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In late November, I made the case for buying gold. At the time, we got data that China’s central bank had resumed gold purchases. We were also dealing with US election uncertainty and — most importantly — the strong seasonal trend in gold.

Gold was trading at $2620 since then and it caught a remarkable bid in the ensuing weeks, climbing to $2953 this week.

Now, there are signs it’s running out of steam. First is that it’s repeatedly failed near $2950. I thought it might be pulled to $3000 but that’s now looking less likely and even if it gets there, the risk-reward isn’t great.

More importantly, the fundamentals are shifting. Here are some looming changes:

1) The Ukraine war is ending

You can consider it over now and one of the (only) predictable things about Trump is that he doesn’t like war. If that’s the case, then a more peaceful world is a drag on gold.

2) Inflation back?

The Fed is losing the impetus to cut rates and a shift in inflationary fortunes could prompt assets everywhere to reset. High or low inflation hasn’t had a great correlation with gold prices but a risk-off retreat on a more-hawkish Fed would hurt.

3) Bitcoin has fallen 20%

Bitcoin is in a real pullback. At time gold and bitcoin compete for dollars and gold is winning at the moment but by and large both of theme compete with the dollar and should move in the same direction.

4) Tariffman has disappointed

A big tailwind for gold after the election was the idea that Trump would put on strong tariffs. He is continuing to talk tough but so far he’s only hit China with 10% tariffs. The market isn’t buying his threats anymore and if tariffs aren’t used, then gold is less attractive.

5) Chinese investors have found something new

I’d argue that much of the gold rally in the past two years was driven by Chinese investors looking for somewhere safe to part money due to the implosion in real estate and dead money in stock markets. Now, Chinese stock markets are hot again and that should see money flow out of gold and into equities, particularly if the National People’s Congress next week delivers stimulus.

6) The fiscal hawks might be back

My 80% baseline is that Congress passes the Trump tax cuts and continues to run huge deficits but there is a chance the fiscal hawks block it and the US tightens up. That would cause some recessionary headwinds but put the US back on the path to fiscal sustainability.

7) The seasonal trade is done

Once again it was a beautiful trade. It’s one of the all-time great seasonal trades and I’ll be back in it next December but it ends at the end of February and that’s that.

There are some risks in the other direction too. Tariffs could come, the US dollar appears to be weakening, China’s recent bounce could be a dead cat.

This article was written by Adam Button at www.forexlive.com.

• Does not think Putin would invade again if there is a peace deal with Ukraine
• We’re paying a disproportionate share for NATO
• We are going to have reciprocal tariffs
• We need a peace deal before talking about a peacekeeping force
• Zelensky is coming Friday morning
• We are having great success in slimming down government
• Asked about sanctions on the UK, Trump said they will have to take a look
• Not seeing progress on drugs coming into the country

It’s tough to take any of this too seriously until there are real deals and real tariffs in place.

This article was written by Adam Button at www.forexlive.com.

The WSJ’s Lingling Wei reports that there haven’t been ‘intensive’ negotiations on how China can avoid further US tariffs after the first 10% increase and there isn’t likely to be more on the second threat.

So far, Beijing hasn’t made an offer to the Trump administration that can show a stepped-up commitment to reducing China’s exports of chemicals used to make fentanyl. That was a reason why no direct conversation had yet taken place between Trump and Xi. Unlike Canadian and Mexican leaders, Xi has shown little interest in focusing solely on a deal about fentanyl, the people said. Rather, he aims to negotiate a broader agreement with Trump that could define the tone of bilateral relations

It’s tough to imagine that any of these negotiations are really about fentanyl given Trump’s longstanding complaints about trade.

Earlier this month, the WSJ reported that Beijing was trying to put together a new ‘phase one’ proposal, similar to the one from Trump’s first term.

“For now, Beijing thinks it can handle the 10% additional tariffs,” the WSJ reports.

This article was written by Adam Button at www.forexlive.com.

Reuters is reporting that:

• OPEC+ is hesitant on going ahead with plans April oil output hike due to uncertainty over sanctions and tariffs.
• Russia, UAE would like to proceed with April oil output hike, other members including Saudi Arabia favor a delay.

Crude oil is trading higher, up $1.52 (+2.22%) at $70.14, after reaching an intraday high of $70.51 and a low of $68.64. The bullish momentum has brought prices closer to a key resistance zone.

Technical Levels to Watch

• The 100-day moving average sits at $71.31—a crucial hurdle for buyers.
• A break and sustained move above $71.31 would strengthen bullish momentum.
• The 200-day moving average at $73.68 serves as the next major resistance level.

If buyers fail to push above the 100-day MA, crude could face renewed selling pressure. However, a breakout above $71.31 and then $73.68 would confirm a shift toward a stronger bullish bias.

This article was written by Greg Michalowski at www.forexlive.com.

Closing changes on the day:

• Stoxx 600 -1.0%
• German DAX -1.2%
• France CAC -0.7%
• UK FTSE 100 +0.2%
• Spain IBEX -0.6%
• Italy’s FTSE MIB -1.6%

The German market is holding in despite the talk of 25% tariffs on Europe from Trump.

This article was written by Adam Button at www.forexlive.com.

• Manufacturing index -5 vs -9 prior
• Composite index -5 vs -5 prior

Comments in the report:

“Couldn’t ship freezables many days in February, due to cold, We have a warehouse full of orders shipping this week.”

“Capital
Equipment cost that are imported are a huge concern for us and the type
of capital equipment we purchase is not produced in the USA for many
years.”

