Blog posts tagged with 'gold'

Gold consolidates recent losses on heightened geopolitical risk

I'm writing today from the bourse floor at the CSNS show in Schaumburg, booth 1404. We've got coffee! Stop by for a cup.

OUTSIDE MARKET DEVELOPMENTS: Russia conducted a large missile and drone strike against the Ukrainian capital of Kyiv. The attack comes as the U.S. is trying to broker a peace deal, and prompted President Trump to demand that Putin "STOP."

“I am not happy with the Russian strikes on KYIV. Not necessary, and very bad timing. Vladimir, STOP! 5000 soldiers a week are dying. Lets get the Peace Deal DONE!” Trump wrote on TruthSocial.

The escalation of geopolitical tensions had a limited impact on risk appetite, with markets remaining optimistic about ongoing trade negotiations. Meanwhile, a dozen U.S. states have sued the Trump administration seeking a court order declaring that tariffs imposed under the International Emergency Economic Powers Act are illegal.

Durable Orders surged 9.2% in March, well above expectations of +2.0%, versus +0.9% in February. Ex-trans was unch on expectations of +0.3%, versus +0.7% in February.

Initial Jobless Claims rose 6k to 222k in the week ended 19-Apr, in line with expectations, versus 216k in the previous week. Continuing claims fell 37k to 1,841k.

Chicago Fed National Activity Index fell 0.27 points to -0.03 in March from 0.24 in February.

Existing Home Sales fell 5.59% to 4.02M in March, below expectations of 4.13M, versus 4.27M in February.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$40.91 (+1.24%)
5-Day Change: +$7.89 (+0.24%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,281.97 - $3,495.89
Weighted Alpha: +48.02

Gold is consolidating within yesterday's range, buoyed by heightened geopolitical tensions. Despite the sharp sell-off from $3,500 earlier in the week, the yellow metal is clinging to a weekly gain.



Today's Asian high at $3,362.22 protects the halfway back point of this week's decline at $3,380.72. Penetration of the latter would bode well for renewed tests above $3,400.

On the downside, the Asian low at  $3,288.35 stands in front of yesterday's low at $3,265.55. Fresh lows for the week would signal additional downside potential to the $3,200 zone.   

Silver is consolidating at the high end of yesterday's range. The white metal jumped to a three-week high of $33.655 on Wednesday, and the ability of silver to sustain gains above $33 is seen as encouraging to the bull camp.



With more than 78.6% of the entire decline off the late-March high at $34.543 now retraced, that level, both $34.543 and the 22-year high from October at $34.853, are considered in play. However, upside prospects remain very much contingent on ongoing progress on trade negotiations.

A retreat below $33 would put the bullish scenario back on pause, favoring a return to the 20- and 50-day moving averages around $32.00 would become likely.


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 continues to correct as trade optimism boosts risk appetite

I'm traveling today, so I'll keep it brief. I hope to see some of you at the Central States Numismatic Society Show in Chicago this week. We'll be at booth 1404.

OUTSIDE MARKET DEVELOPMENTS: Talk of de-escalating trade tensions with China and progressing trade talks with India and Japan is the kind of news markets were desperate for. U.S. stocks are higher amid improved risk appetite.

According to Treasury Secretary Scott Bessent, neither the U.S. nor China sees the current trade war as sustainable. President Trump is “setting the stage for a deal with China,” said Bessent on Tuesday, and de-escalation should happen in the "very near future."

The President also dialed down pressure on the Fed, saying he had "no intention of firing" Chairman Powell and never did. “I would like to see him be a little more active in terms of his idea to lower interest rates,” Trump said Tuesday evening.

The dollar index firmed on Tuesday, but gains stalled well shy of 100. The greenback is lower today, and the overall bias remains bearish after falling to a three-year low on Monday.

MBA Mortgage Applications fell 12.7% in the week ended 18-Apr as 30-year mortgage rates rose to a nine-week high of 6.90%.

S&P Flash Manufacturing PMI rose to 50.7 in April, above expectations of 49.1, versus 50.2 in March. 

S&P Flash Services PMI fell to 51.4 in April, below expectations of 52.5, versus 54.4 in March.

