Gold surges on haven appeal as trade and geopolitical risks escalate

OUTSIDE MARKET DEVELOPMENTS: On Sunday, Ukraine staged surprise drone attacks on airfields within Russia that destroyed dozens of military aircraft on the ground. This attack comes a week after Russia conducted some of the largest drone and missile strikes of the war against Ukraine.

The war in Ukraine appears to be escalating even as U.S.-sponsored peace talks in Istanbul continue. Heightened geopolitical tensions are contributing to risk-off sentiment.

The market's patience continues to be tested on trade. "You're going to see over the next couple of weeks, really, first class deals for the American worker," said Commerce Secretary Howard Lutnick.

The trade is skeptical. President Trump announced that tariffs on steel and aluminum will double on Wednesday. The 90-day pause on broader tariffs is set to expire early next month, despite ongoing legal challenges to the President's authority to impose those tariffs.

Talks with China have reportedly stalled amid accusations from both sides that the terms of the preliminary agreement are being violated. The White House indicated that Trump and Xi may hold direct talks this week.

The uptick in trade tensions and ongoing fiscal worries have weighed on the dollar. The dollar index has now retraced more than 78.6% of the recent corrective gains, returning considerable credence to this year's downtrend.

S&P Manufacturing PMI was revised down to 52.0 for May, versus a flash reading of 52.3 and 50.2 in April. It was the fifth consecutive print above 50, indicating ongoing expansion.

Manufacturing ISM fell 0.2 points to 48.5 in May, below expectations of 49.3, versus 48.7 in April. Prices edged lower to 69.4 from 69.8 in April.

Construction Spending fell -0.4% in April, below expectations of +0.3%, versus a revised -0.8% in March (was -0.5%).


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$58.10 (+1.77%)
5-Day Change: +$13.72 (+0.41%)
YTD Range: $2,607.16 - $3,495.89
52-Week Range: $2,287.64 - $3,495.89
Weighted Alpha: +47.51

Gold surged to fresh four-week highs, boosted by heightened trade and geopolitical risks. Continued weakness in the dollar is providing additional lift.



The breach of resistance at $3,365.41 bodes well for short-term tests back above $3,400. The next tiers of significant resistance are noted at $3,416.97 (78.6% retracement of the corrective decline) and $3,431.63 08-May high). Penetration of the latter would bode well for new all-time highs and a resumption of the dominant uptrend.

A minor intraday chart point at $3,345.45 protects the 20-day moving average, which comes in at $3,296.98 today. Today's Asian low at $3,289.46 protects more important resistances marked by Friday's low at $3,277.18, and Thursday's low at $3,251.28.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CST: +$0.303 (+0.92%)
5-Day Change: -$0.193 (-0.58%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.524 - $34.853
Weighted Alpha: +14.20

Silver jumped to nine-week highs above $34, underpinned by strength in gold and a weak dollar. While today's gains bring key highs at $34.543 and $34.853 within striking distance, ongoing trade tensions continue to pose headwinds.



It would take new 12-year highs above $34.853 to reestablish the uptrend. Such a move would shift focus to Fibonacci/chart resistance at $35.217/348 initially.

The early U.S. low at $33.224 marks first support. Below that, today's intraday low at $32.978 is bolstered by the 20-day moving average. More formidable support is noted at $32.763/725, where last week's low corresponds closely with the 50-day MA.


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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