Gold and silver rebound on de-escalation optimism, weaker dollar

Outside Market Developments: President Trump posted that Project Freedom in the Strait of Hormuz will be paused for a brief period to see if a final agreement to end the war can be achieved. "Great Progress has been made toward a Complete and Final Agreement," wrote Trump.

The post revived hopes that an end to the war may be near. This optimism is in sharp contrast to events earlier in the week when the fragile ceasefire seemed on the verge of collapse as both sides were shooting at each other.

Oil prices eased, moderating inflation risks. While Fed funds futures reflect a modestly more dovish tilt, expectations are still that the central bank is on hold for the remainder of the year. Nonetheless, the dollar index eked out a 10-week low.



Trump followed up with a fresh threat to resume the bombing of Iran "at a much higher level and intensity," if Tehran doesn't make a deal. This signals that the temporary de-escalation is conditional and that the U.S. is prepared to escalate significantly if talks fail.

Today's ADP report showed that U.S. private employers added 109k jobs in April, above expectations of +99k, versus a revised 61k in March. The report suggests continued labor market resilience and generates some optimism heading into Friday’s nonfarm payrolls report, where consensus is +60k jobs.

Hopes for peace, lower energy prices, the ADP beat, and solid tech/AI earnings are all contributing to risk-on sentiment.
Markets will remain firmly in the grip of Middle East headlines.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$160.78 (+3.53%)
5-Day Change: +$145.29 (+3.20%)
YTD Range: $4,100.32 - $5,595.02
52-Week Range: $3,127.12 - $5,595.02
Weighted Alpha: +37.39

Gold jumped to new highs for the week on fresh optimism about progress toward a U.S.-Iran peace deal. Oil prices fell, relieving some inflationary pressure, and the dollar retreated.



The probe above the 20-day moving average is encouraging, but last week’s high at $4,729.72 remains intact, as early signs of de-escalation were quickly followed by threats of renewed bombing. Middle East headlines will remain the dominant driver of market direction.

A close above the 20-day and a breach of $4,729.72 would bode well for an upside extension to challenge the $4,776.75/$4.790.35 zone, where the 100- and 50-day MAs are converging. Above that, the mid-April high at $4,888.18 would be back in play.

On the downside, intraday support at $4,661.89 is bolstered by former resistance at $4,659.44. A move back below this area would suggest potential back below $4,600, leaving Monday's low at $4,503.02 vulnerable to a retest.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$4.791 (+6.58%)
5-Day Change: +$5.832 (+8.18%)
YTD Range: $61.036 - $121.630
52-Week Range: $31.701 - $121.630
Weighted Alpha: +117.50

Silver has surged more than 6% intraday, buoyed by optimism over Middle East de-escalation, a weaker dollar, and better-than-expected April jobs growth. Strong earnings from tech/AI companies provide additional support for the white metal, reinforcing the narrative of ongoing robust AI infrastructure spending.



While silver remains entrenched in the lower half of the broad range established earlier in the year, today's tests above the 20- and 50-day moving averages offer encouragement to the bull camp. A close above those key indicators would bode well for a short-term push back above $80 to challenge the rising 100-day MA at $80.372. Above the latter, focus would return to the 17-Apr high at $83.046.

The 20-day MA at $76.098 marks first support, which protects today's early U.S. low at $75.845. If silver can't hold above the latter, the lows for the week at $72.658/264 would be back in play, with potential for a challenge of the $70 zone.


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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