Gold and silver are poised for higher weekly closes on the hope for a peace deal

Outside Market Developments: Risk sentiment remains elevated despite the ongoing fragility of the ceasefire that was announced on Wednesday. Each side has accused the other of violations, and perhaps most importantly, shipping traffic through the Strait of Hormuz remains well below normal. Nonetheless, the trade is clinging to hope that scheduled peace talks in Pakistan this weekend will bear fruit.

Consumer inflation accelerated in March, driven largely by the conflict in Iran and the resulting spike in energy prices. The 21.2% surge in gasoline prices drove headline CPI up 0.9% m/m, the largest monthly gain in almost four years. The annualized rate of inflation rose to 3.3% – nearly a two-year high – versus 2.4% in February. Core CPI (ex food and energy) was more moderate, increasing 0.2% m/m and 2.6% y/y, below consensus of +2.7%.

Markets are largely shrugging off the hot inflation reading, focusing instead on the peace talks and the attendant expectation that energy prices will moderate in the weeks ahead. However, today's CPI data, combined with sticky PCE inflation and the downward revision to Q4'25 GDP released earlier this week, reinforces concerns about stagflation risks. This should keep the Fed tilted toward a 'higher-for-longer' policy stance for the time being and help underpin the dollar.

Markets will remain sensitive in the week ahead to headlines out of the Middle East and Islamabad. March PPI, import/export prices, along with scheduled FedSpeak, will provide additional clarity on inflation and the Fed policy outlook.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$8.10 (-0.17%)
5-Day Change: +$101.25 (+2.17%)
YTD Range: $4,100.32 - $5,595.02
52-Week Range: $3,127.12 - $5,595.02
Weighted Alpha: +46.18

Gold is trading little changed on the day, confined to yesterday's range amid uncertainty about the ceasefire and prospects for a peace deal. Nonetheless, the yellow metal appears poised for a second straight higher weekly close.



Midweek gains above $4,800, triggered by the announcement of the two-week ceasefire, could not be sustained as skepticism quickly surfaced. For now, the trade seems inclined to wait and see how peace talks progress this weekend.

Increased tanker traffic through the Strait of Hormuz is needed to perpetuate the retreat in oil prices from the March highs, tempering inflation risks and hawkish Fed bets. That would likely prompt gold to test back above $4,800.

A breach of the 8-Apr high at $4,853.18 would clear the way for a challenge of the 50-day MA at $4,898.95 and the $4,915.17 Fibonacci level. Penetration of the latter would bode well for an upside extension above $5,000. Trades above $5,000 would be encouraging to the longer-term bullish outlook.

On the other hand, if shipping through the Strait remains limited, or a peace deal appears elusive, gold would likely start the week ahead on its back foot. A retreat below $4,700.46/$4,699.22 would leave this week's lows at $4.608.33/$4.601.77 vulnerable to a retest.

Concerns about further central bank gold sales continue to pose a headwind. Such worries would likely abate with a peace deal.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$0.309 (+0.41%)
5-Day Change: +$3.402 (+4.66%)
YTD Range: $61.036 - $121.630
52-Week Range: $31.039 - $121.630
Weighted Alpha: +124.71

Silver is consolidating just below the three-week high set on Wednesday, underpinned by hopes that the ceasefire will hold and a peace deal will be reached. The white metal is on track for a third straight higher weekly close.



Like most markets, the next move in silver hangs on Middle East and peace-talk headlines. Movement toward peace would have the market eagerly anticipating a full reopening of the Strait, energy price relief, and perhaps even a tempering of the Fed's current hawkish tilt.

We've noted further evidence of an investor rotation from AI software companies to hardware and infrastructure shares. That bodes well for heightened industrial demand for silver, providing a tailwind.

Closes above the 20-day moving average this week are encouraging, and a short-term close above the rising 100-day MA would provide an additional technical boost, favoring a move back above $80.

However, at this point, the chart pattern that has developed keeps me cautious. A breach of initial support at $72.905 would favor a return to the $70 zone. Below the latter, the 50% retracement level of the rally at $67.009 would attract.


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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