New Home Sales rose to 0.724M in March, above expectations of 0.686M, versus a revised 0.674M in February (was 0.676M).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$51.37 (-1.52%)
5-Day Change: -$23.52 (-0.70%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,281.97 - $3,495.89
Weighted Alpha: +47.74

Gold peaked just shy of $3,500 on Tuesday after positive news on the trade front sparked profit taking. Follow-through losses today pushed the yellow metal to new lows for the week.



While gold is nearly $200 off yesterday's record high, I still see losses as corrective. The next level of support is marked by the 17-Apr low at $3,290.51.

The $3,210.36/$3,198.36 zone offers more substantial chart support and should correspond with the 20-day moving average over the next several sessions. An additional intervening barrier is noted at $3,229.84 (16-Apr low).

Ongoing weakness in the dollar is seen as a limiting factor on the downside for gold. The market will also be monitoring events on the trade front. I categorize recent trade optimism as 'fragile,' particularly with regard to China.

A climb back above $3,400 would return confidence to the dominant trend, which is still very clearly bullish. As noted yesterday, some sources show highs above $3,500. It seems likely that the market will want to return to that level to confirm.

Silver is probing above $33 again, underpinned by heightened optimism on trade and a soft dollar. Gains above $33 have been a struggle recently, but this time might be the charm.



A breach of the previous highs at 33.050/053 would clear the way for a challenge of the $33.264 Fibonacci level. Above the latter, the late-March high at $34.543 and the cycle high from October at $34.853 would be in play.

An intraday chart point at $32.782 should keep today's Asian low at $32.276 at bay. The 50- and 20-day moving averages continue to be significant with respect to the close.

A short-term close below the 20-day MA at $32.334 would set up a test of chart support at $32.134/125, but I would suggest potential at that point would be back to the 100-day MA at $31.613.


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 pressured $3,500 before retreating below $3,400

OUTSIDE MARKET DEVELOPMENTS: Citing heightened trade tensions, the IMF slashed its 2025 U.S. growth forecast by nearly a full percent to 1.8%, versus 2.7% in January.  The risk for a U.S. recession was raised to 40% from 25% in October.

“The common denominator ... is that tariffs are a negative supply shock for the economy imposing them,” said IMF chief economist, Pierre-Olivier Gourinchas. 

The global growth forecast was cut to 2.8% from 3.3% previously. “The April 2 Rose Garden announcement forced us to jettison our projections — nearly finalized at that point — and compress a production cycle that usually takes more than two months into less than 10 days,” wrote Gourinchas.

The IMF also raised inflation expectations for advanced economies to 2.5% from 2.1% in January. The  organization thinks that the reaction of central banks to inflationary pressures will be dependent “on whether the tariffs are perceived to be temporary or permanent.”

Some U.S. trading partners seem to be more worried about disinflation. "[T]he tariffs actually represent more of a disinflationary risk than an inflationary risk," said BoE MPC member Megan Greene.

Greene believes UK consumers could pivot to cheap Asian exports. She also cited a weaker dollar and softening demand as potential sources of downward pressure on prices.

Despite IMF concerns about growth and inflation, risk appetite rebounded after U.S. Treasury Secretary Bessent acknowledged that the trade war between the U.S. and China was unsustainable. He reportedly said he thinks the situation will de-escalate, prompting a strong rally in U.S. shares.

Richmond Fed Index fell 9 points to a five-month low of -13 in April, below expectations of -6, versus -4 in March. Prices paid surged 1.62 points to 5.37, and prices received rose a more modest 0.31 points to 2.65. "Firms expected heightened growth in prices paid and prices received over the next 12 months," according to the survey results.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$29.74 (+0.87%)
5-Day Change: +$206.57 (+6.40%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,281.97 - $3,495.89
Weighted Alpha: +55.00

Gold extended to the upside in overseas trading, setting yet another round of new all-time highs amid ongoing tariff worries and dollar weakness. Some sources show trades just above $3,500, but my chart shows the latest record high as $3,495.89. Time and sales on the ZMhedge platform don't show any fills with a 3500 handle.



One thing is certain: My $3493.00 Fibonacci objective (261.8% retracement of the last meaningful correction) was satisfied before profit taking surfaced and the yellow metal retreated into the range.

Intraday losses accelerated on an indication from Treasury Secretary Bessent that de-escalating the trade war with China was desirable. Gold fell to new intraday lows below $3,400, leaving a range for the day greater than $100.

De-escalation with China would be a good move; finding enough common ground to strike a trade deal is no small task. It's likely to take some time. Global uncertainty will remain elevated, suggesting the retreat is corrective.

