Gold pressured $3,500 before retreating below $3,400

OUTSIDE MARKET DEVELOPMENTS: Citing heightened trade tensions, the IMF slashed its 2025 U.S. growth forecast by nearly a full percent to 1.8%, versus 2.7% in January.  The risk for a U.S. recession was raised to 40% from 25% in October.

“The common denominator ... is that tariffs are a negative supply shock for the economy imposing them,” said IMF chief economist, Pierre-Olivier Gourinchas. 

The global growth forecast was cut to 2.8% from 3.3% previously. “The April 2 Rose Garden announcement forced us to jettison our projections — nearly finalized at that point — and compress a production cycle that usually takes more than two months into less than 10 days,” wrote Gourinchas.

The IMF also raised inflation expectations for advanced economies to 2.5% from 2.1% in January. The  organization thinks that the reaction of central banks to inflationary pressures will be dependent “on whether the tariffs are perceived to be temporary or permanent.”

Some U.S. trading partners seem to be more worried about disinflation. "[T]he tariffs actually represent more of a disinflationary risk than an inflationary risk," said BoE MPC member Megan Greene.

Greene believes UK consumers could pivot to cheap Asian exports. She also cited a weaker dollar and softening demand as potential sources of downward pressure on prices.

Despite IMF concerns about growth and inflation, risk appetite rebounded after U.S. Treasury Secretary Bessent acknowledged that the trade war between the U.S. and China was unsustainable. He reportedly said he thinks the situation will de-escalate, prompting a strong rally in U.S. shares.

Richmond Fed Index fell 9 points to a five-month low of -13 in April, below expectations of -6, versus -4 in March. Prices paid surged 1.62 points to 5.37, and prices received rose a more modest 0.31 points to 2.65. "Firms expected heightened growth in prices paid and prices received over the next 12 months," according to the survey results.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$29.74 (+0.87%)
5-Day Change: +$206.57 (+6.40%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,281.97 - $3,495.89
Weighted Alpha: +55.00

Gold extended to the upside in overseas trading, setting yet another round of new all-time highs amid ongoing tariff worries and dollar weakness. Some sources show trades just above $3,500, but my chart shows the latest record high as $3,495.89. Time and sales on the ZMhedge platform don't show any fills with a 3500 handle.



One thing is certain: My $3493.00 Fibonacci objective (261.8% retracement of the last meaningful correction) was satisfied before profit taking surfaced and the yellow metal retreated into the range.

Intraday losses accelerated on an indication from Treasury Secretary Bessent that de-escalating the trade war with China was desirable. Gold fell to new intraday lows below $3,400, leaving a range for the day greater than $100.

De-escalation with China would be a good move; finding enough common ground to strike a trade deal is no small task. It's likely to take some time. Global uncertainty will remain elevated, suggesting the retreat is corrective.

The low from earlier U.S. trading at $3,380.50 now protects a minor chart point from yesterday at $3,369.43. More substantial supports are marked by last Thursday's high at $3,354.76, and yesterday's low at $3,315.13.


Having the world's largest consumer market means the U.S. has the stronger hand. The last thing China wants is to start closing factories and laying off workers, as it creates a risk for civil unrest.

On the upside, the midpoint of today's range is at $3,438.20. A confirmed penetration of $3,500 would shift focus to $3,539.97 initially, but the potential would be to $3,600.

Global ETF inflows totalled 33.4 tonnes last week, with Asian investors accounting for nearly half of that. It was the twelfth straight weekly net inflow.

The latest COT report shows net speculative long positions edged up 1.5k contracts to 202.5k in the week ended 18-Apr, versus 200.7k in the previous week. However, spec long positioning remains well below the highs from earlier in the year.

  

Silver remained relatively subdued during gold's earlier run-up as the IMF report stoked global growth worries. The white metal ticked back above $33, but once again, gains could not be sustained.



Bessent's comments have provided some hope that the U.S. and China might start moving toward a trade deal. That lifted silver off the intraday low.

A convincing breach of last week's high at $33.050 is needed to clear the way for a test of the next Fibonacci objective at $33.264. Penetration of the latter would bode well for retests of the late-March high at $34.543, and the more important 22-year high from October at $34.853.

On the downside, I'm still watching the 50- and 20-day MAs on a close basis. The low for the day at $32.370 now protects secondary support at $32.134/125. Below the latter, $32.000 and $31.833 would be in play.

In light of recent volatility, it's not surprising that net speculative long positions declined for a third straight week from 46.5k contracts to 43.9k.

CFTC Silver speculative net positions

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.