Spot gold has pushed decisively back below the $1200 level, weighed by renewed haven interest in the dollar. The worsening trade situation with China and the recent deterioration of talks between the U.S. and Canada have conspired to lift the greenback, putting the precious metals under pressure.

Revived dollar interest is putting additional pressure on emerging market currencies, amid heightened talk of contagion. As the trade war between the big dogs escalate, smaller export oriented economies — and their currencies — are getting battered.

The Indian rupee is just one example, which hit another new record low against the dollar today. Perhaps not surprisingly, the Reserve Bank of India has bought gold for the first time in nearly a decade. The RBI added 8.46 tonnes of gold to reserve s during the fiscal year ended 30-Jun in an ongoing effort to diversify reserve assets.

Gold has fallen back below its 20-day moving average (1197.15 today) and the 1193.67 Fibonacci level (38.2% retrace of the recent corrective rally). The 50% retracement level at 1187.29 is the next support to watch. Below that, 1183.15 (24-Aug low) and 1180.92 (61.8% retrace) come into play.

A close back above the 20-day MA is needed to relieve short-term pressure on the downside. Minor intervening resistance is noted at 1195.72/1196.27.

Silver has plunged to new 2½-year lows to approach $14. A retreat below 14.00 would leave the post-financial-crisis low at 13.64 (14-Dec-15) vulnerable to a challenge.

Technically, this market looks terrible. The recent corrective/consolidative phase sufficiently relieved the oversold condition to allow for this latest leg down.

Silver also continues to weaken relative to gold, driving the gold/silver ratio to nearly 85. This is a beyond extreme level, but there is nothing to suggest silver can’t continue to drop.

Platinum has breached support at 773.50/772.50 as recent optimism on trade evaporated. More than 61.8% of the recent corrective rally has been retraced, returning a measure of credence to the underlying downtrend. There’s not much in terms of support protecting the 754.03 low from 16-Aug. The 781.00/782.50 area offers resistance.

Palladium dipped back to the 100-day moving average (956.46 today) in sympathy with the other PMs, but has subsequently snapped back $25 to trade near unchanged on the day.  A new corrective high above 986.42 would put the 987.06/989.32 area to the test. The latter marks 50% retracement of this year’s decline and the 200-day moving average.


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