The low from earlier U.S. trading at $3,380.50 now protects a minor chart point from yesterday at $3,369.43. More substantial supports are marked by last Thursday's high at $3,354.76, and yesterday's low at $3,315.13.


Having the world's largest consumer market means the U.S. has the stronger hand. The last thing China wants is to start closing factories and laying off workers, as it creates a risk for civil unrest.

On the upside, the midpoint of today's range is at $3,438.20. A confirmed penetration of $3,500 would shift focus to $3,539.97 initially, but the potential would be to $3,600.

Global ETF inflows totalled 33.4 tonnes last week, with Asian investors accounting for nearly half of that. It was the twelfth straight weekly net inflow.

The latest COT report shows net speculative long positions edged up 1.5k contracts to 202.5k in the week ended 18-Apr, versus 200.7k in the previous week. However, spec long positioning remains well below the highs from earlier in the year.

  

Silver remained relatively subdued during gold's earlier run-up as the IMF report stoked global growth worries. The white metal ticked back above $33, but once again, gains could not be sustained.



Bessent's comments have provided some hope that the U.S. and China might start moving toward a trade deal. That lifted silver off the intraday low.

A convincing breach of last week's high at $33.050 is needed to clear the way for a test of the next Fibonacci objective at $33.264. Penetration of the latter would bode well for retests of the late-March high at $34.543, and the more important 22-year high from October at $34.853.

On the downside, I'm still watching the 50- and 20-day MAs on a close basis. The low for the day at $32.370 now protects secondary support at $32.134/125. Below the latter, $32.000 and $31.833 would be in play.

In light of recent volatility, it's not surprising that net speculative long positions declined for a third straight week from 46.5k contracts to 43.9k.

CFTC Silver speculative net positions

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 clears $3,400 as haven-driven march higher continues

OUTSIDE MARKET DEVELOPMENTS: While European and UK markets are closed today for Easter Monday, market sentiment is tilted toward risk-off to start the week. U.S. stocks are under pressure amid ongoing trade uncertainty and intensifying pressure from the White House on the Fed and Chairman Powell.

National Economic Council Director Kevin Hassett acknowledged last week that the Trump administration was indeed studying whether they should – and could – fire Powell. "If I want him out, he’ll be out of there real fast, believe me," said Trump.

The threat to Fed independence adds an additional layer to U.S. policy uncertainty, putting further pressure on the dollar. The dollar index dropped to new three-year lows below 98. More than 61.8% of the COVID-era rally has now been retraced, and the 100-month MA has been violated. From a technical perspective, this monthly chart looks grim.



If President Trump successfully ousts Powell, presumably a more dovish central banker would take his place and start pushing for more rate cuts, adding weight to the greenback. A weaker dollar also makes U.S. goods and services cheaper overseas and could help achieve Trump's goal to rein in trade deficits.

There was mixed news on the geopolitical front over the Easter weekend. The 30-hour ceasefire between Russia and Ukraine ended, even though both sides accused the other of violations. Trump expressed some optimism that a peace deal could get done this week, but there were also signals that the administration's patience is wearing thin.

A second round of nuclear talks between the U.S. and Iran occurred on Saturday. Iran said the talks were positive and a third meeting is scheduled for next weekend.

Nonetheless, the Times of Israel reports that Israel is considering a limited attack on Iranian nuclear sites. Any such attack would likely occur without U.S. support.

Leading Indicators fell 0.7% to 100.5 in March, below expectations of -0.5%, versus a revised -0.2% in February (was -0.3%). It was the fourth straight monthly decline and the lowest reading since October 2016.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$67.65 (+2.03%)
5-Day Change: +$172.07 (+5.34%)
YTD Range: $2,607.16 - $3,424.65
52-Week Range: $2,281.97 - $3,424.65
Weighted Alpha: +46.20

Gold continues to march higher, driven by safe-haven interest and a weaker dollar. The yellow metal extended to trade above $3,400 despite the absence of European and UK traders.



The latest round of gains bodes well for the scenario that calls for a test of the next Fibonacci objective at $3,493.00. Just above that, the $3,500 psychological barrier attracts.

Further out, the $4,000 level is looking increasingly attractive. However, the market is quite overbought at this point and vulnerable to a corrective setback.

