Gold has extended to the upside, clearing resistance marked by Tuesday’s high at 1239.76, establishing new 3-month highs. The yellow metal appears poised for a third consecutive higher weekly close; something that hasn’t happened since late last year.

Volatility in global stocks continues to drive haven interest in the precious metals. U.S. shares are down considerably today, reversing yesterday’s rebound. The DJIA is off more than 3% this week and down more than 8% from the all-time high set on 03-Oct at 26,960.85.

The first look at U.S. Q3 GDP showed that economic growth slowed to 3.5%, from 4.2% in Q2. While that was better than the 3.3% that was expected, there were some troubling numbers behind the headline print.

Consumer spending remains robust, but business investment was the weakest in nearly 2-years. Additionally, rising interest rates are weighing on the important housing and auto sectors.

Perhaps most interesting were the trade numbers: Exports fell 3.5% in Q3, while imports surged 9.1%. Not surprisingly, the U.S. recorded a record goods trade deficit of -$76.04 bln in September.

An important driving force behind the recent rally in the dollar has been an expectation that the U.S. would be the “winner” of the trade war. That certainly isn’t being reflected in the data, suggesting to me that the greenback is overvalued, even as it notched a new 10-week high in earlier trading.

Fresh weakness in the Chinese yuan is helping to buoy the dollar. The USD-CNY rate rose to a new 10-year high today, pressuring the important 7.00 threshold.

The Chinese pledged earlier in the year not to “weaponize” the yuan. However, it should come as no surprise that China is willing to do whatever is necessary to protect its all-important export market.

With the dollar index unable to sustain those early gains, resistance marked by the August high at 96.98 remains intact. Gold has shown good resilience in the face of dollar strength of late, but a retreat in the greenback would almost assuredly spur the yellow metal higher.

The 1238.58 Fibonacci level 38.2% retracement of this year’s decline) has been convincingly negated, clearing the way for a challenge of the 1256.74 measuring objective off the symmetrical triangle breakout. Above the latter, 1262.76 (50% retrace of the April to August decline will attract.

Silver is trading higher today, but still below the recent highs at 14.85/92. This level needs to be negated to clear the way for a push above $15.

If silver can trade with a 15-handle, I think potential is to 15.64. Intervening resistances are marked by the 100-day moving average at 15.16 and 15.24 (38.2% retracement of the June to September decline).

Platinum has traded in a choppy manner this week, on either side of the 100-day MA and the short-term trendline. A breach of Monday’s high at 838.07 is needed to clear the way for a retest of 850.37 high from last week.

Palladium has been weighed in recent sessions by stock market turmoil and mounting growth risks that would likely weigh on the auto industry. While palladium is still higher on the week, it is nearly 4.5% off the 1151.29 record high set on Tuesday. A measure of caution is warranted here.


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