Blog posts of '2025' 'May'

Good morning. The precious metals are mixed in early U.S. trading.

U.S. calendar features MBA Mortgage Applications, EIA Data.

FedSpeak due from Jefferson & Daly.

Gold consolidates Monday's losses, awaiting fresh inputs on trade, geopolitics, and economy

OUTSIDE MARKET DEVELOPMENTS: Risk appetite remains elevated as trade optimism continues to ease fears of a trade war and tariff-driven global recession. The U.S. and China agreed to roll back tariffs for 90 days while a broader trade deal was negotiated, boosting confidence that deals with other key trading partners will also be reached.

The market is eager to see that additional progress. While we continue to hear that more deals will be forthcoming, Treasury Secretary Bessent cautioned that a deal with the EU may take some time.

Speaking on Bloomberg, Bessent said that the EU has a “collective action problem,” which is hampering trade negotiations. “I think the US and Europe may be a bit slower,” he said.

Reduced growth risks caused Fed rate cut expectations for June to fall off the table this week. Fed funds futures put the chances of a 25 bps cut at just 8.4%, down from 30.5% a week ago and 64.4% a month ago. The market now only expects 52 bps of easing by year-end, with the first 25 bps cut not fully priced in until October. 

The trade was worried that tariffs enacted in April would result in an upside inflation distortion, but CPI unexpectedly cooled. Headline CPI fell to 2.3% y/y, the lowest print since February 2021. Core CPI was unchanged at 2.8%.

There's still plenty of uncertainty surrounding trade and the economy, and the Fed has been clear that it's in no hurry to adjust rates. However, cooling inflation gives the doves some fodder for conversation at the next FOMC meeting.

You may recall that core PCE inflation – the Fed's preferred measure – fell to 2.6% y/y in March, tying June as the lowest reading since March 2021. Median expectations for April are 2.8%, but I suspect that if we see the CPI results replicated in PPI and import/export prices, PCE inflation expectations will be trimmed.

On Monday, Treasury announced a $258.4 bln budget surplus for April, a $48.9 bln increase (+23.3%) versus last April. Surpluses in April are not uncommon due to incoming tax receipts, but this surplus was the second-largest on record.

A surge in customs receipts (tariffs) contributed $15.6 bln to total receipts. That's an increase of $9 bln f(136%) from a year ago.

NFIB Small Business Optimism Index declined by 1.6 points to 95.8 in April, versus 97.4 in March. The Uncertainty Index fell 4 points to 92 but remained well above the historical average of 68. “Uncertainty continues to be a major impediment for small business owners in operating their business in April, affecting everything from hiring plans to investment decisions,” said NFIB Chief Economist Bill Dunkelberg.

CPI rose 0.2% in April, below expectations of +0.3%, versus -0.1% in March; 2.3% y/y, down from 2.4% in March. Core rose 0.2% on expectations of +0.3%, versus +0.1% in March; 2.8% y/y, unchanged from March.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$18.78 (+0.58%)
5-Day Change: -$186.58 (-5.44%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +37.93

Gold is consolidating Monday's losses, trading at the low end of yesterday's range. The absence of fresh news on the trade front and an easier dollar are providing the yellow metal with some modest buoyancy.



The major stock indexes have recouped the losses since President Trump's initial "Liberation Day" tariff announcements. Gold, on the other hand, remains comfortably above the $3,114.61 open from 02-Apr, suggesting there's more to gold's strength than just its safe-haven status.

However, additional good news on trade and/or further dialing back of geoplitical tensions would perpetuate the unwinding of risk-aversion positioning. That could prompt a retest of support at $3,209.84/$3,204.91 (Monday's low/01-May low) for gold.

A drop below $3,200 would suggest additional downside potential to Fibonacci support at $3,165.84 (61.8% retrace of the leg-up from $2,961.83 to the record high at $3,495.89). The rising 50-day moving average is currently at $3,152.64, adding some significance to this secondary support area.