A minor intraday chart point at $3,369.43 marks first support and protects Friday's high at $3,354.76. Below the latter, today's Asian low at $3,331.40 offers a more formidable downside barrier.

Silver is trading higher, helped by surging gold and new cycle lows in the dollar. However, tests above $33 continue to meet resistance.



A sustained push above $33 is needed to perpetuate the uptrend and keep the white metal on track for a challenge of the late-March high at $34.543. Above that, the cycle high from October at $34.853 would be in play.

On the downside, today's Asian low at $32.428 reinforces support marked by the 50- and 2-day moving averages. More substantial support is defined by several lows from last week at $32.134/125. Last week's low is at $31.833.

While the technical bias remains bullish, global growth risks and recent volatility warrant a measure of caution. 


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.

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

U.S. calendar features Leading Indicators, FedSpeak from Goolsbee. Europe and UK remain closed for the Easter holiday.

Gold notches another new record before retreating on profit taking ahead of the holiday weekend

OUTSIDE MARKET DEVELOPMENTS: On Wednesday, Fed Chairman Powell suggested that the Trump administration's unprecedented trade policies could lead to "higher inflation and slower growth." Stagflation understandably presents a challenge for the central bank.

"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell warned.

Powell went on to indicate that the Fed will remain on pause for the time being. “We are well positioned to wait for greater clarity," he said.

President Trump lashed out, posting on social media that Powell "should have lowered Interest Rates... long ago, but he should certainly lower them now." Trump threatened that "termination cannot come fast enough!"

Fed funds futures continue to suggest Trump's wish for lower rates will be granted, but probably not until July. May remains off the table, and prospects for a June cut dimmed after Powell's speech. The implied Fed funds rate for year-end is 3.4775%, indicating market expectations for 90 bps of easing by December.

The ECB delivered a 25 bps rate cut today, noting that "the outlook for growth has deteriorated owing to rising trade tensions." The vote was unanimous, and ECB President Lagarde revealed that a 50 bps cut was discussed.

That suggests a more dovish tilt at the ECB, even though EU plans for considerable spending (led by Germany) on defense and infrastructure provide a significant underpinning for growth. The euro is lower on the day, but remains generally well bid near the top of the recent range.

Without any help from a softer euro, the dollar index remains on the ropes near the three-year low set last week at 99.01. The 61.8% retracement level of the rally from 89.20 (Jan'21) to 114.78 (Sep'22) comes in at 98.97. The 100-month moving average is just below at 98.66. Both levels appear vulnerable, and penetration would have grim implications for the greenback.

Housing Starts tumbled 11.4% in March to 1.324M, below expectations of 1.418M, versus a negative revised 1.494M in February (was 1.501M). Permits fell to 1.482M from 1.459M. Completions dropped to 1.549M from 1.582M.

Initial Jobless Claims fell 9k to 215k in the week ended 12-Apr, below expectations of 226k, versus 224k in the previous week. Continuing claims rose to 1,885k in the 5-Apr week from 1,844k in the previous week.

Philly Fed Index plunged 38.9 points to a one-year low of -26.4 in April, below expectations of 5.0, versus 12.5 in March. "The survey’s indicators for general activity, new orders, and shipments all fell and turned negative. The employment index registered a near-zero reading, suggesting steady employment conditions. Both price indexes continue to suggest overall price increases," according to the report.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$14.43 (-0.43%)
5-Day Change: +$152.43 (+4.80%)
YTD Range: $2,607.16 - $3,354.76
52-Week Range: $2,281.97 - $3,354.76
Weighted Alpha: +46.73

Gold set another new record high at $3,354.76 in Asian trading before profit-taking ahead of the long holiday weekend surfaced. Most markets are closed tomorrow for Good Friday. Eurozone, UK, Swiss, and Scandinavian markets are also closed on Easter Monday.



Despite the intraday setback, the yellow metal is poised for a second straight higher weekly close. Gold has notched higher weekly closes in 14 out of the last 16 weeks. Ten of those weeks saw record highs. Gold hasn't seen consecutive lower weekly closes since December.

Broad global uncertainty stemming from U.S trade policies, which has resulted in a trade war with at least China, continues to stoke safe haven demand for gold. A weak dollar is providing additional support.

This week's push above $3,290.11/$3,300.00 shifted focus to the next Fibonacci objective at $3,493.00, which corresponds closely with the $3,500 longer-term target that the market has been talking about since early in the year. It looks like we may reach $3,500 before many were expecting.

