Gold backs off from another new all-time high

OUTSIDE MARKET DEVELOPMENTS: Markets were somewhat relieved by Friday's announcement that smartphones, computers, and other electronics imported from China are excluded from reciprocal tariffs. President Trump subsequently clarified via TruthSocial, "There was no Tariff exception announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff “bucket.”"

Additionally, China stoked trade war worries by announcing it would halt the export of rare earth minerals to the U.S. China controls about 90% of the global production of these critical elements. 

While uncertainty remains high, risk appetite was generally improved to begin this holiday-shortened week. Whether that optimism can be sustained remains to be seen.

National Economic Council Director Kevin Hassett said this morning that more than 10 countries have made "amazing" trade deal offers that are being considered. Hassett also believes there is no chance of a recession this year.

High-level discussions over the weekend between the U.S. and Ian about its nuclear program were described as  "constructive." With a second round of talks slated for April 19, geoplitical risks have been dialed back marginally.

Aside from FedSpeak, today's U.S. economic calendar is empty. Except for Asia, global markets will be closed on Good Friday. Europe and the UK will be closed on Easter Monday as well.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$23.63 (-0.73%)
5-Day Change: +$228.36 (+7.66%)
YTD Range: $2,607.16 - $3,243.89
52-Week Range: $2,281.97 - $3,243.89
Weighted Alpha: +39.72

Gold set a new all-time high of $3,243.89 in overseas trade before retreating into the range. Last week, the yellow metal notched a 6.6% gain, its biggest since the COVID crisis five years ago.



I believe today's setback is just profit taking, stemming from improved risk appetite, and the short-term overbought condition that developed into Friday's close. The trade will be looking for opportunities to buy on this setback.

Ongoing trade and geopolitical uncertainty, along with the absence of a strong alternative in the safe-haven space, should continue to drive demand. Softer yields and persistent dollar weakness provide additional underpinnings.

Global ETFs saw net inflows of 52.1 tonnes last week. It was the eleventh straight weekly inflow, and the third largest since July 2020.  North Americans were the biggest buyers, but Asian investors accounted for 39% of last week's inflows, enticed by the drop in price at the beginning of the week and a weaker dollar.

Net speculative long positions dropped 37.7k contracts to an 11-month low of 200.7k in the 11-April week according to the latest COT report. It was the second straight weekly decline in spec long positioning as leveraged traders were probably rattled by last week's price volatility.

CFTC Gold speculative net positions

Gold traded briefly below $3,200, but Friday's low at $3,174.99 does not appear to be in immediate jeopardy. Secondary support is marked by the old record high from 03-Apr at $3,264.72. 

The high from early U.S. trading at $3,226.20 now protects the record high from Asian trading at $3,243.89. Penetration of the latter would keep gold on track for a push to the next Fibonacci objective at $3,290.11.

The $3,300 level remains a valid target. Each new high also bolsters confidence in the longer-term target of $3,500.

UBS hiked its 12-month gold forecast to $3,500 on Friday, citing expectations for "additional demand from central banks, institutions and investors following current events.” It was the bank's second upward revision this year.

Silver continues to trade in the upper half of the broad $34.543/$28.565 range for the year that was established during the preceding three volatile weeks. Some optimism on the trade front, strength in gold, and a weak dollar are providing support.



While more than 61.8% of the decline from the late-March high has already been retraced, the 50- and 20-day moving averages are converging just above the overseas high and conspiring to limit the upside. Those MAs come in at $32.508 and $32.660 today.

The COT report for last week revealed a 10.8k decline in net speculative long positions from 57.3k to a 10-week low of 46.5k contracts. It was the second consecutive weekly decline.

CFTC Silver speculative net positions

Today's low from early U.S. trading at $31.895 fortifies the London low at $31.833. More important support is marked by the midpoint of the range and the 100-day MA at $31.554/$31.465 


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.