Precious metals are experiencing challenges, with gold unable to reach new highs following recent tariffs, while silver has declined significantly. On a given day, silver dropped another 2%, following a 6% decrease the previous day.
The tariffs exempted “bullion,” which has influenced adjustments in silver and other industrial metals. Currently, the 100-day and 200-day moving averages are critical levels to monitor for future price movements.
Futures Market Arbitrage
In the futures market, there was a surge in US premiums for precious metals due to tariff risks, creating a widening gap between Comex prices and spot gold. The differential, known as “exchange for physical,” provided an arbitrage opportunity that led to increased physical shipments to the US, which has since diminished following the tariff exclusion.
The differential decreased from $1.00 to $0.24 after the tariff announcement. Although the decline in EFP is notable, it is not entirely negative for prices overall, with global recession risks affecting silver and industrial metals.
Gold, while also impacted, retains its role as a hedge during uncertain times and a preferred reserve asset among central banks. As central banks consider further rate cuts amid recession concerns, there remain strong expectations for gold to recover more robustly than silver.
What we’re seeing here is a retreat in momentum for both gold and silver, although the reasons behind their respective moves carry different implications. The initial framing showed that gold, despite broader uncertainty and supportive macro factors, has not been able to break higher. At the same time, silver has undergone a sharper selloff, driven not just by general risk-off sentiment, but also by its dual nature—part precious metal, part industrial input.
Engineer’s omission of bullion from the tariffs temporarily expanded the arbitrage window between US futures markets and spot pricing. This created a reactionary pull toward physical delivery into US markets. It was a near mechanical function of pricing differentials, and once the policy detail was clarified, that trade dissolved almost as quickly as it emerged.
Impact Of Global Economic Data
That compression in the exchange for physical (EFP) spread is not inherently bearish. It merely signals that the price incentive to move metal across borders has faded. What matters more for us now is where the broader demand sits, especially under the shadow of slowing economies and liquidity shifts.
With silver losing around 8% across two sessions, there’s a need to judge how much of that movement was technical in nature versus rooted in demand shifts related to slower global output. Industrial usage matters more for silver than gold, and this makes silver more reactive when economic data weakens. We’ve also noticed rising volatility in base metals, which implies traders are re-pricing growth expectations faster than rate policy can adjust.
From an observational standpoint, both the 100-day and 200-day moving averages now act as immediate resistance levels. These averages offer a quick way to spot whether any rally attempts carry genuine follow-through or just reflect short covering. For traders who use systematic entries and exits, these levels become directional filters—the close above offering a possible entry signal, while failure leaves the market exposed to further downside.
Powell’s policy guidance from last week leaned dovish, especially considering the lack of resilience in key global survey data. While real yields remain elevated, there’s been repeated buying interest in gold near major support zones. That speaks to how sentiment is shifting. Gold may not be rocketing higher, but it isn’t collapsing either—buyers continue to emerge when prices retreat to longer-term trend levels.
Yellen’s Department opted to exclude precisely the kind of asset that tends to hold up under restrictive regimes. That tells us there’s still institutional understanding of bullion’s status, and that narrative is being priced into forward gold contracts, if only slowly. Meanwhile, positioning data has shown light net longs, suggesting plenty of room for rebalancing if the macro backdrop deteriorates further.
Manufacturing data from Germany and the US later this week, as well as Chinese fixed-asset investment figures, will steer the next round of positioning. Silver’s reaction will be the faster gauge—it tends to anticipate macro turns more clearly, albeit with higher intraday turbulence.
For those watching intraday flows or placing leveraged spread structures, it’s worth noting how the skew in options has begun to favour downside protection, especially in silver. The implied volatility curve has steepened again, most notably in front-end expiries.
Furthermore, ETF flows have been showing light, but consistent, outflows in silver. This tells us that retail and institutional holders are steadily lightening their risk. It is not panic-driven, but rather a managed repositioning amid margins being tested.
Those running curve trades in gold futures will notice flattening across the second and third quarter contracts, pointing to lower expectations for carry. In contrast, backwardation in select silver contracts has widened slightly—this points to demand pressures on deliverables, or at least supply chain planning ahead of summer.
The tone from Lagarde and the ECB continues to be facially concerned about inflation but operationally preparing the ground for reduced policy rates. This shift will create room for gold to regain support, not through headline reaction alone, but because of what it means for real returns, FX risk, and monetary hedging across institutional portfolios.
Keep watch on forward-looking inflation swaps and their correlation to real gold pricing. The tighter that link becomes, the clearer the path for momentum re-entry strategies. That doesn’t mean loading up—timing matters. But it creates the sort of conditions that bring discretionary funds back into metals after this unwind.