The $3,400 level offers an intervening psychological barrier. Further out, $4,000 is looking increasingly appealing amid robust official sector demand and mounting investment demand.

ANZ Bank raised its year-end gold forecast to $3,600 from $3,200. "Increasing risks of a deeper recession, another turn in the geopolitical landscape, disruptions in global supply chains, fears of rising inflation along with a changing rate outlook suggest that gold will remain on strong footing in the foreseeable future," ANZ noted.

Goldman Sachs and UBS upped their expectations for the yellow metal to $3,700 and $3,500, respectively. With the breach of his $3,300 target, Ole Hansen of Saxo Bank now likes $3,500 as well.

It would likely take a major breakthrough on the trade front (perhaps specifically with China) to diminish haven interest in any meaningful way. While that could result in a significant setback, I would still view any retreat as corrective within the dominant uptrend.

Even if trade deals get sorted out, U.S. trading partners have been sufficiently rattled to perpetuate the de-dollarization trend. Similarly, investors have been unsettled by recent stock market volatility to the point that gold will continue to be viewed as an attractive portfolio addition.

Despite today's probe below $3,300, look for last week's high and close at $3,243.16/$3,238.14 to remain protected. More substantial support is marked by Wednesday's low at $3,229.84.

Silver has retreated to the 20- and 50-day moving averages as traders paired bullish bets ahead of the long weekend. While Wednesday's test above $33 could not be sustained, a close above $32.294 would confirm a second straight higher weekly close.



Today's setback is not surprising in light of silver's recent volatility. Who wants to be long over a holiday weekend two weeks removed from a 13% plunge?

That being said, the magnitude of the rebound since the seven-month low was hit last week at $28.565 has been impressive. More than 61.8% of the plunge from the March high has been retraced, and key moving averages have been regained.

However, the rally speaks as much to silver's volatility as the plunge. Ongoing caution is warranted, but I maintain a bias toward the longer-term uptrend based on the realities of supply and demand.

The Silver Institute reports that industrial demand for silver rose 4% in 2024 to reach a record high of 680.5 Moz. It was the fourth year in a row for record-setting industrial demand.

While overall demand was down 3%, driven by "weakness in physical investment and slightly lower silverware and photographic demand," the market was in deficit for a fourth straight year.

The trade organization believes the market will remain in deficit in 2025, although the gap is expected to tighten to a four-year low of 117.6 Moz. Marginally weaker demand of 1.15 Boz and a forecasted 1.5% increase in supply will account for the narrower deficit.

The Silver Institute does anticipate "a modest recovery in coin and bar demand in some Western markets." That's some potential good news for our clients in the bar and coin space!

As for tariffs, the SI says, "The impact of US tariffs will be a key risk to silver demand this year. An extended period of elevated tariffs, or a further escalation of global trade wars, could lead to significant supply chain disruptions and sharply lower global GDP growth. These will weigh on industrial, jewelry, and silverware demand, though physical investment could benefit from rising safe-haven purchases."

Wednesday's high at $33.050 now provides intervening resistance ahead of the $33.264 Fibonacci level (78.6% retracement of the recent plunge). Penetration of the latter would bode well for tests back above $34, with potential to the 28-Mar high at $34.543, and the key 22-year high from October at $34.853.

On the downside, watch the 50- and 20-day MAs at $32.529/474 on a close basis. The low for the day at $32.134 bolsters Tuesday's low at $32.124. Below that, $32.000 and $31.833 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 surges above $3,300 as trade tensions continue to ramp

OUTSIDE MARKET DEVELOPMENTS: Trade tensions between the U.S. and China continue to escalate, sapping risk appetite once again. The White House announced that China now faces tariffs up to 245% "as a result of its retaliatory actions."

When retaliation begets retaliation, you've got yourself a trade war. However, China surprisingly appointed a new lead trade negotiator today. Li Chenggang was China's assistant commerce minister during Trump's first term and may have been inserted to help dial down the tensions.

Beijing has signalled that it is open to trade talks. A Bloomberg article said that China requires that the Trump administration first show more respect, have a more consistent position, and appoint a point person for those talks. Two of the three seem antithetical to the preferred tactics of the Trump administration.

