Gold falls to new lows for the week as stock plunge triggers more deleveraging 

OUTSIDE MARKET DEVELOPMENTS: Stock market losses are mounting amid increased concerns that a global trade war is underway. Shares had their worst day since the pandemic on Thursday and are under heavy pressure again.

The DJIA is down more than 1,500 points today. The S&P and NASDAQ are off more than 4%, with the latter poised to close in bear market territory.

China announced it will impose 34% tariffs on U.S. imports, mirroring the levies President Trump imposed this week. Canadian PM Carney said he would match Trump’s 25% auto tariffs.

European Commission President Ursula von der Leyen said the EU is preparing to "take firm countermeasures." French President Macron has suggested freezing investment in America. However, Bloomberg reports that negotiations between the EU and the U.S. to lower tariffs are underway.

Despite claims by his aides to the contrary, President Trump appears to be open to negotiations. "Tariffs give us great powers to negotiate," Trump said.

Trump posted on TruthSocial that he had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, "who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S." If that happens, presumably the U.S. would remove tariffs on Vietnam.

The President also took a swipe at the Fed Chair via TruthSocial for always being late. "This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates," wrote Trump.

Powell warned that the economic effects of tariffs are likely to include "higher inflation and slower growth” at a conference for business journalists. “While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” he said.

Do to the recent turmoil, the market is increasingly leaning toward a June rate cut. Fed funds futures are now pricing in 105 bps in cuts by year-end, implying four 25 bps cuts in H2.

Stronger-than-expected job gains in March did little to brighten the mood on Wall Street. The jobless rate ticked up to 4.2%.

Nonfarm Payrolls climbed 228k in March, above expectations of 110k, versus a negative revised 117k in February (was 151k). The unemployment rate edged up to 4.2% from 4.1% in February. Hourly earnings were in line with expectations at +0.3%. The average workweek ticked up to 34.2 hours.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$3.29 (-0.11%)
5-Day Change: -$1.77 (-0.06%)
YTD Range: $2,607.16 - $3,164.72
52-Week Range: $2,270.21 - $3,164.72
Weighted Alpha: +35.74

Gold fell to new lows for the week as plunging equities revived deleveraging pressures. The yellow metal is lower for a second straight session and is poised for its first lower weekly close in five, but last week's low doesn't seem to be in immediate jeopardy.



The 20-day moving average at $3,028.49 was slightly penetrated, but Fibonacci support at $3,017.62 (23.6% retracement of the rally from $2,541.42 to $3,164.72) has contained the downside thus far.

Key support is well defined at $3,003.62/$3,000.00. If this level gives way, risk would be to the 50-day MA at $2,938.01. This level corresponds closely with the 38.2% retracement level of the aforementioned rally at $2,926.62.

The halfway back point of this week's decline is at $3,092.84 and must be regained to return some confidence to the dominant uptrend. A breach of today's overseas high at $3,130.62 would clear the way for a run at the record high set on Thursday at $3,164.72.

Any indication that stocks have found a bottom would help the bullish cause for gold. At that point, deleveraging pressures would ebb, and haven flows into the yellow metal would resume.

Silver extended to the downside to trade below $30 for the first time since late January, amid ongoing tariff turmoil, rising concerns about a trade war, and global growth risks. The white metal is poised for its biggest weekly percentage decline since the 21-Sep'20 week.



That's a gruesome-looking chart if you're a bull. Gains stalled shy of last October's high, and now more than 78.6% of this year's rally has been retraced. All the key moving averages have been violated.

Silver is a small, thinly traded market known for its volatility, but this week's action is rather extraordinary. Investors are going to be gun-shy for some time to come.

The small double bottom from December at $28.802/783 is the next significant support. If this level also gives way, focus would shift to the $28.00 zone and the September lows at $27.739/732.

I think silver needs to rebound above $32 to revive interest in the upside. Look for short-term conditions to remain volatile as markets come to terms with the new trade regime.

If you have physical silver in the vault, I'd be pleased to talk to you about our hedging services. The horse is out of the barn on this one, but be assured, this is not the last double-digit percentage decline we'll see in silver. Protect your margins with ZMhedge.


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.