While I remain confident in the underlying uptrend, it's very difficult to determine where the buyers will step back in during a correction. At this point, the downside still seems to be vulnerable to further tests.

The halfway back point of yesterday's decline at $3,267.46 has successfully capped the upside thus far. The overseas high at $3,262.11 bolsters this level. A minor chart point at $3,280.91 protects the more important $3,320.44/$3,325.08 area, where the 20-day MA corresponds closely with yesterday's high.

Silver probed back above $33 in overseas trading, but once again, these gains could not be sustained. The white metal made another run at the upside in early U.S. trading, but the intraday rally has faltered ahead of $33 thus far.



Today's high at $33.197 bolsters last week's highs at $33.231/239 as a key short-term resistance. The 20- and 50-day moving averages come in at $32.752/765 today and remain significant on a close basis.

The bull camp can feel somewhat encouraged by the sustained drop below 100 in the gold/silver ratio. However, a breach of support in the ratio at 97.574 (23-Apr low) is still needed to really boost confidence for a run at key highs in silver at $33.662 (25-Apr high), the high for the year at $34.543, and the 22-year high from October at $34.853.

Today's intraday low at $32.546 and a minor chart point at $32.271 protect Monday's low at $31.969. The latter stands in front of the key 01-May low at $31.762.


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 retreats to the $3,200 zone on trade optimism, easing of geopolitical tensions

OUTSIDE MARKET DEVELOPMENTS: Weekend trade talks between the U.S. and China bore fruit with both countries agreeing to reduce tariffs for 90 days as negotiations continue. In a joint statement, the parties  recognized the "importance of a sustainable, long-term, and mutually beneficial economic and trade relationship."

The U.S. will temporarily lower its tariffs on Chinese imports from 145% to 30%, and China will reduce its levies on American goods from 125% to 10%. China also agreed to "adopt all necessary administrative measures to suspend or remove the non-tariff countermeasures taken against the United States since April 2," according to the statement.

The progress made in Switzerland significantly dials back trade tensions, stokes risk appetite, and saps gold's haven bid. U.S. shares are up sharply. Make no mistake though, there's still plenty of uncertainty out there, and markets want to see further progress toward trade deals with China and other key trading partners.

The dollar index surged to a five-week high as trade deal hopes bolstered economic optimism. A week after the Fed announced that it would indeed remain on hold, rate cut hopes have been further diminished.

A fragile ceasefire is holding between India and Pakistan, although each has accused the other of violations. 
"The underlying issues remain, and every six months, one year, two years, three years, something like this happens and then you are back at the brink of war in a nuclear environment," acknowledged Pakistan's National Security Advisor.

President Trump is taking credit for the ceasefire. "We stopped a nuclear conflict, I think it could have been a bad nuclear war, millions of people could have been killed, so I'm very proud of that," he said.

Trump used trade as the carrot. "We're going to do a lot of trade with Pakistan, we're going to do a lot of trade with India," he pledged. Some in India (and probably Pakistan as well) are reportedly not happy with the outcome. The situation remains tense.

President Putin of Russia proposed direct peace talks with Ukraine in Turkey. “Russia is ready to negotiate without any preconditions,” said Putin.

"I have openly expressed my readiness to meet. I will be in Türkiye," responded President Zelenskyy of Ukraine. Zelenskyy also requested that President Trump attend that meeting.

Hamas has released American/Israeli hostage Edan Alexander. "This comes as part of the mediators’ efforts to reach a ceasefire, open the border crossings, and allow the entry of aid and relief for our people in the Gaza Strip," Hamas said in a statement.

Key U.S. inflation and retail sales data for April come out this week. There may be some tariff-related distortions, so it's not clear where the actual prints will fall in relation to median expectations. Any significant misses may be discounted by the trade, particularly in light of the uptick in trade optimism.