Citing "pervasive uncertainty," The Bank of Canada held steady on rates today. "The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations," according to the policy statement.

As central banks continue to evaluate the impact of tariffs, risks to both growth and prices are evident. Nonetheless, the market still expects a 25 bps cut from the ECB on Thursday, although it seems it could be a closer call than many are anticipating.

Fed Chairman Powell will speak to the Economic Club of Chicago later today. It seems unlikely that any of his comments on the policy path will deviate from the 'wait-and-see' tack.

That being said, the Fed remains on an easing path, and the market believes it will continue. Fed funds futures are pricing in 87 bps of cuts by year-end, with the first 25 bps cut likely to come in July.  

MBA Mortgage Applications fell 8.5% in the week ended 11-Apr as the 30-year mortgage rate jumped to a seven-month high of 6.81%. Purchases fell 4.9%, while refis plunged 12.4%.

Retail Sales surged 1.4% in March, in line with expectations, versus +0.2% in February. Ex-auto +0.5% on expectations of +0.4%, versus a revised +0.7% in February (was +0.3%). Auto and parts sales were especially strong at +5.3% as consumers front-ran potential tariffs.

Industrial Production fell 0.3% in March on expectations of -0.2%, versus a revised +0.8% in February (was +0.7%). Capacity utilization fell to 77.8% from 78.2% in February.

NAHB Housing Market Index rose one point to 40 in April from 39 in March. The future sales index fell 4 points to 43, versus 47 in March.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$74.61 (+2.31%)
5-Day Change: +$232.19 (+7.54%)
YTD Range: $2,607.16 - $3,315.65
52-Week Range: $2,281.97 - $3,315.65
Weighted Alpha: +45.88

Gold surged to new record highs above $3,300 on the latest escalation of trade tensions between the U.S. and China, even as there was some glimmer of hope for bilateral trade talks between the two largest economies. Persistent weakness in the dollar and expectations for an ECB rate cut tomorrow provided additional lift for the yellow metal.



The next big round number is $3,400, but the breach of the $3,290.11 Fibonacci objective shifts focus to $3,493.00 (261.8% retracement of the last meaningful correction). That would bring gold within striking distance of the often-mentioned $3,500 target.

With each new high, $4,000 gold is looking increasingly attractive. Gold is already up more than 27% YTD. Does it have an additional 20% rise in it this year? 

It wouldn't be unprecedented. Gold's largest annual percentage gain was 74%. This occurred in 1979 as investors sought shelter from surging inflation and geopolitical tensions.

Arguably, recent weeks of trade turmoil are further incentive for de-dollarization, which should perpetuate robust official sector gold demand. China, in particular, appears to be eschewing dollars and Treasuries as reserve assets, but they certainly aren't alone.

UK export data reveals that China bought 50 tonnes of gold from Britain in February. Societe Generale estimates that a "staggering" 700 metric tons have now been brought into China over the past two years, according to a Reuters article by Mike Dolan.

"The rotation from U.S. Treasuries into gold seems like something we can loosely correlate and somewhat keep track of – and the selling of Treasuries matching that of gold exports to China is something we can't help but take notice of."

If China plans to swap Treasuries for gold, they have a lot more ammo to use that could fuel the rally for some time to come. However, long gold is now the most crowded trade, supplanting the 'magnificent-seven' tech stocks.

That comes as gold once again proved itself to be an excellent hedge in times of stock market volatility. Investors have taken notice and are reallocating accordingly.

Silver traded briefly with a 33-handle for the first time in nearly two weeks. The white metal is being dragged higher by the latest record highs in gold, rebounding copper, and a weak dollar.



As gold soars out of reach for some investors, silver is frequently viewed as a less expensive safe-haven alternative. Those investors must keep in mind that silver is primarily an industrial metal and is a much smaller, more thinly traded market than the gold market.

The volatility seen in the last two weeks alone is indicative of silver's higher beta. Gold is a far superior haven.

With silver back above the 50- and 20-day moving averages, confidence continues to swing back in favor of the bull camp. A breach of the $33.264 Fibonacci level (78.6% retracement of the recent plunge) would bode well for tests back above $34, with potential to the 28-Mar high at $34.543. At that point, the 22-year high from October at $34.853 would also be in play.

The aforementioned MAs now mark first support at $32.539/527. Below that, the highs from earlier in the week at $32.368/382 bolster today's Asian low at $32.276.


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.