Month: February 2025

BY Neils Christensen

President Donald Trump’s escalating trade war is taking its toll on risk assets, and gold continues to shine as a safe-haven asset and an alternative global currency.

Not only is gold beating the S&P 500 as Trump levies significant tariffs on Mexico, Canada, and China, but it’s also outperforming Bitcoin, which saw a sharp drop over the weekend.

Bitcoin has been struggling since hitting new all-time highs above $100,000 per token last month. On Sunday, as equity markets were starting a new trading week, the leading cryptocurrency dropped to a low of $91,530 per token. Although Bitcoin has managed to bounce off its overnight lows, it remains in negative territory at $95,135 per token, down 2.6% on the day. Bitcoin is down 13% from its all-time highs seen just two weeks ago.

Meanwhile, gold prices experienced some modest selling pressure overnight as they tested support around $2,800 an ounce. However, prices have recovered ahead of the North American open. As of 8:45 a.m. ET, April gold futures were trading at $2,847.50 an ounce.

Many analysts expect gold prices to remain in a solid uptrend, even as they face increasing volatility due to strong gains in the U.S. dollar. In a note Monday, Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, said that gold should remain well supported as the “everything bubble” starts to deflate. While gold has managed to bounce off its lows, the S&P 500 remains in heavily negative territory, down 1.58% ahead of the open.

“Gold may be gaining momentum vs. the stock market and Bitcoin, with unfavorable macroeconomic implications. Up about 5% as of Jan. 31 since Bitcoin first closed above $100,000 on Dec. 6, the precious metal is beating both the crypto and the S&P 500,” McGlone said in his note.

McGlone added that gold is in a much better position than Bitcoin to attract new safe haven flows as sentiment in equity markets continues to sour.

“It could be a short-term spurt for the old-guard store of value, but four years of gold ETF outflows versus the biggest ETF launch in history for Bitcoin, strong competition from record-setting stocks, and high U.S. interest rates may suggest a pinnacle that the precious metal is sniffing out,” he said.

McGlone noted that Bitcoin could be facing a make-or-break moment as it underperforms gold, which could also have broader implications for global financial markets.

“A top prerequisite for continued appreciation of the highly speculative digital asset that’s been embraced by Trump might depend on the performance of the U.S. stock market. At 36x, the ounces of gold equal to a Bitcoin have stalled near the 2021 high,” he said. “Gold’s roughly 37% gain versus 27% for the S&P 500 year-over-year as of Jan. 31 may suggest that the metal is testing the limits of the great U.S. wealth-creation machine. Runaway U.S. government deficit spending buoys both gold and the stock market, but equities may have reached diminishing returns. Bitcoin/gold may be in a ‘must-go-up-or-else’ situation due to President Donald Trump’s endorsement and its implications for risk assets.”

By Neils Christensen

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By Jim Wyckoff

Gold prices are higher and have hit new record highs in midday U.S. trading Monday. Safe-haven demand is featured in the yellow metal amid keener marketplace uncertainty as the U.S. may soon implement tariffs against its major trading partners. April gold was last up $17.40 at $2,852.10. March silver was up $0.14 at $32.41.

Gold did back down from its daily high at mid-morning on news that U.S. trade tariffs against Mexico, which were set to go into effect Tuesday, have been delayed by one month so the U.S. and Mexico can negotiate more. Canada has vowed retaliation and as of this writing the new U.S. trade tariffs against that nation and against China were set to go into effect Tuesday.
The Canadian dollar overnight sank to its weakest level against the U.S. dollar since 2003.

U.S. stock indexes are lower at midday but up from daily lows on the news of delayed tariffs against Mexico.

The key outside markets today see the U.S. dollar index higher but down from its daily highs. Nymex crude oil futures prices are slightly up after trading solidly higher earlier, and are now trading around $72.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.55%.

Technically, April gold futures bulls have the strong overall near-term technical advantage. Prices are trending up on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,900.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $2,760.20. First resistance is seen at today’s contract high of $2,872.00 and then at $2,885.00. First support is seen at $2,822.10 and then at $2,800.00. Wyckoff’s Market Rating: 9.5.

