Gold and silver slide on lingering peace deal skepticism, firmer yields, and dollar

OUTSIDE MARKET DEVELOPMENTS: Markets are tilted toward risk-off amid skepticism surrounding the Middle East peace process. Iranian officials have repeatedly stressed that a deal is "not imminent," highlighting deep distrust and unresolved key issues (nuclear program, sanctions, verification). Iran has also accused the U.S. of ceasefire violations in the wake of this week's U.S."self-defense strikes" against missile launch sites and Iranian boats that were reportedly attempting to lay mines near the Strait of Hormuz.

That being said, President Trump said today that negotiations with Iran continue and that the Iranians are “starting to give us the things that they have to give us,” while cautioning that he is not satisfied with the current state of talks and will not rush into a deal. He reiterated that it must be a “great deal” or there will be no deal at all, warned that the U.S. is prepared to “finish the job” militarily if needed.

While oil prices have moderated somewhat this week, persistently high energy prices continue to underpin short- and medium-term consumer inflation expectations, reducing hopes for near-term Fed rate cuts. This is keeping pressure on bonds and supporting a stronger dollar.

The Fed's favored gauge of inflation comes out on Thursday. Median expectations for April PCE inflation are +0.5% m/m and 3.8% y/y, versus +0.7% and 3.5% in March.

A hot inflation print tomorrow could boost Fed rate hike expectations. Currently, Fed funds futures are implying scope for 14 bps of tightening by year-end. Given that these are April numbers, seeing any evidence of cooling is unlikely.

Despite the risks for tighter monetary policy, stocks remain underpinned by exceptionally strong corporate earnings and persistent AI/tech optimism. This growth narrative is outweighing higher-for-longer interest rate concerns for many investors, as the market focuses on future earnings potential rather than near-term policy.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$61.48 (-1.36%)
5-Day Change: -$93.07 (-2.05%)
YTD Range: $4,100.32 - $5,595.02
52-Week Range: $3,251.28 - $5,595.02
Weighted Alpha: +27.31

Gold has fallen to eight-week lows as Middle East peace negotiations drag on and persistent inflation worries keep yields and the dollar supported. This is keeping the yellow metal under pressure for a third straight week.



We may also be seeing early signs of seasonal selling. Gold has historically shown seasonal weakness, or "summer doldrums," from June to August. June is often the weakest month on average, with studies showing returns around -0.5% to -1.5%. However, the seasonal pattern can be overridden by major macro or geopolitical events. In fact, I expect markets to continue rotating primarily on U.S./Iran diplomatic development.

Support marked by the 200-day moving average and an important Fibonacci level at $4,406.30/$4,401.28 has successfully contained the downside thus far, providing some hope for the longer-term bull camp. However, it would take a climb back above $4,600 to set a more favorable tone within the well-defined range.

On the other hand, a convincing move below $4,400 would shift focus to the next significant Fibonacci level at $4,288.92. Additional intervening supports are noted at $4,352.04 (26-Mar low) and $4,308.83 (24-Mar low).

Wednesday's PCE data, particularly the inflation print, could set the short-term tone. If the sticky inflation theme is reinforced, Treasury yields and the dollar would likely firm, triggering fresh selling in gold. Conversely, softer-than-expected inflation readings could support a modest rebound in gold.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$2.668 (-3.47%)
5-Day Change: -$1.272 (-1.68%)
YTD Range: $61.036 - $121.630
52-Week Range: $32.763 - $121.630
Weighted Alpha: +101.13

Silver has slipped to new lows for the week, weighed by weakness in gold and a firm dollar. Tech/AI optimism continues to provide some underpinning.



Last week's low at $73.153 has contained the downside thus far, keeping more important chart support at $70.893 (29-Apr low) at bay. The 200-day MA at $66.901 remains well protected.

While Middle East headlines will continue to drive markets, tomorrow’s PCE inflation data could trigger new multi-week highs or lows, depending on its implications for Fed policy. Kevin Warsh’s recent ascension to Fed Chair has introduced an additional level of uncertainty, as the trade grapples with his more hawkish history on inflation, potential balance sheet reduction, and expectations for a less interventionist approach to monetary policy.

A short-term close back above the 20-day MA would set a more favorable technical tone within the lower half of this year's broad range. Such a move would bode well for renewed probes above $80 with potential to the 100-day MA at $81.283.


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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