Gold remains defensive, trading in the lower half of Monday’s range. The yellow metal continues to be weighed by rising trade war concerns and a firmer dollar.

The IMF has walked-back there “synchronized global growth” scenario, citing disruptions in trade policies as a primary culprit. “There are clouds on the horizon. Growth has proven to be less balanced than we had hoped,” said IMF Chief Economist Maurice Obstfeld.

The IMF trimmed its global growth forecast by 0.2% to 3.7% for both this year and next. U.S. growth expectations for 2018 remained steady at 2.9%, but a drop to 2.5% is now expected for 2019. The IMF sees China’s output growing at a 6.6% pace in 2018, and then slipping to 6.2% in 2019.

It is that slow down in Chinese growth that is causing concerns in global commodities markets. China is world’s largest consumer of commodities, including gold. Not surprisingly, economic headwinds in China associated with the ongoing trade war are prompting worries about demand in a number of markets.

A sense that China may be on the ropes to some degree has also revived the dominant uptrend in the dollar. The dollar index eked out a new 7-week high, before slipping back into the range. Yuan weakness has been helping buoy the greenback.

While the DX has been unable to sustain tests above 96.00 thus far, the magnitude of the retracement already seen suggests there is potential back to the high for the year at 96.98. Such a move would likely pose a headwind for gold.

Gold continues to hold Fibonacci/chart support at 1180.92/77. With this level intact, the low for the year at 1160.27 is still considered protected. However, with the yellow metal below all the important moving averages, the downside remains vulnerable.

News that Nikki Haley will step down as U.S. Ambassador to the UN seems to have generated a bit of an intraday bid. A climb back above the 20-day MA at 1197.89 is needed to ease short-term pressure on the downside; let’s call it $1200. However, the range highs at 1211.06/1212.23/1214.32 must be negated to return a modicum of credence to any bottoming scenario.

Silver is consolidating at the low end of yesterday’s range as well, but similarly has rebounded intraday. A breach of minor resistance at 14.45 may offer some encouragement to the bull crowd. The 14.60 level marks the halfway back point of the recent dip.

The 50-day MA (14.64 today) gains additional import as it now corresponds closely with 61.8% retracement of the recent decline. A rebound above 14.64/67 would return attention to the last week’s high at 14.92.

Platinum has rebounded from Monday’s setback and is now trading above yesterday’s high. The confirmation point of the small potential double top pattern at 804.50 is now protected by yesterday’s low at 807.85. We continue to look for a true test of the 100-day MA (835.33 today), which now corresponds closely with those highs at 839.19/836.80.

Palladium exceeded last week’s high at 1078.40 before slipping back into the range. This market continues to look and act good with the recent corrective/consolidative action relieving the overbought condition that had developed. A retest of 1095.90 high from 28-Sep is anticipated. Above that, the all-time high at 1139.62 (15-Jan) would be back in play.


Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Group LLC, unless otherwise expressly noted.