Gold rebounds to approach $3,100, silver back above $31 on tariff pause

OUTSIDE MARKET DEVELOPMENTS: Stocks remain volatile, swinging from the red to solid gains after President Trump announced a 90-day tariff pause for non-retaliating countries on TruthSocial.

China remains squarely in Trump's sights with another retaliatory escalation in response to Beijing's latest retaliation.

Countries like Japan and South Korea are reportedly progressing toward new trade deals. However, the overall trade situation remains fluid and fraught with uncertainty.

Earlier, Trump announced that his next target for tariffs is the pharmaceutical industry to encourage them to relocate manufacturing to America. “They will leave other places because they have to sell—most of their product is sold here, and they’re going to be opening up their plants all over the place in our country,” Trump said during a speech on Tuesday.

[The rest of this segment was written before President Trump's most recent announcement]

Wall Street has noticed that the normal inverse relationship between stocks and Treasuries may be breaking down. When stocks sell off, investors typically rotate to bonds as a haven, pushing yields lower and stoking investment.

The market will be closely watching today's $39 bln 10-year auction with particular interest in gauging foreign demand. There is also a $22 bln 30-year auction tomorrow.

Mounting trade angst is likely inversely impacting foreign demand for our bonds. There have been reports of foreign selling over the past week, suggesting this week's auctions may not be well-received.

Tensions are arguably highest with China, the second-largest holder of U.S. Treasuries ($760.8 billion as of January). Japan and the UK are number one and two.

With interest rates unnaturally rising in tandem with growth risks, recession becomes increasingly likely. JPM CEO Jamie Dimon believes ongoing trade turmoil does indeed make recession a likely outcome.

“Take a deep breath, negotiate some trade deals. That’s the best thing they can do,” said Dimon on CNBC. “But I think it could get worse if we don’t make some progress here,” he added.

Treasury Secretary Besset dismissed the sell-off in bonds as "normal deleveraging," but the market is not convinced. Haven seekers also seem to be eschewing the dollar in favor of the yen and Swiss franc.

The dollar index fell to a new low for the week in earlier trade before rebounding into the range. A six-month low was set last week at 101.27.

That leaves few safe haven options amidst the past week of market turmoil. See the gold comment below...

MBA Mortgage Applications surged 20% in the 04-Apr week, versus a decline of 1.6% in the previous weeks. Both purchases and refis jumped as the 30-year mortgage rate slipped to 6.61% from 6.70%.

Wholesale Sales surged 2.4% in February, well above expectations of +0.8%, versus -0.9% in January (was -1.3%). Inventories rose 0.3% in line with expectations, versus a 0.8% rise in January.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$62.01 (+2.08%)
5-Day Change: -$48.57 (-1.55%)
YTD Range: $2,607.16 - $3,164.72
52-Week Range: $2,281.97 - $3,164.72
Weighted Alpha: +34.68

Gold surged to new highs for the week as the U.S. and China traded retaliatory strikes on the trade front. At one point, the yellow metal was up more than $100 and on the verge of regaining the $3,100 level.



The subsequently announced tariff pause spurred risk appetite and knocked gold off the intraday highs, but the market remains sharply higher on the day. With Treasuries and the dollar suddenly seen as less desirable havens, the appeal of the yellow metal has intensified.

The tariff pause allows for a deleveraging reprieve, removing a significant downside risk. However, Trump giveth and Trump taketh away. Who knows what this afternoon and tomorrow might bring?

With more than 61.8% of the recent decline now retraced, and gold back above the 20-day MA, a measure of confidence has been returned to the underlying uptrend. Under normal circumstances, I'd believe the corrective low is in place at $2,961.83. These are not normal times, so ongoing caution is advised.

Today's high at $3,092.59 now protects the next tier of Fibonacci resistance at $3,121.30 (78.6% retrace of the decline from $3,164.72 to $2,961.83). A retest of last week's record high at $3,164.72 is looking increasingly likely.

Watch the 20-day MA at $3,043.54 on a close basis. This level is bolstered by an intraday chart point at $3,040.05. A move back below $3,000 now would dishearten the bull camp.

Silver is setting new highs for the week, buoyed by risk-on sentiment stemming from the tariff pause. The white metal had already been tracking higher today, helped by strong safe-haven gains in gold.



Yesterday, I wrote that it was hard to look at the silver chart and not be bearish. Adding, "Sometimes that's the time to buy." With silver up more than 3% today, I wish I had!

I don't think this market is out of the woods yet, by any stretch. However, I am curious to see where we close relative to the 200-day moving average ($30.903) today. The 100-day MA is at $31.435, penetration of which would at least give the spec sellers some pause.

Silver swung from a five-month high of $34.543 to an eight-month low of $28.565 in just three weeks. A plunge of nearly $6 (17.3%) is enough to rattle the most ardent of silver bugs. I worry investors won't be back anytime soon.

First support is marked by a minor intraday chart level at $30.201. A retreat below $30 from here would keep focus squarely on the downside.

If you are a dealer, a refiner, or any business with physical precious metals in the vault, volatility like we've experienced recently can be very stressful. At Zaner Metals, we provide risk management solutions that help your business thrive even in the most uncertain of times. Call or email for details.


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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