Gold and Silver Make 4% Easter Week Gains as Trump Spikes Oil Price Again

GOLD and SILVER PRICES halved their steep overnight falls on Thursday, rallying into the long Easter Weekend well above $4600 and $70 per Troy ounce respectively as US President Trump's latest about-turn on the war with Iran spiked oil prices while whacking bonds and stock markets yet again.

"We're going to bring them back to the Stone Ages, where they belong," the President repeated late Wednesday in what  liberal Western media called a "slurred and disjointed" TV address to the nation after Tehran denied Trump's claim that the "much less radicalized" regime is seeking a ceasefire.

"We are going to hit them extremely hard over the next two to three weeks."

Brent crude oil leapt over 10% towards $110 per barrel while Asian, European and then US stock markets lost more than 1%, reversing almost one-third of this week's previous rally, before rallying as oil eased back amid rumors that Iran is drafting a 'protocol' with Oman regarding safe passage of oil tankers through the Strait of Hormuz.

Bond prices had also fallen hard, driving up longer-term borrowing costs towards last week's multi-year highs on UK and European government debt.

"Inflation concerns have led to interest-rate volatility and a repricing of monetary policy expectations," says a note from global bank and London bullion clearer HSBC's wealth management team.

"[But] policymakers are likely to maintain current interest rates for some time before easing later. [So] despite the recent pullback in gold we remain bullish over the medium to long term due to its diversification benefits and safe-haven demand."

Betting on the Federal Reserve's key policy rate today puts only a 2% chance on the US central bank raising its key interest rate by year-end, down from more than 43% this time last week.

The odds of a rate cut before Christmas have meantime jumped back to 21% after evaporating to zero as gold and silver prices sank alongside stocks, bonds and industrial commodities following the start of the US-Israeli war with Iran.

With the US, Israel and Iran each stepping up their airstrikes again today, gold bullion made a 4.3% rise in US Dollar terms from last weekend's spot market close, recovering half of its overnight slump to trade as high as $4688 per Troy ounce. and showing a gain of more than 40% from Good Friday last year.

Silver also recovered one-half of last night's drop to rally to $72.81 per Troy ounce, adding 4.5% from last week-end.

The falling price of government bonds means that US, German and Japanese yields have now risen by 1/3rd of a percentage point from this time last month, while borrowing costs for India, the UK, France and Greece have risen by 0.5 points and Italy's 10-year BTP yield has jumped by more than 0.6 percentage points.

After Trump called Nato a "paper tiger" on Wednesday, France's President Macron today said the US leader is weakening the military alliance by creating "doubts every day about [his] commitment" to it.

Bankers in Paris and Frankfurt were meantime advised to work from home after an attempted bomb attack on Bank of America's French offices.