March silver futures bulls have the overall near-term technical advantage amid a price uptrend in place on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the December high of $33.33. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at last week’s high of $32.92 and then at $33.00. Next support is seen at $32.00 and then at the overnight low of $31.61. Wyckoff’s Market Rating: 6.5.

By Jim Wyckoff

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By Ernest Hoffman

Gold demand in China is showing signs of a strong rebound even as physical flows from the UK to the U.S. continue, while there are indications that solar demand for silver may be peaking, according to precious metals analysts at Heraeus.

In their latest precious metals update, the analysts noted that Chinese wholesalers appear to be anticipating a rise in consumer demand for gold.

“Shanghai Gold Exchange (SGE) withdrawals, a key indicator of wholesale and fabrication demand, typically rise in December and January as fabricators stock up for the Chinese New Year, which fell on 29 January this year,” they noted. “Consumer demand tends to also adhere to similar seasonality. Despite a strong start to 2024, cumulative withdrawals for the full year were among the lowest on record (excluding 2020), totalling 1,450 tonnes. This comes amid ongoing contractions in China’s jewellery industry, reflected in year-on-year revenue declines among major retailers such as Richemont, Chow Tai Fook and Chow Sang Sang. However, given that December 2024 withdrawals were up 23% month-on-month, January withdrawals could still align with the historical average of 190 tonnes (based on SGE data since 2016).”

The analysts said that SGE withdrawals tend to front-run consumer demand. “The uptick in December suggests that although on a lower level than in 2024, consumer demand in China could pick up in Q1 this year,” they wrote. “However, the performance of consumer demand is somewhat contingent on how the gold price performs. So far this year, gold has risen every week, including to a new all-time high in dollar terms last week. This could temper any positive impact from the Chinese New Year gifting cycle.”

Heraeus said the flow of gold from London to the United States also continued last week. “Gold shipments have been swiftly flowing into COMEX inventories this year and are approaching 30,000 koz, the highest since August 2022,” they said. “Since 1 January, gold inventories have grown by nearly 8,000 koz, including 1,720 koz additional ounces last week, as traders and institutions have raced to beat potential tariffs in the US. As London’s vaults see outflows, this has extended waiting times, usually measured in days, to as much as a month.”

Both the Federal Reserve and the European Central Bank aligned with market expectations last week, with the former holding rates steady while the latter delivered a 25 basis point cut, while gold prices had fresh all-time highs late in the week. “However, US futures continue to trade at contango to spot gold and hit an all-time high of $2,853/oz on the March contract,” the analysts noted.

Gold prices continued their strong performance amid the ongoing tariff concerns, with spot gold reaching a new all-time high of $2,830.75 per ounce. Spot gold last traded at $2,818.00 per ounce for a gain of 0.72% on the session.

Turning to silver, Heraeus questioned whether China is capable of sustaining their torrid pace of solar growth.

“Total installed photovoltaic (PV) capacity in China reached 886.66 GW in 2024, marking a 46% year-on-year growth,” they wrote. “This addition of 277 GW exceeded industry forecasts and surpassed China’s own 2024 capacity estimate by 17 GW. However, the growth rate, while notable, fell short of 2023’s record 54% increase, and prior to that, 28% in 2021. This trend suggests that China’s peak PV capacity growth rate may have already occurred.”

The analysts noted that the last two years of growth for solar have coincided with record-low prices for PV modules driven by intense competition. “However, entering 2025, polysilicon producers (GCL and Tongwei) have agreed to limit production, while module makers (Jinko, JA Solar and Canadian Solar) have reached a minimum pricing consensus to restore profitability,” they said. “This could raise solar module prices, increasing project capital expenditure. Forecasts indicate that 232 moz of silver was used (source: The Silver Institute) in the 495 GW of PV applications in 2024 (source: PV magazine). If growth in the rate of installation is the same year-on-year, solar demand for silver could rise by another 39 moz in 2025, reaching a record 270 moz.”

Silver underperformed gold last week, though it rallied along with most precious metals. Silver prices are enjoying a strong showing to start the week, with spot silver last trading at $31.481 per ounce, an increase of 0.50% on the daily chart.

By Ernest Hoffman

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