Gold has regained the $1200 level, boosted by revived haven interest. Importantly, the yellow metal is gaining in tandem with the dollar today as the euro is hit by escalating concerns about Italy’s budget deficit and the broader implications for the EU.

The heightened risk appetite seen yesterday on news of a new trade deal between the U.S., Canada and Mexico was short-lived. Risk aversion is the order of the day, amid rising tensions between Italy and the European Union.

Brussels has expressed serious reservations about Italy’s proposed deficit spending to fund populist measures that brought a euro-skeptic party to power. "I am truly convinced that Italy would solve most of its problems if it had its own currency," said Claudio Borghi of Italy’s ruling Lega party.

These words revived concerns about a potential Italian exit from the EU, prompting a surge in Italian yields to 4½-year highs and a sell-off in stocks. The euro slid to a 5-week low against the dollar.

Gold jumped back above its 20-day moving average (1198.28 today), bringing the recent series of highs at 1211.06/1212.23/1214.32 back within striking distance. A push to new corrective highs would shift focus to the 1236.58/1238.58, where the 100-day MA corresponds closely with the 38.2% retracement level of this year’s decline.

Today’s convincing violation of the 50-day MA (1201.95 today) lends some additional credence to the import of the move. Gold has not been above its 50-day MA since April.

The 1200.00 level now marks initial support. Minor secondary support at 1193.76/1192.45 protects the intraday low at 1188.80.

Silver has surged to new 4-week highs and is once again leading on this rally. Silver is up nearly 3% on the day and has approached $15 for the first time in more than a month.

A close above the 50-day moving average (14.74 today) seems likely and would lend some confidence to the bottoming scenario. Such a move, and a breach of 15.00 (28-Aug high), would highlight 15.24 initially (38.2% retrace of the decline off the June high). However, potential would be toward the 100-day MA at 15.51.

Platinum continues to recover from the recent pullback after bouncing off the convergence of the 20-day and 50-day moving averages at 807.46 and 806.40 respectively. The breach of Friday’s high at 824.09 returns focus to the 839.19 high from 21-Sep, which now corresponds closely with the 100-day MA (838.88 today).

Palladium remains somewhat defensive within the dominant uptrend. Recent losses are seen as corrective in nature. Minor support at 1032.56 has contained the downside thus far and probes below the short-term trendline have proven unsustainable.

A breach of resistance at 1069.35/1071.64 would bode well for a retest of Friday’s high at 1095.64. Above the latter, 1100.00 and the 1139.62 peak attract.


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