Gold remains generally well bid, near the 2½-month high that was established on Monday and tracking the 100-day MA. The yellow metal continues to garner support from risk aversion and mounting concerns about inflation. 

The FOMC minutes from the September meeting that were released yesterday were more hawkish than expected. There were strong indications that the Fed would continue to raise rates until the economy cooled. 

Yields rose and stocks were pressured. Meanwhile gold held up nicely — particularly in light of the dollar strength seen Wednesday — as the rotation out of risk assets continues to offer support. 

Some FOMC participants commented that “trade policy developments remained a source of uncertainty for the outlook for domestic growth and inflation.” The Trump administration announced this week that it would begin bilateral trade negotiations with Japan, the EU and the UK, ramping up pressure on China. 

Other sources of uncertainty include stalled Brexit talks and EU concerns centered on the budgets of Italy and Spain.  

While gold has probed above the 100-day MA (1226.09 today) every day this week, I’m still awaiting a close above this moving average as additional confirmation that the low is in. 

Secondary resistance is at 1238.58 (38.2% retracement of this year’s decline). Above that, the 50% retracement level at 1262.76 would be in play, as would the 200-day moving average (1276.18 today). 

Yesterday’s low at 1221.84 marks initial support, which should keep the more important 1216.99/1215.88 level at bay. As mentioned previously, another retreat below $1200 from here were significantly erode the technical picture. 

Silver is trading more defensively today, having slipped to a new low for the week. However, the 20-day moving average at 14.53 has contained the downside thus far, so we remain cautiously optimistic. Keep an eye on that 20-day MA on a close basis. 

I’d really like to see silver breakout and take the lead here, but renewed strength in the gold/silver ratio is undermining that hope. The ratio has set a new 4-week high today and more than 78.6% of the recent decline has already been retraced. 

That suggests the ratio could probe above 85 once again, which would mean silver will continue to lag. That may prove to be an upside impediment to gold as well. 

Platinum has probed below the 9-, 20- and 100-day MAs today. Monday’s gains stalled shy of the 858.92 Fibonacci objective. We’ll keep an eye on the moving averages on a close basis, as well as the short-tern trendline around 820.00. 

Palladium remains comparatively well bid near the recent highs at 1095.90/1097.03. Downticks are still seen as corrective in nature, amid still solid technicals and fundamentals. I’m watching the 20-day moving average (1068.27 today) on a close basis here as well. 

While I still see potential for new all-time highs above 1139.62 (15-Jan), the seemingly relentless rise in yields may ultimately sap all-important auto-sector demand for the PGMs. It might be worth considering taking some profits and/or tightening up stops. 


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