Gold surged as Putin hesitant about Trump’ UKR ceasefire plan

·       Wall Street and Dax Future recovered early Friday on the progress of the US and German debt deal; also positive telephonic talk between Trump and Putin helped

·       Gold stumbled amid signs of progress in the Ukraine war ceasefire deal; also surging inflation expectations dragged Gold as the Fed may not cut before June’25

·       Industrial metals including Silver surged on Chinese and German fiscal stimulus including higher infra and defense spending

·       Gold is also a major beneficiary of increasing public deficit, public debt, and currency devaluation

Wall Street crumbled Thursday on escalated Trump/US-EU trade war tensions and fading hopes of an imminent Ukraine war ceasefire. Also, a looming US shutdown drama is affecting risk trade and also USD. The US dollar is also under pressure despite the narrative of the primary beneficiary of the Trump trade war tantrum. The deluge of retaliatory tariffs by the EU and Canada on US exports is also affecting the USD. But GBP is stable and gaining a lot due to the relatively stable trade relationship between the US/Trump and the UK.

Now From Trump tariffs to geopolitics

As of March 13, 2025, Trump’s efforts to establish a 30-day ceasefire in Ukraine have encountered significant challenges due to differing positions among key leaders/stakeholders. The conflict began in February 2022, with significant humanitarian and geopolitical implications. Recent efforts have focused on achieving a ceasefire, with the U.S. President Trump playing a pivotal role in negotiations.

Ukraine War Ceasefire Proposal

A 30-day ceasefire proposal, brokered by the U.S., has been endorsed by Ukraine following talks in Jeddah, Saudi Arabia. The proposal includes an immediate halt to hostilities and humanitarian measures such as the exchange of detainees and the return of alleged forcibly transferred children of Ukraine by Russian forces.

U.S. President Trump's Position

President Trump has called for an immediate ceasefire in Ukraine, stating that both sides have suffered enormous losses and that negotiations should commence promptly to halt the ongoing conflict. After meeting with Ukrainian President Zelenskyy in Paris, Trump expressed optimism that Ukraine is willing to negotiate to end the war. President Trump has been actively involved in promoting the ceasefire, thanking Putin for his openness to the idea. Trump has indicated that he is ready to engage further with Putin to finalize the agreement, noting that positive signs from Moscow are encouraging but not comprehensive. Trump has also warned Russia of potential economic consequences and additional sanctions if it undermines any agreement.

Russian President Putin's Stance

President Putin has expressed tentative support for the proposed ceasefire but has emphasized the need to address the conflict's underlying issues. He has set forth stringent conditions, including the cessation of Western military aid to Ukraine, guarantees that Ukraine will not join NATO, recognition of Russia's annexation of certain Ukrainian territories, and assurances that Ukraine will not use the truce to rearm and regroup its forces. Russian President Putin has expressed support for the ceasefire idea in principle but emphasized that any agreement must lead to lasting peace and address the root causes of the conflict. Putin has also highlighted the need for guarantees that Ukraine will not use the ceasefire to regroup or receive military aid during this period. He has suggested direct talks with the U.S. to resolve these issues.

Ukrainian President Zelenskyy's Response

President Zelenskyy has agreed to the U.S.-proposed 30-day ceasefire but has criticized Putin's preconditions as potential delays to the peace process. He has accused Putin of stalling and has emphasized the need for a just and enduring peace that cannot be undermined in the future. Zelenskyy has also highlighted that any ceasefire without solid guarantees could be reignited at any moment, underscoring the necessity of international unity and strong positions to ensure lasting peace. Ukrainian President Zelenskyy has expressed skepticism about Putin's intentions, stating that Russia needs war and that Putin's preconditions for a ceasefire are designed to delay or prevent it. Zelenskyy has urged international partners to ensure Russia does not deceive them about its commitment to peace.

Current Situation

Despite ongoing negotiations, hopes for an immediate ceasefire have diminished due to the complex conditions set by Russia and the differing expectations among the involved parties. The situation remains fluid, with diplomatic efforts continuing to seek a resolution to the conflict. The situation remains tense, with Russia claiming advances in the Kursk region against Ukrainian forces. Putin may demand additional concessions, such as lifting sanctions or security guarantees, before agreeing to a ceasefire.

In summary, while there is a glimmer of hope for an imminent ceasefire, significant challenges remain, including differing interpretations of what a ceasefire should entail and the underlying trust issues between the stakeholders, while Putin almost poured cold water on Trump’s proposal for a 30-day ceasefire in phase one.

