Gold and silver ease intraday after setting four-week highs

Outside Market Developments: Revived hopes for Middle East de-escalation continue to underpin risk appetite. The two-week ceasefire is holding, and expectations are mounting that a second round of peace talks will commence in the days ahead.

U.S. Central Command reports that the naval blockade of Iranian ports is fully in place and actively being enforced. Seaborn trade, primarily oil, accounts for about 90% of the Iranian economy. The blockade will be economically devastating, with the U.S. hoping that it will drive the Iranians to accept its peace terms.

Yesterday's PPI data came in cooler than expected, moderating recent inflation concerns. Headline PPI rose 0.5% in March, below expectations of +1.1%, versus +0.5% in February; 4.0% y/y (highest since Feb'23), up from 3.4% y/y in February. Core PPI was up just 0.1% on expectations of +0.5%, versus +0.3% in February; +3.8% y/y, unchanged from February. 

Given that it's Tax Day, it's worth reiterating the well-known reality that government spending remains far greater than revenue. Through the first six months of FY2026, the U.S. federal government collected $2.48 trillion in revenue and spent $3.65 trillion. While the $1.17 trillion deficit for the period is modestly smaller than the $1.3 trillion deficit from H1 FY2025, it all keeps adding up.

The national debt is growing by $4-5 billion per day and currently stands at about $39 trillion. The $40 trillion threshold will be crossed well before year end, amplifying an already unsustainable trajectory.

Net interest payments are projected to exceed $1 trillion annually this fiscal year (roughly $88 billion per month!). This is now one of the largest single items in the federal budget, rivaling or surpassing defense and Medicare spending.

Massive government borrowing competes with businesses and households for capital, pushing up interest rates across the economy. This reduces private investment, slows productivity growth, and can lead to lower wages and slower long-term economic growth. It also threatens to further undermine confidence in the dollar as the global reserve currency, perpetuating – and perhaps accelerating – the dedollarization trend.

More than 50% of this year's rebound in the dollar index has been retraced, returning credence to the long-term downtrend. A breach of important Fibonacci support at 97.50 would bode well for an eventual retest of the four-year low set in January at 95.55.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$41.39 (-0.85%)
5-Day Change: +$93.61 (+1.98%)
YTD Range: $4,100.32 - $5,595.02
52-Week Range: $3,127.12 - $5,595.02
Weighted Alpha: +44.65

Gold reached a four-week high of $4,871.02 in overseas trading, buoyed by de-escalation optimism, tempered inflation worries, and a weaker dollar. While the yellow metal subsequently eased to trade lower on the day, intraday losses are likely being driven by short-term profit-taking.



While short-term market movements will continue to hinge on Middle East headlines, the U.S. fiscal situation noted above provides long-term support. In addition, central bank gold buying is a major component of the broader de-dollarization trend.

Gold is seen as a neutral, sanction-proof asset that doesn’t carry the same geopolitical or counterparty risk as dollar-denominated assets. The shift to gold accelerated after 2022 when Western sanctions froze Russian reserves, prompting many countries to view dollar holdings as vulnerable.

Central banks are on pace to buy 850 tonnes this year, roughly double pre-2022 levels. This year, gold has overtaken U.S. Treasuries as the largest reserve asset held by central banks in value terms. That is partially attributable to ongoing reserve diversification, but strong price appreciation is a significant contributing factor as well.

As long as gold is trading above the 100-day moving average, the technical bias remains tilted to the upside. With more than half of this year's plunge retraced, a measure of confidence has been returned to the underlying uptrend.

The 50-day MA was approached in earlier trading today, but was left intact as profit-taking pressure emerged. A breach of the 50-day would perpetuate the four-week rally, favoring tests above $5,000 for the first time since the mid-March plunge. Gold back above $5000 would go a long way toward reviving the bull camp's optimism.

On the downside, the 100-dau MA at $4,711.20 is protected by Tuesday's low at $4,740.30. The 20-day MA looks to be rotating and should bolster support marked by Monday's low at $4,645.10 as the week progresses. I'd like to see the 20-day climb back above the 100-day – perhaps as early as next week – to encourage additional technical buying.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.768 (-0.97%)
5-Day Change: +$4.786 (+6.46%)
YTD Range: $61.036 - $121.630
52-Week Range: $31.701 - $121.630
Weighted Alpha: +132.19

Silver set a four-week high above $80 in overseas trade. While the 80-handle could not be sustained, the technical picture continues to improve, albeit slowly.



The white metal is being underpinned by the same factors that are supporting gold. However, silver is garnering additional support from an industrial demand component provided by electrification/AI/data center demand, which is outstripping available supply. The silver market is expected to register its sixth straight annual deficit this year. 

Nearly a third of global silver production is a byproduct of copper mining. Copper supply is facing significant disruptions in both Indonesia, where the giant Grasberg mine has cut output by roughly 30-35% due to a major mudflow incident in September and ongoing operational issues, and in Chile, where labor strikes, declining ore grades, and maintenance delays at key mines have reduced production in early 2026. 

Eleven-week highs in copper indicate expectations for ongoing strong industrial demand, and an acknowledgement of persistent supply constraints. With more than 61.8% of this year's retreat now retraced, focus shifts to $6.3331 initially, with potential back to January's record high at $6.6230. The bullish outlook for copper should continue to provide indirect support for the silver market.

While short-term action will continue to be headline-driven and volatile, further tests above $80 seem likely. The next significant upside objective is the $82.087 Fibonacci level (61.8% of the leg down from $96.393 to $61.036). Above that, the $84.183 level (38.2% of the entire decline off the $121.630 all-time high) would be in play.

Continue to eye the 100-day MA on a close basis. Below that, $76.580 (trendline) and $75.400 (14-Apr low) protect the important $73.100/$72.792 zone, where the 20-day moving average corresponds with Monday's low.  


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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