Gold clears $3,400 as haven-driven march higher continues

OUTSIDE MARKET DEVELOPMENTS: While European and UK markets are closed today for Easter Monday, market sentiment is tilted toward risk-off to start the week. U.S. stocks are under pressure amid ongoing trade uncertainty and intensifying pressure from the White House on the Fed and Chairman Powell.

National Economic Council Director Kevin Hassett acknowledged last week that the Trump administration was indeed studying whether they should – and could – fire Powell. "If I want him out, he’ll be out of there real fast, believe me," said Trump.

The threat to Fed independence adds an additional layer to U.S. policy uncertainty, putting further pressure on the dollar. The dollar index dropped to new three-year lows below 98. More than 61.8% of the COVID-era rally has now been retraced, and the 100-month MA has been violated. From a technical perspective, this monthly chart looks grim.



If President Trump successfully ousts Powell, presumably a more dovish central banker would take his place and start pushing for more rate cuts, adding weight to the greenback. A weaker dollar also makes U.S. goods and services cheaper overseas and could help achieve Trump's goal to rein in trade deficits.

There was mixed news on the geopolitical front over the Easter weekend. The 30-hour ceasefire between Russia and Ukraine ended, even though both sides accused the other of violations. Trump expressed some optimism that a peace deal could get done this week, but there were also signals that the administration's patience is wearing thin.

A second round of nuclear talks between the U.S. and Iran occurred on Saturday. Iran said the talks were positive and a third meeting is scheduled for next weekend.

Nonetheless, the Times of Israel reports that Israel is considering a limited attack on Iranian nuclear sites. Any such attack would likely occur without U.S. support.

Leading Indicators fell 0.7% to 100.5 in March, below expectations of -0.5%, versus a revised -0.2% in February (was -0.3%). It was the fourth straight monthly decline and the lowest reading since October 2016.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$67.65 (+2.03%)
5-Day Change: +$172.07 (+5.34%)
YTD Range: $2,607.16 - $3,424.65
52-Week Range: $2,281.97 - $3,424.65
Weighted Alpha: +46.20

Gold continues to march higher, driven by safe-haven interest and a weaker dollar. The yellow metal extended to trade above $3,400 despite the absence of European and UK traders.



The latest round of gains bodes well for the scenario that calls for a test of the next Fibonacci objective at $3,493.00. Just above that, the $3,500 psychological barrier attracts.

Further out, the $4,000 level is looking increasingly attractive. However, the market is quite overbought at this point and vulnerable to a corrective setback.

A minor intraday chart point at $3,369.43 marks first support and protects Friday's high at $3,354.76. Below the latter, today's Asian low at $3,331.40 offers a more formidable downside barrier.

Silver is trading higher, helped by surging gold and new cycle lows in the dollar. However, tests above $33 continue to meet resistance.



A sustained push above $33 is needed to perpetuate the uptrend and keep the white metal on track for a challenge of the late-March high at $34.543. Above that, the cycle high from October at $34.853 would be in play.

On the downside, today's Asian low at $32.428 reinforces support marked by the 50- and 2-day moving averages. More substantial support is defined by several lows from last week at $32.134/125. Last week's low is at $31.833.

While the technical bias remains bullish, global growth risks and recent volatility warrant a measure of caution. 


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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