“Markets we serve [machinery manufacturing] are down 30% for quarters 1 and 2 2025 vs quarters 1 and 2 2024.”

“The
second calendar quarter is seasonally the worst. The last half of 2024
was not good, but seeing uptick in early 2025 and optimism for the year.
Foreign dumping is still a problem.”

“We
are in a comprehensive evaluation of all input costs and
labor/production efficiencies. Based on the outcome of this research we
will adjust pricing accordingly.”

“Material Costs continue to rise. Several suppliers increasing price after the beginning of the year.”

“This is a time of uncertainty for manufacturers, very difficult to make business plans.”

“Costs
in specific categories/commodities are going up significantly and
quickly. Big changes since the first of the year already. We will see
continued/accelerated inflation on select goods/categories. We’ll have
to pass it along – question is will consumers pay/impact on demand?”

“We cannot absorb the cost increases. We have to pass those along.”

“We
will scale back rather than take any hit to profit margin. We are
expecting significant issues with payment and credit in next year and
building cash margin to absorb bankruptcies and flailing business.”

This article was written by Adam Button at www.forexlive.com.

• Prior was -5.5%
• Index 70.6 vs 74.2 prior — all time low
• Year over year transactions -5.2% vs -5.0% prior
• Prices up 4.7% y/y

This series started in 2002 and this was the worst reading ever for the index, which is remarkable given it’s gone through a housign crisis and covid.

The NAR said it was unclear if cold weather was the driver in the latest drop but that elevated home pries and higher mortgage rates are straining affordability in any case. The cold weather continued in February but there should be some relief with mortgage rates coming down a bit.

Sales were particularly hard hit in the south, with the index falling 9.2%.

This article was written by Adam Button at www.forexlive.com.

CNBC is helping to clarify that the additional 10% tariff on China today will be on top of the prior 10% tariff that went into place at the start of February. That will bring the total to 20%.

When he announced it this morning, there was some confusion on whether that was the 10% already announced (and implemented).

CNBC also reports that there are some negotiations over the Mexican tariffs ongoing today.

This report is hurting sentiment at the moment and US equities have almost given up all the gains.

This article was written by Adam Button at www.forexlive.com.

Yesterday, Trump said that Mexico and Canada tariffs were delayed until April 2 but then appeared to contradict himself. Now he’s clearing it up with a post on Truth Social that says the Canada/Mexico tariffs are still on while there will be an additional 10% charged on Chinese goods.

The latest:

Drugs are still pouring into our Country from Mexico and Canada at very
high and unacceptable levels. A large percentage of these Drugs, much
of them in the form of Fentanyl, are made in, and supplied by, China.
More than 100,000 people died last year due to the distribution of these
dangerous and highly addictive POISONS. Millions of people have died
over the last two decades. The families of the victims are devastated
and, in many instances, virtually destroyed. We cannot allow this
scourge to continue to harm the USA, and therefore, until it stops, or
is seriously limited, the proposed TARIFFS scheduled to go into effect
on MARCH FOURTH will, indeed, go into effect, as scheduled. China will
likewise be charged an additional 10% Tariff on that date. The April
Second Reciprocal Tariff date will remain in full force and effect.
Thank you for your attention to this matter. GOD BLESS AMERICA!

The US dollar is stronger on this and USD/CAD rose to 1.4425 from 1.4364. S&P 500 futures halved their gains but are still +18 points. The market doesn’t really believe the threat on Canada and Mexico but the one on China is more credible and I think this is the first time he’s talked about an additional 10% tariff on China, though it’s not clear if that ‘additional’ to the ones that have been on since his first term or additional to the one he put on at the start of February.

This article was written by Adam Button at www.forexlive.com.

• Prior week initial jobless claims 219K revised to 220K
• Initial jobless claims 242K vs 221K estimate. Highest since the first week in October (the high at the start of the year was also at 242K)
• 4-week moving average for initial jobless claims 224.0 0K versus 215.5 K last week
• Prior week continuing claims 1.869M revised to 1.867M
• Continuing claims 1.862M vs 1.872M estimate
• 4-week moving average for continuing claims 1.865M vs 1.862M last week

The Initial claims equaled the highest level going back to October. Although at the high, it is one week. DOGE cuts will be eyed, but it is probably too early for the impact from those layoffs in the big picture of things.

The continuing claims was a bit lower and is more sideways .

This article was written by Greg Michalowski at www.forexlive.com.

All growth numbers are quarter-over-quarter annualized:

• Advance Q4 GDP reading was +2.3%
• Q3 GDP was +2.8%
• Final sales +3.2vs +3.2% advance
• Consumer spending +4.2% vs +4.2% advance

Inflation numbers:

• GDP deflator +2.4% vs +2.2% expected
• Core PCE +2.7%vs +2.5% expected
• PCE prices prelim +2.4% vs +2.3% advance
• PCE service excluding energy and housing +3.5% vs +3.3% in Q3

Contributors and subtractors:

• Consumption: +2.79% vs +2.82% advance
• Government: +0.49% vs +0.42% advance
• Net International trade: +0.12% vs +0.04% advance
• Inventories: -0.81% vs -0.93% advance

This article was written by Adam Button at www.forexlive.com.

• Prior was -2.2%
• Nondefense capital goods orders ex-air +0.8% vs +0.3% expected
• Prior nondefense capital goods orders ex-air +0.5% (revised to +0.2%)
• Ex transport +0.0% vs +0.3% expected
• Ex defense +3.5% vs -2.4% prior (revised to -1.8%)

This article was written by Adam Button at www.forexlive.com.