Treasury Budget for April comes out this afternoon. The market is expecting $256.0 bln.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$115.89 (-3.48%)
5-Day Change: -$95.66 (-2.87%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +37.54

Gold came under heavy selling pressure at the Asian open on news that the U.S. and China had reached at least an interim trade agreement. A firmer dollar and easing geopolitical tensions applied additional pressure to the yellow metal.



I wouldn't go so far as to say that peace is breaking out everywhere (including in the trade war), but risk-on sentiment has shifted attention away from the safe-haven appeal of gold, back to risk assets. The DJIA is up more than 1,000 points today.

Last week saw net outflows in global gold ETFs for the first time in 15 weeks. The net outflow was just 4.4 tonnes as buying in Asia offset more than a third of North American and European selling.

Net speculative long positions in futures fell 0.8k to 162.5k contracts in the week ended 9-May, versus 163.2k in the previous week, according to the latest COT report. It was the third straight weekly decline and the lowest net long positioning in over a year.

The 01-May low at $3,204.91 has successfully contained the downside thus far, keeping the range intact. My favored scenario continues to call for consolidation within the $3,495.89/$3,204.91 range.

In Friday's comment, I suggested there would be opportunities on both sides of the market. While I was not expecting the lower boundary to be challenged the very next session, today's price action is not inconsistent with recent volatility.

Further progress on trade and mitigation of geopolitical risks would leave gold vulnerable to additional tests of the $3,200 zone. Penetration would shift focus to Fibonacci support at $3,165.84. The 50-day moving average is currently at $3,145.86 and should rise to bolster the Fibonacci level by midweek.

The high from earlier U.S. trading at $3,245.22 marks initial resistance. The halfway back point of today's decline comes in at $3,267.46, and there's a minor chart point at $3,280.91. More important resistance is marked by the 20-day MA and today's Asian high at $3,318.86/$3,325.08.

Penetration of the latter is needed to clear the way for a move back into the upper half of the range above $3,350.40. The $3,431.46/63 highs from last week are seen as a formidable barrier ahead of the key $3,500 zone.  


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.744 (-2.27%)
5-Day Change: +$0.129 (+0.40%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +5.68

Silver slumped back to the $32 zone, weighed by the sharp drop in gold and a stronger dollar. While still lower on the day, the white metal is more than 50¢ off the intraday low, buoyed by optimism on trade.



As long as the trade sees progress on the trade front, I expect silver to outperform. The gold/silver ratio is testing back below 100 with potential for a challenge of support at 97.574 (23-Apr low).

Net speculative long positions in silver futures fell just 0.6k to 49.3k contracts in the week ended 9-May, versus 49.9k in the previous week, according to the latest COT report. Spec long positioning remains fairly stable despite the recent volatility.

Important support marked by the 01-May low at $31.762 was left unmolested. While further tests of the downside can not be ruled out, this support zone has been reinforced.

The recent inability of silver to sustain gains above $33 remains a concern, and the next test above this level may have to come without the help of gold. Once again, I'm watching the convergence of the 20- and 50-day moving averages at $32.719/745 on a close basis.

A close above this level would bode well for a test of the European high at $32.972. Above $33, last week's highs at $33.231/239 will be back in play.

Other significant tiers of resistance are noted at $33.662 (25-Apr high), the high for the year at $34.543, and the 22-year high from October at $34.853. It would take a breach of the latter to truly consider the longer-term uptrend off the $11.703 from March 2020 to be back underway.

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 set to notch a higher weekly close as rising geopolitical tensions offset trade optimism

OUTSIDE MARKET DEVELOPMENTS: Optimism about weekend trade talks between the U.S. and China continues to underpin risk appetite. While a comprehensive deal is unlikely to come out of these initial meetings in Switzerland, it appears that both sides are keen to de-escalate trade tensions. That's a great place to start.

"Chinese officials have grown increasingly alarmed about tariffs' impact on the economy and the risk of isolation as China's trading partners have started negotiating deals with Washington," according to reporting by Reuters.