As of March 13, 2025, the ongoing war in Ukraine has reached a critical juncture with renewed diplomatic efforts led by the United States to establish a ceasefire. The proposal for a 30-day truce, initially agreed upon by Ukrainian and U.S. delegations during talks in Jeddah, Saudi Arabia, on March 11, 2025, has elicited varied responses.

The ceasefire proposal emerged from U.S.-Ukrainian discussions in Saudi Arabia, where Ukraine agreed to a temporary 30-day halt in hostilities, contingent on Russia’s acceptance. The U.S. has restored military aid and intelligence sharing with Ukraine following the talks, signaling a thaw in relations after tensions earlier in the week amid a public exchange of war of words at the Oval Office.

The U.S. envoy Steve Witkoff is currently in Moscow to negotiate with Putin, with Trump hinting at potential financial repercussions for Russia if it rejects the plan. The situation remains fluid, with European leaders and NATO also weighing in as the proposal’s implications ripple across the continent.

Trump’s Comments

President Trump has been a vocal proponent of the ceasefire, framing it as a step toward fulfilling his campaign promise to end the war swiftly. On March 13, 2025, he described Putin’s initial response to the ceasefire proposal as “promising” but “incomplete,” noting that Putin had raised “lots of questions” about its implementation. Speaking from the White House, Trump said, “It’s up to Russia now. Our people are going to Russia right now as we speak. And hopefully, we can get a ceasefire from Russia.”

Trump emphasized a desire for peace, stating, “I don’t want to do [financial measures], because I want to get peace,” but warned that he could “do things financially that would be very bad for Russia” if Putin refuses to cooperate. During a meeting with NATO Secretary-General Mark Rutte on March 13, Trump expressed hope that Russia would “do the right thing” and agree to the truce while praising NATO’s efforts to “step up” under Rutte’s leadership.

Trump’s comments reflect a dual approach: optimism about a potential deal and a readiness to leverage economic pressure on Russia. He has also indicated plans to speak directly with Putin and invite Zelenskyy back to the White House, underscoring his involvement in the process.

Trump said:

·       Rutte is doing a fantastic job

·       Witkoff is in serious discussions in Russia

·       I'm getting word things are going ok in Russia

·       Hopefully, we should have an idea today how we're doing

·       We're discussing land with Ukraine

·       There's a power plant involved

·       Trump on Russia-Ukraine: Details of final agreement have been discussed

·       Putin put out a very promising statement but it wasn't complete

·       If Russia isn't there, it's disappointing for the world

Putin’s Comments

On March 13, 2025, Putin addressed the ceasefire proposal during a news conference with Belarusian President Alexander Lukashenko in Moscow. He expressed conditional support, stating, “We agree with the proposals to halt the fighting, but we proceed from the assumption that the ceasefire should lead to lasting peace and remove the root causes of the crisis.” However, he raised significant concerns, warning that a 30-day truce might allow Ukraine to “retreat, regroup, and rearm,” particularly as Russian forces have regained momentum in the Kursk region. Putin questioned enforcement mechanisms, asking, “Who monitors the ceasefire, how will we know when it’s being violated, what happens if it is?” He also hinted at a possible phone call with Trump to negotiate outstanding issues, suggesting flexibility but not commitment.

Putin’s remarks align with Russia’s long-standing demands, reiterated by his foreign policy adviser Yuri Ushakov: Ukraine must recognize Russia’s annexation of Crimea and four southeastern regions, withdraw troops from claimed territories, and pledge not to join NATO. His cautious stance indicates a strategy to maximize Russia’s battlefield gains while testing Trump’s willingness to accommodate these conditions, potentially prolonging negotiations.

Putin said:

·       The return of Western companies could be beneficial for everyone, we are in talks about such a return

·       We agree to stop fighting in Ukraine, but it should lead to long-standing peace. This has to eliminate the root causes of the conflict.

·       The situation in the Kursk region is fully under Russian control

·       Ukrainian troops are in full isolation in Kursk

·       For Ukraine, it will be good to reach a 30-day ceasefire in such circumstances.

