Gold and silver are defensive to start the week

OUTSIDE MARKET DEVELOPMENTS: Risk aversion remains elevated amid uncertainty about tariffs and ongoing efforts to radically restructure the federal government. U.S. stocks begin the week under pressure.

China launched new tariffs on U.S. agricultural products today in response to U.S. tariffs against them that went into effect last week. Retaliatory action from the Trump administration is likely, raising concerns about a trade war.

The Canadian province of Ontario hiked the price for electricity delivered to Minnesota, New York, and Michigan by 25%. “Until the threat of tariffs is gone for good, Ontario won’t back down. We’ll stand strong, use every tool in our toolkit and do whatever it takes to protect Ontario," said Ontario Premier Doug Ford in a statement.

Former BoC Governor Mark Carney will replace Justin Trudeau as Canadian Prime Minister. Trudeau was forced to resign as his popularity plunged along with the standard of living of Canadians.

Carney's assention to PM and tough talk on Trump will probably revive the prospects of the Liberal Party to some degree, but general elections are in the offing. If Carney doesn't call for elections quickly, the Conservative and New Democratic parties have vowed a vote of no confidence when Parliament convenes.

Trade worries are stoking growth risks. Speaking with Maria Bartiromo over the weekend, President Trump wouldn't rule out recession, acknowledging, "There is a period of transition because what we’re doing is very big.”

That Atlanta Fed's GDPNow indicator for Q1 remains in negative territory at -2.4%. The New York Fed's NowCast declined last week for a fourth straight week to +2.65%.

The GOP has unveiled a stopgap funding bill that they hope to get through Congress and to the President's desk by Friday to avoid a government shutdown. As this critical week begins, it's unclear whether they have the necessary votes.

The President made a plea on TruthSocial for all Republicans to vote yes. "Great things are coming for America, and I am asking you all to give us a few months to get us through to September so we can continue to put the Country's 'financial house' in order," he wrote.

U.S. and Ukrainian diplomatic teams will meet in Saudi Arabia this week for the latest push for a peace deal between Russia and Ukraine. President Zelensky says Ukraine is “fully committed” to the talks.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$8.27 (-0.28%)
5-Day Change: +$14.04 (+0.49%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,146.66 - $2,955.40
Weighted Alpha: +33.75

Gold is under modest pressure, but price action has been confined to the upper end of last week's range. The yellow metal continues to be underpinned by haven interest and a weaker dollar.



While intraday downticks below $2,900 have been limited, so too have upticks above the 20-day MA at $2,911.60.

With gold still within striking distance of the $2,955.40 record high from 24-Feb, the trend remains decisively bullish. However, the weekly key reversal that formed two weeks ago and technical divergences continue to warrant a measure of caution.

Market focus this week will be on U.S. inflation data. Median expectations for CPI on Wednesday are +0.3%. PPI is expected to come in at +0.2% on Thursday.

A breach of chart/Fibonacci resistance at $2,928.75/29.68 is needed to clear the way for fresh record highs. Such a move would return additional confidence to the $3,000 objective.

Initial supports are noted at $2,893.31 and $2,883.58/82.20. A breach of the latter or a close below the 20-day would suggest potential to a retracement level at $2,871.12.

Gold ETFs saw net inflows of 7.9 tonnes last week, led by European investors. It was the sixth straight weekly inflow. There have only been two weekly outflows since the beginning of the year.

The COT report for last week saw net speculative long positions decline by 18.3k to 243.3k contracts versus 261.6k in the previous week. It was the fourth straight weekly decline and the lowest net spec long positioning since the 08-Nov'24 week.

Silver has once again retreated to the 20-day moving average, weighed by trade and growth worries. The white metal is showing some vulnerability here for a dip back below $32.



Such a move would shift focus to the halfway back point of last week's rally at $31.812. The convergence of the 100- and 50-day MAs at $31.322/258 also makes a logical attraction.

Last week's COT report revealed a modest 0.4k increase in net speculative long positions to 53.3k contracts versus 52.9k in the previous week.

CFTC Silver speculative net positions

A breach of last week's high at $32.750 is needed to clear the way for renewed tests above $33. A close above $33 has proven elusive so far this year, leaving the cycle high from October at $34.853 well protected for the time being.


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.