Rising geopolitical tensions, most notably now between India and Pakistan, are counterbalancing the optimism on trade. India sent missiles into Pakistan earlier in the week in retaliation for what it called a terrorist attack.

Pakistani fighter jets reportedly shot down at least two Indian warplanes on Wednesday. Both India and Pakistan have nuclear weapons, so the stakes are extraordinarily high.

Today's U.S. economic calendar is empty, but there is a whole lot of FedSpeak happening today. From what I've seen thus far, most of the speakers are towing the line on patience.

Fed funds futures reflect fading rate cut expectations. June is presently off the table, and odds for a 25 bps cut in July are slightly better than 50-50. Less than 75 bps in cuts are currently implied for year-end.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$17.04 (+0.52%)
5-Day Change: +$96.56 (+2.98%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +46.39

Gold has rebounded from a four-session low of $3,280.91 and appears on track for a higher weekly close. Heightened geoplitical tensions are offsetting the loss of haven interest associated with optimism on trade.



As noted in previous commentary, gold has not seen consecutive lower weekly closes this year. In fact, there have only been three lower weekly closes in total!

I continue to think we're going to see a period of consolidation within the $3,495.89/$3,204.91 range. While there will be opportunities on both sides of the market, the dominance of the underlying uptrend warrants a bias toward an eventual upside breakout.

A breach of chart/Fibonacci resistance at $3,431.63/33.62 is needed to clear the way for another go at the $3,500 zone. An eventual move to new all-time highs would shift focus to $3,575.04 based on a Fibonacci extension and boost confidence in the longer-term $4,000 objective.

The World Gold Council believes investor flows into ETFs will remain supportive for some time. "Near-term momentum may ebb and flow, but expectations for continued market volatility – driven by concerns such as future trade policy and inflation – should provide a level of support to flows over the medium-to-long term," according to the WGC.

There have been five consecutive net monthly inflows. Asian inflows were particularly strong in April, reaching a record high US$7.3 bln (69.6 tonnes). While U.S. inflows moderated somewhat versus February and March, it was the second strongest April on record.

The WGC also noted that "net cumulative flows through the first four months of the year have already outpaced 2020’s historical performance."

On the downside, I'm watching the 20-day moving average at $3,318.90 on a close basis. It looks to be pretty well protected. Secondary supports are noted at $3,300.00/$3,293.06 and $3,280.91.

Silver is poised for its fourth higher weekly close in five. A close above the 20- and 50-day moving averages at $32.715/730 would provide some additional encouragement to the bull camp.



However, recent heaviness on trades above $33 remains a concern. Positive reports from the weekend trade meetings in Switzerland between the U.S. and China might knock the gold/silver ratio back below 100 and allow silver to attempt to break out to the upside without the help of gold.

Significant tiers of resistance are noted at $33.662 (25-Apr high), the high for the year at $34.543, and the 22-year high from October at $34.853. It would take a breach of the latter to truly consider the longer-term uptrend off the $11.703 from March 2020 to be back underway.

On the downside, today's low at $32.271 now provides an intervening barrier ahead of more substantial support at $32.009/$31.975. The rising 100-day moving average should further bolster the latter next week. The 01-May low $31.762 is another important level to watch.


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 remains defensive on trade optimism

OUTSIDE MARKET DEVELOPMENTS: News of a "full and comprehensive" trade deal with the UK has stoked optimism that other deals may soon drop. The easing of trade tensions is stoking risk appetite. The fact that China and the U.S. will begin 

To be fair, a trade deal with the UK was the easy one. The U.S. typically runs a trade surplus with the UK (+$11.9 bln in 2024). Striking a deal with China will be far more difficult, but that talks are beginning is encouraging.

The EU is seeking public comment on $109 bln in retaliatory tariffs if ongoing negotiations fail to bear fruit. “Since the US imposed its unjustified and harmful tariffs, the EU has prioritized finding a mutually beneficial and balanced solution through negotiations,” the EU said in a statement.

