Gold – Interesting and Sleepy
Commentary for Tuesday, October 22, 2019 – Gold closed down $0.70 today at $1481.70 and then moved up $6.00 in the aftermarket. Again, it seems quiet in the precious metals market but there are undercurrents. But there is not much fresh news out there to “push” safe haven demand.
The 30 day pricing chart remains “middle of the ground” in that this past month gold broke down at $1530.00 falling dramatically looking at $1470.00 in late September. Still the route was stopped and it bounced nicely higher but not convincingly, if you know what I mean.
Yes the price of gold firmed but it lacked substance above $1500.00 and has since traded off bouncing higher at $1480.00 on what I think is simply a small round of short covering.
This is an old story in that while the fear factor is moving lower – Trump and Chinese seem to be getting along better and Wall Street stocks remain firm the dollar trending lower supports the price of gold but is not creating any buzz. It’s actually surprising that given this past month the Dollar Index has lost nearly 2 points and gold has still not found its footing.
I think speculative short paper senses an opportunity here but just can’t muster the courage of its convictions. Why? It may be that international stress, while diminished is still bothersome. The British for example just can’t seem to manage Brexit even though they have been banging away at this solvable problem for 3 years and the English want out of the EU.
It’s also worth noting that some of our trading partners think Trump is a loose cannon which obviously helps the gold trade. And even with this boring back and forth trading range the technical outlook for gold favors the bulls – up $250.00 this past year.
There is a number of bigger bullion players which claim higher prices, perhaps even record highs will be seen next year. Still the notion that gold has turned flat around $1500.00 since last July takes the bubbles out of the champagne.
I’m happy gold seems to be holding its ground – but think fresh bullish news is needed to push higher. If over time the bulls cannot reinvigorate themselves gold pricing will continue to wonder – not too hot and not too cold, but still interesting.
Finally watch possible interest rate changes. But this too remains tricky – some insiders think the FOMC will lower rates in late October or middle December – a modest ¼ point. Whether this is already factored into today’s price of gold remains to be seen – if it is and they decide to leave rates unchanged it could introduce more turbulence.
This from Zaner (Chicago) – “Global markets started out with a mildly positive tone but have taken a negative shift coming into this morning’s action. Canada’s Parliamentary election has resulted in the ruling Liberal Party holding onto enough seats to have a ruling minority government. China’s Vice Foreign Minister said that as long as the US and China respect each other, there is no problem could that can’t be resolved. Asian shares generally finished in positive territory and were led by gains in the South Korean Kospi and Shanghai Composite indices. A September reading for UK public sector net borrowing came in slightly below forecasts. The UK government is expected to bring their current Brexit deal to a first vote in the UK Parliament later today. European shares were posting mixed results with the UK FTSE-100 posting a mild gain while the French CAC-40 and Italian MIB indices were showing modest early losses. The North American session will start out with a weekly private survey of same-store sales, followed by August Canadian retail sales that are expected to hold steady with July’s 0.4% reading. September existing homes sales are forecast to have a modest downtick from August’s 5.49 million annualized rate. The Richmond Fed’s October manufacturing index is expected to hold steady with September’s -9 reading. The Bank of Canada’s quarterly Business Outlook Survey will be released during mid-morning Canadian trading hours.
Gold and silver appear to be on a fulcrum, as some renewed optimism on trade is offering pressure but the upcoming Brexit vote(s) in Parliament is adding a level support. President Trump said China has indicated that negotiations over an initial trade deal are advancing, raising expectations the nations’ leaders could sign an agreement at a meeting next month in Chile. This followed comments yesterday from China Vice-Premier Liu expressed similar optimism. There are two crucial votes today in Parliament, one about accepting the Brexit agreement and the other regarding the timeline, and it would appear that gold could fall off sharply if the votes succeed and rally if the votes fail, especially since the deadline for the exit is only nine days away. ETFs were buyers of gold yesterday, and holdings have reached the highest level in 12 months. This is in contrast to managed money traders, who have liquidated some of their positons in recent weeks, and at least one commentator remarked that this is a recipe for volatility. Recent Fed commentary has been mixed about whether a rate cut is necessary, but the Fed Funds were giving an 87% chance of a 25 basis-point cut at the October 29-30 meeting yesterday. The IMF is estimating that the trade war between China and the US will reduce global growth to 3% in 2019, the slowest pace in a decade. Factors like potential rate cuts lurk in the background, but we expect the Brexit vote to be the most consequential event today.
December palladium has been consolidating since last week’s rally to new all-time highs, and the market appears well-positioned to make another breakout. Despite being technically overbought, there is no indicator of a top. Furthermore, some analysts and industry specialists expect tight supplies to continue through 2020. Look for support at $1,712.70 with resistance at $1,750 and the next round-number target up at $1,800. We would expect platinum to take its lead from gold today, and the Brexit vote could be consequential. Look for support in January platinum at $880 and $875.60 with resistance at $906.90.
The safe-haven impulse has been waning over the past week or so, but a failure in Brexit could spark some buying in gold today. On the other hand, the positive trade news is becoming a pressure point for the metals. Look for resistance in December gold at $1,503 and $1,508 with support at $1,480.60 and $1,478. Look for support in December silver at $17.18, with resistance at $17.895.”
Silver closed down $0.09 at $17.44.
Platinum closed up $3.80 at $892.30 and palladium closed up $3.20 at $1729.90.
We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.
Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.
In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).
Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.
We appreciate your friendship and business. Blessings and thanks for reading.
Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisors. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.