3/12/2025

Gold rises to two-week highs as silver pressures the February high

OUTSIDE MARKET DEVELOPMENTS: The U.S. and Ukrainian negotiators have reached agreement on a proposal that includes a temporary ceasefire and plans to enter into immediate negotiations with Moscow to end the war. The ball is now in Russia's court, said U.S. Secretary of State Marco Rubio.

The U.S. has launched sweeping tariffs on steel and aluminum imports. The EU and Canada were quick to retaliate with levies of their own.

President Trump walked back his threat of even higher tariffs on Canada after Ontario temporarily suspended its plan to impose a 25% surcharge on electricity provided to several northern states. Ontario Premier Doug Ford and Commerce Secretary Howard Lutnick have agreed to talks.

U.S. consumer inflation slowed in February, helped by a 1% decline in gasoline prices. Core inflation dropped to a near four-year low of 3.1% y/y.

Attention now turns to tomorrow's PPI release. The market will be looking for confirmation of cooling inflation.

There is a realization that the February inflation data does not reflect tariffs that went into effect in early March. Dovish Fed expectations actually moderated somewhat as the latest trade tensions overshadowed the CPI undershoot.

The Fed is expected to remain on hold when the FOMC meets next week. Fed funds futures continue to suggest the next rate cut will come in June.

The Bank of Canada lowered its policy rate today by 25 bps to 2.75%. "Heightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada," warned the BoC.

The House passed a continuing resolution to fund the government through September. The GOP is going to need some support from democrats to get the measure to the Senate floor.

MBA Mortgage Applications rose 11.2% in the 7-Mar week after a 20.4% gain in the previous week. 30-year mortgage rates edged lower by 4 bps to 6.67% from 6.73% in the previous week.

CPI rose 0.2% in February, below expectations of +0.3%, versus +0.5% in January; +2.8% y/y, versus +3.0% in January. Core +0.2% on expectations of +0.3%, versus +0.4% in January; +3.1% y/y, versus +3.3% in January.  


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$1.44 (-0.05%)
5-Day Change: -$0.69 (-0.02%)
YTD Range: $2,607.16 - $2,955.40
52-Week Range: $2,146.66 - $2,955.40
Weighted Alpha: +34.45

Gold is on the bid at two-week highs. The yellow metal is being buoyed by rising trade tensions and an undershoot on U.S. consumer inflation that keeps the dollar on the defensive.



More than 78.6% of the recent corrective phase has now been retraced, returning focus to the all-time high at $2,955.40. New record highs would bode well for the long-awaited attainment of the $3,000 objective.

The Perth Mint reported a 35% m/m increase in gold coins and minted bar sales in February to 25,103 ounces. However, sales are down 47% from a year ago. "It is heartening to see the increase in sales on January levels given precious metals prices remain at record highs," said Neil Vance, Perth Mint's general manager of minted products.

Former resistance at $2,929.17/26.75 now marks first support and stands in front of the intraday low at $2,910.24. The latter corresponds closely with the 20-day moving average today.

Silver continues to outperform and has moved convincingly above $33 for the first time in three weeks. The long-awaited close above $33 appears to be in the offing.



The white metal has benefitted from rising trade tensions, Germany's planned spending bazooka, and expectations of further Chinese stimulus. Strength in gold and copper has also provided solid underpinnings to the silver markets.

Copper prices surged to nine-month highs on worries that it's the next metal in the Trump administration's crosshairs. Nearly half of U.S. copper needs are satisfied by imports. 

A breach of the $33.340 high from 14-Feb would bode well for a retest of the more than 22-year high at $34.853 (22-Oct'24). An additional intervening barrier is noted at $33.554 (78.6% retracement of the decline from $34.853 to $28.783).

First support is $33.00/$32.954 and will be important on a close basis. The overseas low at $32.728 provides a solid barrier ahead of the 20-day MA at $32.308.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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