·       There are two options for Ukrainians in Kursk - die, or be captured

·       If there is a ceasefire, it's not clear how the situation will develop in Kursk and elsewhere

·       Why do they need 30 days of ceasefire? For mobilization or weapons supplies to Ukraine? There are lots of questions about ceasefire

·       Who will control the ceasefire? The front is 2,000 KM long. We need to talk to the US about this. The ceasefire itself is right and we will support it, but there are questions to be discussed

·       Maybe me and Trump will have to hold a phone call

·       We need to discuss the details of a settlement with Trump

·       If the US and Russia agree on energy cooperation, then a gas pipeline for Europe could be provided. It will be beneficial for Europe, thanks to cheap Russian gas

·       We will agree next steps on conflict taking into account developments on the front

·       Would agree to stop fighting in Ukraine, but should lead to long-standing peace

·       Russia backs Ukraine ceasefire but any deal must address 'root causes'

Zelenskyy’s Comments

Ukrainian President Zelenskyy has adopted a wary yet pragmatic tone toward the ceasefire proposal. In his evening address on March 13, 2025, he described Putin’s response as “very predictable” and “very manipulative,” accusing the Russian leader of preparing to reject the truce indirectly. “Putin, of course, is afraid to say directly to President Trump that he wants to continue this war, he wants to kill Ukrainians,” Zelenskyy said. “That’s why they in Moscow are framing the idea of silence with such preconditions that nothing will happen at all or that it will not happen for as long as possible.” He labeled Putin’s approach “just another Russian manipulation,” contrasting Ukraine’s willingness to negotiate with Russia’s intransigence.

Zelenskyy emphasized Ukraine’s openness to peace, stating, “We do not set conditions that complicate anything,” and urged allies to “ramp up the pressure on Putin and impose further sanctions.” Earlier, on March 11, he hailed the Jeddah talks as “very positive,” noting that if Putin refuses, “I understand that we could count on strong steps… sanctions and about strengthening Ukraine.” His comments reflect a blend of skepticism about Russia’s intentions and reliance on international support to enforce any agreement.

Zelenskyy said:

·       Putin is preparing a rejection of the ceasefire proposal but is scared to say this directly to Trump

·       Russia is setting conditions for a ceasefire to try to delay it or make it not happen

Current Status and Implications

As of March 13, 2025, the ceasefire remains unofficial, with negotiations ongoing. Steve Witkoff’s visit to Moscow, potentially involving a Trump-Putin phone call, is a pivotal moment. Putin’s layered response—supportive in principle but laden with conditions—has drawn criticism from Zelenskyy and concern from European leaders, who fear a deal could favor Russia’s territorial gains. Trump’s push for a quick resolution risks pressuring Ukraine into concessions, a prospect that alarms Kyiv and its European allies.

Analysts suggest Putin is leveraging Russia’s recent military advances, particularly in Kursk, to negotiate from a position of strength, while Trump seeks a diplomatic win. Zelenskyy, meanwhile, balances Ukraine’s survival with the need for robust security guarantees, rejecting a “frozen conflict” as untenable. The outcome hinges on whether Russia accepts the 30-day truce and how the U.S. and Europe respond to Putin’s demands.

The Ukraine war ceasefire proposal marks a significant diplomatic push, but the divergent comments from Trump, Putin, and Zelenskyy highlight the challenges ahead. Trump’s optimism contrasts with Putin’s calculated ambiguity and Zelenskyy’s guarded realism, setting the stage for tense negotiations. As the situation evolves, the interplay of military developments, economic leverage, and international pressure will determine whether this truce leads to lasting peace or remains a fleeting pause in Europe’s largest conflict since World War II.

Russia-Belarus Joint Statement

·       Russia and Belarus consider NATO actions in the context of the Ukrainian crisis as hostile and destabilizing, fraught with nuclear conflict.

·       Plans to deploy American missiles in Europe destabilize the situation

·       Russia and Belarus are ready to take military and diplomatic measures in response to NATO actions

On Friday, Trump truthed:

·       Our Economy will BOOM, like never before!

·       Congratulations to Chuck Schumer for doing the right thing — Took “guts” and courage! The big Tax Cuts, L.A. fire fix, Debt Ceiling Bill, and so much more, are coming. We should all work together on that very dangerous situation. A non-pass would be a Country destroyer, approval will lead us to new heights. Again, really good and smart move by Senator Schumer. This could lead to something big for the USA, a whole new direction and beginning! DJT

·       We had very good and productive discussions with President Vladimir Putin of Russia yesterday, and there is a very good chance that this horrible, bloody war can finally come to an end — BUT, AT THIS VERY MOMENT, THOUSANDS OF UKRAINIAN TROOPS ARE COMPLETELY SURROUNDED BY THE RUSSIAN MILITARY, AND IN A VERY BAD AND VULNERABLE POSITION. I have strongly requested to President Putin that their lives be spared. This would be a horrible massacre, one not seen since World War II. God bless them all!!!