This chart from Bloomberg, which was included in the World Gold Council's latest commentary, shows the unprecedented level of trade policy uncertainty. 

In a widely anticipated move, the Bank of England cut the bank rate by 25 bps to 4.25%. Amid ongoing uncertainty, MPC members had mixed views, with two members voting for a 50 bps cut and two favoring steady policy.

"Uncertainty surrounding global trade policies has intensified since the imposition of tariffs by the United States and the measures taken in response by some of its trading partners. There has subsequently been volatility in financial markets, and market-implied policy rates have moved lower. Prospects for global growth have weakened as a result of this uncertainty and new tariff announcements, although the negative impacts on UK growth and inflation are likely to be smaller." – Bank of England Monetary Policy Report

Meanwhile, Sweden's Riksbank and Norway's Norges Bank left rates unchanged. Both cited global trade uncertainty and expressed dovish leanings.

The Fed remained on pause when policy was announced yesterday. Chairman Powell acknowledged that solid economic fundamentals allow the Fed to continue playing the waiting game.

“The labor market is solid, inflation is low. We can afford to be patient as things unfold. There’s no real cost to our waiting at this point,” Powell said during his presser. President Trump called him a "fool" this morning on TruthSocial.

Q1 Productivity (preliminary) fell 0.8% on expectations of -0.6%, versus a revised +1.7% in Q4 (was +1.5%). ULC surged 5.7%, above expectations of +5.2%, versus a revised +2.0% in Q4 (was +2.2%).

Initial Jobless Claims fell 13k to 228k in the week ended 03-May, below expectations of 233k, versus 241k in the previous week. Continuing jobless claims fell 29k to 1879k in the 26-Apr week, versus a revised 1,908k in the previous week.

Wholesale Sales rose 0.6% in March, below expectations of +0.9%, versus a negative revised +2.0% in February (was +2.4%). Inventories rose 0.4% on expectations of +0.5%, versus a revised +0.5% in February (was +0.3%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$22.45 (-0.67%)
5-Day Change: +$115.14 (+3.56%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +47.31

Gold is trading lower for a second session after failing to sustain gains above $3,400 earlier in the week. Easing global trade jitters and a modestly firmer dollar are weighing on the yellow metal.



This week's powerful rebound stalled at the 78.6% retracement level yesterday. The subsequent retreat into the range suggests a period of consolidation is likely, but the dominant trend remains decisively bullish.

The World Gold Council cited "a significantly weaker US dollar and overall heightened risk" for driving gold to record highs in April. The WGC expects "US policy and structural risks to continue driving gold investment" moving forward. They acknowledge that "profit taking could bring pause but may also encourage consumers."

 

The WGC also noted strong ETF inflows as a driving force. "In Q1, gold ETFs amassed US$21bn of inflows – the strongest quarter in three years – with an additional US$11bn in April," the organization reported.

Despite the longer-term bullish prospects, today's breach of support at $3,318.27/11.82 (halfway back point of the recent rally, and  20-day MA) suggests scope for additional retracement towards $3,300. The 61.8% retracement level of the rally from $3,204.91 to $3,431.63 comes in a $3,291.52.

A rebound above intraday resistance at $3,365.93 would set a more favorable short-term tone, suggesting potential for renewed probes above $3,400.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.025 (-0.08%)
5-Day Change: -$0.005 (-0.02%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +13.21

Silver is trading within yesterday's range. While trade optimism provides some underpinning, weakness in gold and a firmer dollar weigh.



The 50- and 20-day moving averages have converged at $32.690/698, and today's close in relation to those indicators could be telling. A close above would favor more tests above $33, while a close below would leave the white metal vulnerable to tests below $32.

It seems likely that a move back above $33 would invite further selling interest, leaving the 25-Apr high at $33.662 protected.

On the downside, Monday's low at $32.009 stands in front of the 100-day moving average at $31.793. Below the latter, the $31.195/114 level (200-day MA, halfway back point of the rally from $28.565) would be in play.


