Gold Holds its Ground into the Weekend
Commentary for Friday, Oct 19, 2018 (www.golddealer.com) – Gold closed down $1.20 at $1225.30. The best you can say about gold prices is that they have turned choppy leaving the bulls wondering about recent gains but at the same time they have remained steady above $1200.00 in spite of a generally stronger dollar. The Dollar Index these past 5 trading days has moved from 95.00 through 96.00 with some sell off in early trading today which is a bullish plus.
The late dollar weakness was the result of the EU being nice to Italy and her plans to raise deficit spending after a warning that such fiscal irresponsibility was not part of the EU game book. Italy is now at least consistent in doing whatever she wants and damn the torpedoes so while Europe remains off balance worries of another Greece like bailout grow.
Gold still remains well bid at the higher end of its recent price range because the state of world affairs has turned very dicey indeed. That still does not mean much – but it is worth watching.
Traders have short memories – world commotion today world calm tomorrow is the standard operating procedure. But with a real Saudi problem and the White House worried about leaks and Trump not worried about China the rest of us are at least confused leading to trading tension.
I’m not a big DOW watcher but even this potential hot spot is still not resolved in my mind. Yesterday’s choppiness and today’s weakness may suggest that things are just not right in River City. Still with strong economic numbers and number of pundits suggesting that 25,000 is just a good start you have to wonder if the rest of us are just worrywarts.
You see that is just the thing about today’s safe-haven buying in gold – it takes a little fear to keep that dynamic moving and while there are plenty of scenario’s which might support further bullish talk there has not been much in the way of fireworks.
Today’s pricing action is most likely just the result of traders facing a long weekend and not wanting to be short in a world with financial dangers.
The big question at this point however is whether this angst will continue if these concerns either do not continue to develop or in the case of the Saudi problem are just buried.
While the US wants to look good relative to human rights they also understand that the murder of a journalist is another problem in a difficult to understand Middle East cabal that makes no sense to the western mind. Pounding the Saudi’s who, for now are the “go-to” player in this complicated mess is probably not a good idea.
Recent comments by Putin suggesting that US hegemony is coming to an end – and good riddance only amplifies this developing Halloween atmosphere and makes one wonder if our European alleys really do have something to worry about.
Finally the bulls are making a big deal out of gold’s 100 day moving average but I’m less sanguine and would appreciate more buzz. Those wondering and still on the sidelines however would turn bullish if gold pushed through the $1230.00/$1240.00 band with some momentum.
This from Zaner (Chicago) – “December gold is approaching overbought technical levels and is also facing key resistance at the 100-day moving average. It appears to be capturing some safe-haven buying for a change, as it managed to close higher on Thursday in the face of a stronger dollar. The dollar index ended up unchanged overnight after trading to its highest level since October 9th. The Fed’s Bullard said on Thursday that weak inflation levels mean that the Fed does not have to hike rates further, but he also said that the Fed’s current policy is “about right”. Those comments may not have been a surprise, due to his reputation as a policy dove, but they still seemed to provide some support to gold. US initial jobless claims, ongoing claims and the Philly Fed survey all came in better than trade forecasts on Thursday. This may have provided a lift to the dollar, but it did little to support equity markets. Instead, equities appeared to be focused on weak industrial earnings, increasing business expenses due to the tariffs, and higher borrowing costs due to rate increases, and this may have lent additional support to gold. December gold is approaching a major resistance level at the 100-day moving average, which comes in around $1,235.30, but it is also becoming short-term overbought. It may take another sharp break in equities to spark a move through that resistance area. Silver appears to be a follower of gold these days. The December contract broke below its 50-day moving average on Thursday and traded to its lowest level in a week. It managed an impressive bounce off its lows and a close back above the 50-day average, but it still closed lower on the day. ETF holdings in gold increased for the eighth straight day, adding 48,607 ounces and bringing this year’s net purchases to 545,166 ounces. South African gold production in August fell 16 percent from a year ago, marking the 11th straight month of decreases.
The PGM sector was firmer overnight, as a modest recovery in China’s stock markets may have eased some concerns about autocatalyst demand, especially for palladium. However, the fact that China’s growth rate was as low as it was could eventually weigh on the optimism. Both palladium and platinum have put in 3-4 days of lower lows and lower highs, but neither market has traded down to the lower end of its 2-week range, and palladium has clearly rejected that pattern overnight. The markets may have found some modest support from news that South Africa, the world’s biggest producer of platinum, saw its output fall 9.1 percent from year-ago levels in August. July output was down 4.1%. A key resistance area for January platinum comes in at $837.80, with support down at $825 and then $812.40. Look for support in December palladium at $1,050, with resistance at $1,089.50.”
Silver closed up $0.05 at $14.58.
Platinum closed up $4.50 at $832.30 and palladium closed up $5.20 at $1087.90.
Our Patented Employee Survey – Gold’s Direction Next Week?
Of course, it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 6 believe gold will be higher next week 1 thinks gold will be lower and 2 think it will be unchanged.
Our Patented Customer Survey – Gold’s Direction Next Week?
Like the employees, our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 41 people thought the price of gold would increase next week 28 believe the price of gold will decrease next week and 31 think prices will remain the same.
Precious Metal Closes & Dollar Strength – Oct 15 – Oct 19
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