Ukraine may not be able to join NATO:

On Friday, the NATO) Secretary-General Mark Rutte answered positively to a question about whether considerations of Ukraine joining the alliance have been "taken off the table." Discussing the war in Ukraine and the recent negotiations between Kiev and Washington, and Moscow and Washington, Rutte told BBG that this is a breakthrough. Talking about what could happen after the war ends, he shared that it would make sense for countries to rebuild ties with Russia. However, he cautioned that "we are not there yet" and that the world needs to continue pressuring Moscow until peace is achieved. When asked whether NATO would be involved in the potential ceasefire, the secretary general said this would be "difficult," adding, however, that the organization might offer some advice to the parties involved. He also mentioned that he is "cautiously optimistic" that peace could potentially be reached in 2025.

On the other side of the Atlantic, Germany’s Dax Future also recovered on the progress of the German debt deal as the Greens are ready to support the incoming CDU/CSU & SPD coalition government for the required constitution amendment bill.

Germany’s incoming government, led by Chancellor-in-waiting Friedrich Merz, has signaled a significant shift in its fiscal policy, moving away from the longstanding "debt brake" and austerity policy that has constrained borrowing since its introduction in 2009. This constitutional rule limits the federal government’s structural deficit to 0.35% of GDP and prohibits Germany’s 16 states from running structural deficits, reflecting a deep-rooted cultural and political aversion to debt. However, recent developments like the Trump trade war and Trump’s NATO funding policy have prompted a reevaluation of this approach, with plans to increase fiscal deficits and debt to fund critical priorities including higher defense spending.

The proposed reforms, agreed upon by Merz’s Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU), and the Social Democrats (SPD), aim to loosen these fiscal constraints. Key elements include exempting defense spending above 1% of GDP from the debt brake, establishing a €500 billion debt-financed fund for infrastructure over ten years, and allowing states to borrow up to 0.35% of GDP annually for investment. This shift is driven by urgent needs to bolster defense capabilities—especially amid concerns over U.S. commitment to European security—and to address decades of underinvestment in infrastructure, such as roads, railways, and digital networks.

The pledge marks a dramatic departure from Germany’s traditional fiscal conservatism, which Merz himself had championed during the recent election campaign. Critics, including some within his party and opposition groups like the Greens and the far-right Alternative for Germany (AfD), argue that this U-turn risks burdening future generations and contradicts voter expectations. The Greens, whose support is crucial for the required two-thirds parliamentary majority to amend the constitution, are pushing for broader exemptions, including investments in climate and economic initiatives, complicating negotiations.

Financial markets have reacted positively, with the DAX index surging and bond yields rising (e.g., 10-year bund yields hitting 2.9% in early March), reflecting expectations of increased borrowing. Germany’s debt-to-GDP ratio, currently at 62.8%, remains well below the EU average, and its strong credit rating keeps borrowing costs relatively low. Nonetheless, the fiscal deficit could widen by up to 2.5% of GDP, still within manageable limits compared to peers like the U.S. (6.4% in 2024). The US is now expensing almost 15% of core tax revenue as interest on public debt against the EU and China averages around 6%.

This policy shift could transform Germany’s economic and military role in Europe, addressing its sluggish growth and enhancing its leadership amid global uncertainties. However, its success hinges on parliamentary approval before the new Bundestag convenes by March 25, 2025, and navigating resistance from fiscal hawks and political opponents. If implemented, this pledge could mark the end of Germany’s era of rigid austerity, with significant implications for its domestic economy and European stability.

The yield on Germany’s 10-year Bund rebounded to 2.9%, its highest level since June 2011, following the country’s agreement on a debt overhaul and a significant increase in state spending. Incoming Chancellor Friedrich Merz secured a deal with the Green and Social Democrat parties on Friday, ahead of a parliamentary vote next week on borrowing rule reforms. On the monetary policy front, investors scaled back expectations for additional ECB rate cuts this year after policymakers adopted a more hawkish stance. ECB President Lagarde recently warned that trade war disruptions and increased government spending across Europe would make it increasingly difficult to keep inflation stable. Germany's current account surplus narrowed to €11.8 billion in January 2025 from €20.9 billion in the previous month.

On Friday, the German Green Party said:

·       Recommended lawmakers to agree to the deal

·       We have reached an agreement on the debt deal and are satisfied

German Conservatives' Merz said:

·       I expect to vote to do these constitutional amendments on Tuesday

·       This will mobilize private capital; 500 bln euros over 12 years is nowhere near what we need for our infrastructure

·       Germany is back

·       The climate and transformation fund will get 100 bln from the 500 bln Euro fund.

