Gold and silver retreat as Middle East tensions escalate

Outside Market Developments: De-escalation optimism surged late last week after both President Trump and Iran's Foreign Minister announced that the Strait of Hormuz was fully open. While the U.S. naval blockade of Iran remained in place, there were hopes that the combatants were progressing toward at least an extension of the ceasefire that is set to expire tomorrow evening, and perhaps a peace deal.

Those hopes quickly evaporated after Iran subsequently said the Strait would remain closed as long as the blockade continued. Each side is accusing the other of ceasefire violations, and the second round of peace talks in Pakistan is in jeopardy.

President Trump has threatened to initiate attacks on Iranian dual-use infrastructure. He has warned that if Iran does not accept a deal or reopen the Strait, the U.S. will "knock out every single power plant and every single bridge in Iran."

The situation in the Middle East remains highly fluid. Markets will continue to key off the headlines.

The trade is tilted toward risk-off to begin the week. Oil prices are up sharply, reviving concerns about inflation and dimming rate cut hopes. Nonetheless, the dollar remains defensive. Stocks have retreated from last week's highs.

The confirmation hearing for Fed Chair nominee Kevin Warsh is scheduled for Tuesday. Warsh is widely viewed as pragmatic with a hawkish tilt on inflation, though his views have shown some flexibility in recent years. Fed independence is likely to be a major focus of questioning from senators. While Warsh is widely expected to be confirmed and take the helm of the Fed sometime in May.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$35.74 (-0.74%)
5-Day Change: +$77.31 (+1.63%)
YTD Range: $4,100.32 - $5,595.02
52-Week Range: $3,127.12 - $5,595.02
Weighted Alpha: +44.13

Gold retreated to a five-session low in early Asian trading on Monday after Middle East tensions increased over the weekend. However, the downside was limited by lingering hopes for an extension of the ceasefire and another round of peace talks. Dollar weakness provides additional underpinning.



The yellow metal notched a third straight higher weekly close last week and four-week highs. More than 50% of the total decline from the January record high at $5,595.02 has now been retraced, returning a measure of confidence to the underlying uptrend.

A breach of Friday's high at $4,886.14 – which corresponds closely with the 50-day moving average – would bode well for tests of the $4,915.17 Fibonacci level and $5,000. Another important retracement level comes in at $5,024.04.

Investors continue to move back into gold, as evidenced by the latest ETF data. Net inflows to global ETFs last week totalled 21.7 tonnes, led by North American investors (13.9 tonnes). It was the third consecutive weekly inflow.

I have repeatedly noted this year that gold has been trading like a risk asset, ignoring key risk-off events like war and focusing instead on inflation implications and shifts in Fed policy expectations. The latest Heraeus Precious Appraisal is titled, Gold remains a safe haven despite 2026 price action.

"[This year's] moves do not reflect a change to the fundamental case for gold. Some repositioning and deleveraging during times of cross-asset volatility should be expected. The gold price responding to technical indicators is also an expected symptom of shorter-term speculative market participants. This volatility is likely to last for some time, but, in the long run, gold will retain its fundamental attraction as a way to retain purchasing power."

I agree – gold is likely to resume its long-term uptrend once near-term volatility subsides. The move higher would be supported by familiar core fundamentals that have driven the bull market: strong central bank buying, continued ETF inflows, and broad structural demand for gold as a hedge against geopolitical risks, currency debasement, de-dollarization efforts, and persistent U.S. fiscal deficits.

Subdued upside momentum remains a bit of a concern for the bull camp. Continue to watch the 100- and 20-day moving averages on the downside. Penetration of last week's low at at $4,645.10 would be troubling, putting the $4,601.77 (6-Apr) and $4.555.48 (2-Apr) lows in play.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$1.578 (-1.95%)
5-Day Change: +$4.662 (+6.17%)
YTD Range: $61.036 - $121.630
52-Week Range: $31.701 - $121.630
Weighted Alpha: +131.99

Silver is trading lower, but remains confined to Friday's range. While optimism about Middle East de-escalation and a soft dollar are generally supportive, the white metal has struggled above $80.



That being said, the 50- and 100-day moving averages are doing a good job of containing the downside. Volatility remains elevated, and price action will continue to hinge on headlines from the Middle East and Washington.

The fundamental demand picture remains quite bullish, and this year will mark the sixth consecutive year of a structural deficit. However, we continue to see indications that the market is trying to address the imbalance.

According to Heraeus, silver exploration has surged, becoming the "fourth most explored target in 2025," with a 37% increase in economically viable projects. While mined supply grew by 3% last year – led by Central and South America –secondary supply from recycling is also on the rise.

Heraeus also noted Indian demand skyrocketed through the end of its fiscal year on March 31, with imports increasing by 42% year-on-year to over 235 million ounces. This reflects silver's dual role as both a jewelry staple and a critical inflation hedge. While both silver and gold reached record highs this year, the former is increasingly considered a more accessible and cheaper alternative to the latter.

A sustained move above $80 would bode well for a push toward $84.183 (38.2% of the entire decline off the $121.630 all-time high). Beyond the latter, $90 and the halfway back point of this year's drop at $91.333 would be in play.

I'll continue to watch the 50- and 100-day moving averages on a close basis. Secondary support is marked by Friday's low at $77.828, penetration of which would shift focus to $75.400.


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.