prices jumped 4.2 points to a six-month high of 65.1, versus 60.9 in March.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$72.53 (+2.24%)
5-Day Change: -$27.19 (-0.81%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +45.18

Gold rebounded back above $3,300, buoyed by heightened geopolitical tensions, persistent trade uncertainty, and a softer dollar. The yellow metal is up more than 2% to start the week.



Last week, the yellow metal notched its first lower weekly close in four. Today's price action remains confined to last week's range thus far, with a minor chart point at $3,323.15 protecting the more important $3,351.87 level.

Penetration of the latter would constitute a more than 50% retracement of the correction off the $3,495.89 all-time high from 22-Apr. At that point, focus would shift to the 61.2% and 78.6% retracement levels at $3,384.74 and $3,433.62, respectively.

Recent losses are considered corrective within the dominant uptrend. Successive violations of these resistance levels heighten the likelihood of further attacks on the $3,500 zone. Above that, the next Fibonacci objective is at $3575.04.

Goldman Sachs believes gold will continue to outperform silver due to ongoing central bank demand. Official sector demand has increased fivefold since Russian assets were frozen in 2022, and that trend seems likely to continue.

"With Chinese solar production now slowing amid oversupply, high recession risk, and central bank gold buying remaining strong in 2025, we expect gold to continue out-glittering silver," the bank said.

Goldman believes gold is in a structural bull market with potential to $3,700 by year-end, and $4,000 by mid-2026. If the U.S. slips into recession, safe-haven flows could drive gold to $3,880 this year.

On the downside, first supports are $3,300.00 and 3,289.15. The latter is bolstered by the midpoint of today's range at $3,280.43 and protects today's Asian low at $3,239.98.

Silver is trading higher to start the week, underpinned by renewed strength in gold and a softer dollar. However, the white metal's recent struggles above $33 suggest that at least the short-term tone is consolidative in the upper half of this year's range.



Ongoing tariff uncertainty and concerns about oversupply in the solar market are seen as headwinds for silver. So too are fading prospects for a Fed rate cut this summer, despite pressure from the White House for monetary easing.

A failure to reclaim the 33-handle would bode well for further tests below $32. Last week's low at $31.762 corresponds closely with an important retracement level and the 100-day moving average. A push below the $31.763/727/715 area would shift focus to the convergence of the next tier of Fibonacci support and the 200-day MA at $31.124/114.

Fresh five-week highs above $34.662 are needed to return focus to the high for the year at $34.543 and the more important 22-year high from October at $34.853.


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 extends to the downside as solid earnings and trade optimism sap the haven bid

OUTSIDE MARKET DEVELOPMENTS: Risk appetite remains robust despite yesterday's weak advance Q1 GDP print. Amid generally strong corporate earnings, there is a growing belief that growth weakness in the first three months of the year was a one-off event associated with tariff front-running.

Thus far, the blended year-over-year earnings growth rate of the S&P 500 is 10.1%. That's above the 10-year average, and analysts remain optimistic about the whole year despite the intensified trade uncertainty that began early in Q2.

Three Senate Republicans joined Democrats in an attempt to thwart President Trump's tariff agenda by ending the "national emergency." They failed, but only after VP Vance broke a tie in favor of the White House.

Markets remain optimistic about trade deals that are in the works with some of America's key trading partners. There even seems to be some movement with China. "The U.S. has proactively reached out to China through multiple channels, hoping to hold discussions on the tariff issue," according to a Weibo post linked to Chinese state media.

"They sell us about five times more than we sell them. So their factories are closing down as we speak," said Treasury Secretary Scott Bessent. He reinforces a point that I've been making since the trade war kicked off: China needs access to our consumers more than we need access to theirs.

Massive numbers of idle workers in China create potential for political unrest. That's the last thing the CCP wants.

Bessent went on to point out that orders for the upcoming holidays are typically placed around this time. "If those orders aren't placed, it could be devastating for the Chinese," he said.

The U.S. is pushing for a 30-day ceasefire in Ukraine to allow for progress toward a lasting peace. "We had 22 concrete terms that (Ukraine) agreed to. What they want... and what they have is a very comprehensive and permanent ceasefire that leads to a peace treaty. When I mean comprehensive, sea, air, land infrastructure for at least 30 days... It could build to an important peace initiative," said U.S. Special Envoy Keith Kellogg.