·       A special fund of €500 bln over 12 years to be created, of which €100 bln to be spent by states

·       Exemption from debt break for defense spending above 1%

·       Special fund for infrastructure of €500 billion

·       Germany's states will get to spend some €16 bln extra through debt finance

·       Spending on civil protection, IT security, intelligence, and aid to illegally attacked states will be exempt from debt break beyond 1% of GDP as part of defense spending

·       CDU, SPD, and Greens reached a deal on fiscal package

·       Discussions were challenging, but the result was acceptable for all

·       German debt deal to exempt defense spending from debt break above 1% of GDP but includes expanded definition of defense spending

Conclusions:

Europe/EU now has to stand up on its own feet after being dependent on the US for almost 80 years. EU has to build its own military force and foreign policy. Europe now has to make a security deal with ‘mighty’ Russia rather than too much Russia phobia, leading to the Ukraine war. EU also has to accept China as the number one superpower in terms of economy, technology, and development and keep good relations for mutual benefit rather than too much dependency on the US, which has no policy stability like under Biden and Trump admin.

Bottom line:

Whether Trump is a Russian agent or sympathizer, Trump’s active initiative is bringing much-needed peace in and around Europe. Over the last year, Gold jumped almost 75% even before Trump’s election win as Gold was a major beneficiary of the Ukraine and Gaza war. Apart from the haven asset and inflation hedge narrative, Gold is gaining as various countries are diversifying from USD/EUR-based FX assets to physical Gold at their disposal to reduce the risk of US/USD and also EU hegemony. Now Trump’s less hawkish foreign policy towards so-called enemy countries like Russia, China and also Iran may cause some correction in Gold.

Market Wrap:

Wall Street crumbled Thursday on escalated Trump/US-EU trade war tensions and fading hopes of an imminent Ukraine war ceasefire. Also, a looming US shutdown drama is affecting risk trade and also USD. But on early Friday, March 14, 2025, US stock futures rose, with the S&P 500 rising 0.7%, Nasdaq 100 gaining 0.9%, and Dow Jones futures adding nearly 200 points. The risk trade Sentiment improved amid signs lawmakers in Washington will successfully avert a government shutdown. Meanwhile, the market remains focused on escalating trade tensions under President Trump and their potential impact on Wall Street and also Real Street. The US market is now fully controlled by Trump’s morning moods, whims & fancies and Truths; not economic data and Fed comments. On late EU Friday, Dax Future also recovered from earlier US-EU escalated trade war panic low on the progress of the German debt deal.

Inflation-Adjusted Gold Price:

Gold Price= (CPI Index-2024/ Base Year CPI Index-2020)* Base Year-2020 Avg Gold Price= (314/259)*1850

=$2242

M2-Money Supply adjusted Gold Price:

Gold Price= (M2-Dec’24/M2-Jan’20)* Base Year-2020 Avg Gold Price= (21.5/15.4)*1850

=$2583

Gold-to-S&P 500 Ratio

Gold is sometimes valued relative to stocks.

Historical Gold/S&P ratio: ~0.5

S&P 500 (2024): ~5975 (average)

Price of Gold: 5975*0.5=$2987

Average Fair Value of Gold: (2987+2583+2242)/3=$2604

Overall, the average fair value of Gold may be now around $2600 against present levels of $3000.

Looking ahead Gold may correct due to various reasons:

• Gaza and Ukraine war permanent ceasefire and lower geo-political tensions under Trump 2.0

• Less hawkish approach by Trump 2.0 on tariffs and immigration, resulting in relatively muted inflation

• Less dovish Fed monetary policy and higher USD/US bond yields

Weekly-Technical trading levels: DJ-30, NQ-100, Gold and Dax

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 43850) now has to sustain over 44050 for any further rally to 44250/44400-44500/44800 and 45000/45200-45300/45500 and 45700/45800-45900/46000 in the coming days; otherwise sustaining below 44000, DJ-30 may again fall to 43800/43675-43300/43150 and 42800/42700-42000/41900 in the coming days.

Similarly, NQ-100 Future (20915) has to sustain over 21050 for a further rally to 21300/21500-21700/21850 and 22050/22200-22350/22500 and 22700/23000-23300/23500 in the coming days; otherwise, sustaining below 21000, NQ-100 may again fall to 20900/20600-20400/20150 in the coming days.

Technically, DAX-40 (22500) now has to sustain over 22700 for a rally to 22800/22/900-23000/23500 and 23600/23700-23800/24000; otherwise, sustaining below 22650/22550, may again fall to 22250/21850-21700/21100 and 20800/20000-19700/19000-18850 in the coming days.

Also, technically Gold (CMP: 2985) has to sustain over 3005 for a further rally t 3025/3060-3075/3100 and 3125/3150-3200/3225; otherwise sustaining below 3000-2995, Gold may again fall to 29650/2925-2900/2880 and 2850/2835-2810/2780-2780 and 2745/2725-2695/2665 and further 2635/2600-2585/2560 in the coming days.