Spot gold retreated back below $1200 as reports that the Trump administration will proceed with additional tariffs on $200 bln in Chinese goods, despite recent efforts to restart trade talks. The haven bid in the dollar has been revived, pushing gold back to near unchanged on the week.

Markets were heartened earlier in the week by news that the U.S. was making an effort to restart trade talks with China, taking some of the haven bid out of the dollar. The dollar index fell to new 6-week lows.

President Trump tempered that optimism somewhat on Thursday when he tweeted that the U.S. was “under no pressure to make a deal with China, they are under pressure to make a deal with us.” Hopes for a U.S./Sino trade deal were dealt a more serious blow today when Bloomberg reported that President Trump instructed his administration to initiate additional tariffs on Chinese goods.

The dollar index rebounded from a 6-week low of 95.36.  The breach of trendline support and the probe below the 100-day moving average (94.47 today) lend additional credence to the topping scenario. However, a close below the 100-day MA would have been a stronger signal, but it now doesn’t look like we’ll see that today.

With gold trading back below $1200, the short-term tone remains neutral; particularly in light of the failed challenge of resistance marked by the previous corrective high at 1214.32.  In fact, Thursday’s high at 1212.66 fortifies this level.

On the downside, initial minor support at 1192.69 (12-Sep low) has contained the downside thus far, keeping the more important 1187.77 low from 11-Sep protected. We’ll watch to see where gold closes today in relation to the 9-day and 20-day moving averages, which are at 1198.02 and 1198.90.

Silver has backed off from yesterday’s high at 14.35. A close above 14.14 is needed to avert a third consecutive lower weekly close. If that doesn’t happen, silver will have closed lower 13 out of the last 14-weeks. Given that silver set a new 31-month low on Tuesday at 13.94, the trend remains unquestionably bearish.

The gold/silver ratio remains well bid near 2-decade highs at 85.16. There is a small double top in place, but that pattern won’t be confirmed unless support at 83.73 is taken out.

At this point, I think it is the relative strength in the other metals that are underpinning silver.  While silver is arguably a bargain down here, looking at the chart, I don’t see anything that is suggestive of a bottom; save the oversold condition and the much discussed record short position in the futures market.

Platinum has retreated into the range after setting a new 4-week high at 813.11 on Thursday. The failure to sustain these gains and the probe above the 50-day MA (809.66 today) is a disappointment for the bulls, I think there is additional upside potential to 830.00.

Palladium is trading lower on the day, but still well within the recent range and within reach of the recent high at 992.43 (10-Sep high). This level is bolstered by the 50-week (988.26 today) and 200-day (988.04 today) moving averages. Nonetheless, I still see $1,000 as the short-term attraction.


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