The U.S. and Ukraine signed a deal that grants America access to Ukraine’s vast strategic resources. The agreement is important to the U.S., as many rare earth minerals were previously imported from China.

While the deal does not include any specific security guarantee, it behooves the U.S. to protect those resources.  “This agreement signals clearly to Russia that the Trump administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over the long term,” said Treasury Secretary Bessent.

Challenger Layoffs tumbled 62% to 105.4k in April, well below analyst expectations, versus 275.2k in March.  “Though the Government cuts are front and center, we saw job cuts across sectors last month. Generally, companies are citing the economy and new technology. Employers are slow to hire and limiting hiring plans as they wait and see what will happen with trade, supply chain, and consumer spending,” Andrew Challenger.

Initial Jobless Claims rose 16k to 241k in the week ended 26-Apr, above expectations of 225k, versus a revised  223k in the previous week. Continuing claims rose 83k to 1,916k in the 19-Apr week from 1,833k in the previous week.

S&P Global Manufacturing PMI was revised down to 50.2 in the final April print, versus a preliminary read of 50.7, and unchanged from 50.2 in March. "Manufacturing continued to flat-line in April amid worrying downside risks to the outlook and sharply rising costs," said S&P Global.

Manufacturing ISM fell to a five-month low of 48.7 in April, above expectations of 47.8, versus 49.0 in March. Prices rose to 69.8 from 69.4 in March.

Construction Spending fell 0.5% in March, below expectations of +0.3%, versus a revised +0.6% in February (was +0.7%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$66.96 (-2.04%)
5-Day Change: -$137.58 (-4.11%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,285.07 - $3,495.89
Weighted Alpha: +41.85

Gold remains in corrective mode as heightened optimism on trade, robust corporate earnings, and perhaps a glimmer of hope for a ceasefire and ultimately peace in Ukraine sap the haven bid. The dollar index also rebounded to a three-week high, applying additional pressure to the yellow metal.



I also think speculative sellers took advantage of thin market conditions with parts of Asia and most of Europe closed for May Day/Labor Day holidays. There is scope to see at least some of these losses retraced.

While gold has retreated nearly $300 from the record high set just last week around $3,500, the yellow metal posted a 5.3% monthly gain for April. It was the fourth straight monthly gain of the year. It's worth noting again that gold hasn't seen more than two consecutive monthly losses in over two years.

Recent commentary suggested the breach of support at $3,269.62/65.55 would set up a test of the 20-day MA and the $3,200 zone. We can consider those corrective objectives satisfied, but a close below the 20-day at $3,241.80 would leave the downside vulnerable.

Trades below $3,200 would shift focus to Fibonacci support at $3,165.84 (61.8% of the rally from $2,961.83 to $3,495.89). Below that, the rising 50-day MA comes in at $3,087.73 and corresponds closely with the 78.6% Fibonacci level.

Former support at $3,265.55/69.62 now defines resistance. The halfway back point of the decline now comes in at $3,340.50 with an important chart point at $3,366.18 (25-Apr high). This area must be cleared to return confidence to the underlying uptrend.

I do think recent losses are indeed corrective. Billionaire John Paulson agrees, predicting "high $4,000 range" within three years. "As central banks and people look to put their money in a more stable source... I think gold will increase its position in the world," he said.

Silver fell to a three-week low, weighed by losses in gold and a stronger dollar. However, trade optimism provides some underpinning, and the white metal is already back above the midpoint of today's range and the 20-day moving average.



Important support at $31.715/711 marked by an important retracement level and the 100-day MA successfully contained the downside, but further losses can not be ruled out. A breach of $31.715/711 would bode well for a challenge of $31.110/086, where the halfway back point of the April rally corresponds with the 200-day MA.

Short-term action in silver is likely to be volatile as trade negotiations and gold's correction play out. A move back above $33 would ease pressure on the downside, but last week's high at $33.662 provides a significant barrier ahead of key highs from March and October at $34.543 and $34.853


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.