- Gold, silver tracking stocks, yet both trade heavy
- Tech earnings and Gulf headlines may drive sentiment
- Powell future may matter more than Fed decision
- Pullback in both metals stalls at known fib retracements
Risk appetite driving precious metals
Gold and silver may take their directional cues off risk appetite this week, with sentiment surrounding a packed US earnings calendar potentially as important in the near term as the Fed or developments in the Gulf.
Recent correlations help make that case. Gold’s five-day correlation with S&P 500 futures sits at 0.90, while silver’s is even stronger at 0.93, holding at 0.77 over 20 days. Both metals have also moved inversely to VIX futures and the MOVE Index, suggesting rising volatility in equity and bond markets has recently been a drag rather than a source of support.
Source: TradingView
That points to a backdrop where calmer conditions and bullish price action, especially around US tech, have been benefitting precious metals. That theory faces a major test on Wednesday as earnings from Microsoft, Alphabet, Meta and Amazon collide alongside the Federal Reserve FOMC decision and expected Senate Banking Committee vote on Kevin Warsh’s nomination as Fed chair. Few sessions deliver so many catalysts capable of meaningfully moving yields, the dollar, and broader sentiment at once.
Energy markets remain highly relevant too, with Brent and WTI still influential on the US rates outlook and FX valuations through inflation expectations, terms of trade and energy security channels.
Oil’s influence can be seen in the recent crude correlations. Gold’s relationship with Brent sits at -0.45 over five days and -0.47 over 20 days, while silver shows -0.36 and -0.56. Rather than suggesting Gulf developments are the primary driver of precious metals, it points to a more complex transmission mechanism where moves in crude feed through to rates, the dollar and broader sentiment.
The assessment is that gold and silver are being pulled by several powerful themes at once, with tech earnings optimism, US rates, the dollar and headline-driven energy fluctations competing for control.
Powell future eclipses rates call
With little expected from the Fed in April, and only around 10 basis points of easing priced for the remainder of the year, the hurdle for a meaningful hawkish or dovish surprise looks high given the sheer degree of uncertainty surrounding the outlook. Unless that occurs, Powell’s update on whether he stays on as governor may be the more important event for markets. If he leaves altogether, it would create an earlier governor vacancy, potentially allowing Kevin Warsh to assume Powell's opening and Stephen Miran to remain as a permanent member, shifting the FOMC towards a more dovish composition relative to the current market assessment.
If earnings land well with rates and oil vol remaining contained, both metals may find support, with silver likely the cleaner upside expression given its stronger growth linkage. If crude spikes, volatility jumps, or Powell unsettles markets unexpectedly, the tone could sour quickly.
Gold heavy beneath $4850 resistance
Source: TradingView
While gold has been tracking US stock futures closely on a day-to-day basis, that strength is not translating into a similarly bullish chart setup. The price looks a touch heavy on the daily timeframe, having been rejected above $4850 resistance several times in April, retracing lower before attracting bids near the 38.2% Fibonacci retracement of the January-April advance at $4672, shown on the weekly chart to the right. That is the immediate downside level in focus, especially after the bearish engulfing candle that printed last week.
Despite that bearish signal, losses in gold stalled at the 38.2% retracement earlier today before reversing higher, helped by another positive headline relating to the potential reopening of the Strait of Hormuz, offsetting negative developments over the weekend. Beneath that level, support to watch includes $4600, the 23.6% Fibonacci retracement of the January-April move, along with the 200-day moving average at $4252.
Follow-through selling after last week's engulfing candle would strengthen conviction those levels may be revisited, especially given how poorly gold traded above $4850 in recent weeks. That remains the key hurdle bulls need to clear before thinking about higher levels and a run back towards the January record high.
Like the rangy price action, the oscillators on the daily are largely neutral. RSI (14) sits just beneath 50, while MACD has moved towards the signal line in negative territory but has yet to cross. Traders should therefore keep an open mind when assessing both bullish and bearish setups.
Silver probes Fib zone
Source: TradingView
It is a very similar setup for silver, with the modest pullback over the past week stalling at the 23.6% Fibonacci retracement of the January-March bear move at $75.16, raising questions over the strength of the signal from last week's engulfing candle. We have now seen three consecutive downside probes of that level on the daily chart to the left, making it the immediate downside area to watch.
While the price action suggests bulls are lurking beneath the level, the moves over the past week have not been especially convincing as to whether that support can hold. The price has broken beneath the March uptrend, horizontal support at $78, along with the 50 and 100-day moving averages. Those three now pose a decent hurdle for bulls to overcome, with a sustained push back above them improving the prospects for a retest of the April high at $83.
But if the bearish retracement from last week resumes, there is not a lot of visible support other than $72 between where the price now trades and a retest of the August 2025 uptrend, located around $68 today. The oscillators are entirely neutral in their messaging on the daily timeframe, placing the emphasis firmly on price action rather than maintaining any specific directional bias.
