Gold rebounds above $2,900 on haven demand, silver flirts with $32

OUTSIDE MARKET DEVELOPMENTS: President Trump's promised tariffs against America's largest trading partners took effect overnight. Global stocks came under pressure as trade war worries ramped up risk aversion.

Duties on EU products are thought to be forthcoming. China immediately retaliated with new tariffs on U.S. farm products. Markets are fearful that Canada and Mexico also have retaliatory levies planned.

Escalating trade tensions threaten to stoke both inflation and growth risks. The Atlanta Fed's GDPNow indicator has plunged into negative territory, driven by the trade deficit blowout as importers front-ran tariffs, weak personal consumption, and soft manufacturing data. 

The GDPNow chart looks horrible, but this indicator can be quite volatile. The NY Fed's Nowcast continues to suggest a growth rate close to 3%.

At a minimum, GDPNow is a troubling harbinger, contributing to already elevated market jitters. Look for Q1 GDP forecasts to continue eroding.

The market will be paying close attention to jobs data this week to see if cracks are forming in the labor market. Median expectations for the ADP survey are +139k and +160k for NFP.

Commerce Secretary Howard Lutnick indicated he may strip out government spending from GDP. “You know that governments historically have messed with GDP. They count government spending as part of GDP. So I’m going to separate those two and make it transparent.” 

“A more accurate measure of GDP would exclude government spending,” wrote Elon Musk on X. While the administration claims such a move would bolster transparency, many are arguing it is an effort to obscure slower growth stemming from massive cuts to government. 

Even with Europe now taking the lead on negotiations between Ukraine and Russia, President Zelensky said that an end to the war was “very, very far away.” Trump warned that "if somebody doesn’t want to make a deal, I think that person won’t be around very long."

Trump paused military aid to Ukraine following Friday's Oval Office clash. Zelensky characterized that meeting as "regrettable," indicating a willingness to "make things right” and continue working toward peace.

Meanwhile, the ceasefire between Israel and Hamas appears to be in jeopardy. Israel has halted aid shipments into Gaza until Hamas agrees to new conditions.
 
President Trump will speak before a joint session of Congress this evening. "There will be a lot of surprises and a lot of made-for-TV moments,” said an administration official. Markets typically don't like surprises.

RCM/TIPP Economic Optimism Index fell 4.2% to 49.8 in March, below expectations of 53.1, versus 52.0 in February. It was the first read below 50 since Trump's election.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$27.05 (+0.94%)
5-Day Change: -$6.66 (-0.23%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,111.24 - $2,955.40
Weighted Alpha: +33.36

Gold regained $2,900 as rising trade and geopolitical tensions drove risk aversion and flight to safe havens. A 12-week low in the dollar index and deleveraging pressures are contributing to today's bid in the yellow metal.



The World Gold Council reported that global central banks continued their gold buying spree in January. Net buying totaled 18 tonnes, with Uzbekistan, China, and Kazakhstan the top three buyers.



More than 61.8% of last week's correction has now been retraced, but gains at least temporarily stalled ahead of the 78.6% Fibonacci level at $2,929.68. A breach of this level is needed to clear the way for a retest of last week's record high at $2,955.40 and the long-standing $3,000 objective.

The weekly key reversal from last week remains a troubling technical feature and warrants a degree of caution when it comes to fully recommitting to the dominant uptrend. I'm going to base my short-term confidence on today's close relative to the 20-day moving average at $2,903.87.

 A close below $2,903.87/$2,900.00 would leave secondary support at $2,883.58/80.99 vulnerable to a retest. The latter is marked by today's overseas low and the halfway back point of the rally off last week's low at $2,835.23.

Silver has been pulled higher by this week's haven-inspired rebound in gold despite the darkening growth picture. The weaker dollar is providing some additional underpinning.



White metal gains have faltered ahead of $32, keeping the 20-day moving average at $32.114 at bay. A short-term close back above $32.00/114 is needed to bolster the confidence of the bull camp, but rising trade tensions and growth risks are likely to mean that silver will lag on the upside.

Scope remains for further tests of the 100-day MA at $31.281. Today's overseas low at $31.517, and the 50% retracement level of this week's bounce at $31.421 provide intervening barriers.

The Silver Institute projects that silver demand will remain steady at 1.20 billion ounces this year. They estimate that supply will increase 3% to 1.03 billion ounces. This should result in a fifth consecutive annual deficit in 2025 and provide important price support.

The basic supply/demand fundamentals remain broadly supportive for silver. While I favor the upside over the longer term, I suspect the uptrend will continue to be punctuated by sometimes volatile setbacks.

In their most recent newsletter, the Silver Institute also makes note of research done with PMI that concluded "no correlation exists between the overall level of above-ground stocks and the silver price."

"Once only a storehouse of wealth, for instance in bars, silverware, jewelry and coins, items that stay mostly as they were produced – and largely unavailable to the market – silver has become an industrial metal that usually gets consumed or otherwise taken out of circulation except for recycling, whose effect can vary."


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.