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 retreats into the range on trade optimism, awaits FOMC policy statement

OUTSIDE MARKET DEVELOPMENTS: Treasury Secretary Bessent will travel to Switzerland tomorrow to meet with Swiss President Karin Keller-Sutter.  "While in Switzerland, Secretary Bessent will also meet with the lead representative on economic matters from the People’s Republic of China (PRC)," according to the Department of the Treasury.

Markets are encouraged that China and the U.S. are set to begin talks, underpinning risk appetite. However, that's being counterbalanced by rising geopolitical tensions.

India fired missiles at what it called "terrorist infrastructure sites" within Pakistan, raising tensions between the two nuclear-armed neighbors. Pakistan claims to have shot down five Indian jets and drones and vowed further retaliation.

The U.S. and Houthi rebels in Yemen have reportedly reached a ceasefire agreement. Some see the deal as a precursor to nuclear talks with Iran.

The Houthis were quick to clarify that the ceasefire did not extend to Israel, and that those attacks would continue. “There is no turning back from supporting Gaza, no matter the cost," said Houthi leader Mahdi al-Mashat. Israel has struck key Yemeni infrastructure this week.

Russia and Ukraine continue to trade attacks, a day before a three-day ceasefire is slated to take effect. When recently asked about Ukrainian strikes on Russian territory, Putin ominously said: “There has been no need to use those (nuclear) weapons ... and I hope they will not be required.” 

The Fed is expected to remain on pause when it announces policy this afternoon. The statement and Chairman Powell's responses to questions will be dissected for clues as to when the next rate cut might occur. However, in light of recent tariff uncertainty, I expect the Fed to keep its cards close to the vest.

MBA Mortgage Applications rebounded 11.0% in the week ended 02-May after falling 4.2% in the previous week. The 30-year mortgage rate eased to 6.84% from 6.89% in the previous week.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$38.68 (-1.13%)
5-Day Change: +$100.35 (+3.05%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +49.53

Gold has retreated from the two-week high set early in the Asian session at $3,431.63 as news that the U.S. and China would hold trade talks this week in Switzerland sapped the haven bid. However, rising geopolitical risks are providing some underpinning.



This week's gains stalled just shy of the 78.6% retracement level of the decline from the record high. Nonetheless, the magnitude of the retracement thus far suggests that the corrective low is in place at $3,204.91.

However, progress toward a trade deal with China, or evidence that deals are being struck with other major trading partners, could put the yellow metal under heavier pressure within the range. This strikes me as a scenario where a symmetrical triangle (a series of lower highs and higher lows) is likely to form.

Such a pattern is considered a continuation pattern within the dominant trend. In the case of gold, the dominant trend remains decisively bullish. Further near-term attacks on the $3,500 level are anticipated, with longer-term potential still seen to $4,000.

Initial support is marked by the Asian low at $3,365.18. The more important zone to watch is $3,326.29/18.27/08.12, where Tuesday's low, the halfway back point of the recent rally, and the 20-day MA are all in close proximity.

 

Silver has once again failed to sustain gains above $33, despite optimism on the trade front and a fresh round of Chinese stimulus. While price action remains confined to yesterday's range, the fact that silver is underperforming gold is troubling.



The 50- and 20-day moving averages are being pressured at $32.677/636. A breach of this level would clear the way for a return to the $32.00 zone, which is highlighted by Monday's low at $32.009.

Silver may have to dip further into the range to gather itself for a more serious test of key highs above $34. A drop below $32 would shift focus to the 100-day MA at $31.777 initially, but potential at that point would be to $31.152/114, where the halfway back point of the rally from $28.565 corresponds with the 200-day MA.

I'm going to remain suspicious of upticks above $33 as long as 25-Apr high at $33.662 is intact. I see the upside as limited until the high for the year at $34.543 and the more important 22-year high from October at $34.853 are negated. I also want to see the gold/silver ratio fall back below 100.


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.