Gold rebounded impressively, recouping all the losses incurred in the previous three sessions and then some. The yellow metal is being buoyed by a retreat in the dollar amid optimism about a U.S. China trade deal and positive movement on Brexit.

President Trump indicated this morning via Twitter that he had just had a “good conversation” with Chinese President Xi. The President went on to say that trade discussions are “moving along nicely with meetings being scheduled at the G-20.”

Stocks firmed on revived risk appetite and the dollar retreated from in front of the key 7.00 level against the yuan. The greenback was further weighed by strength in the British pound

Sterling firmed on reports that London was close to a Brexit related deal on financial services, that would give UK firms access to EU markets. In addition, the BoE hinted that it would be inclined to tighten more quickly if Brexit goes smoothly.

Despite the pressure seen earlier in the week, gold notched a higher monthly close for October. That was the first higher monthly close since March!

Gold got additional support from the World Gold Council’s Q3 Gold Demand Trends report. Strong central bank demand was highlighted and the WGC indicated that it expected improved demand in the jewelry and bar and coin sectors.

The market also viewed news that President Trump has signed a sanction order targeting Venezuelan gold exports as a positive. If Venezuela is unable to sell gold into the market, supply will be more limited.

Today’s strong rebound – after a nearly perfect 38.2% retracement - put the yellow metal back above all the major moving averages once again. The new high for the week bodes well for a retest of the cycle high at 1243.44 set last week. 

Penetration would bode well for the scenario that calls for additional gains toward 1262.77 (50% retracement of this year’s decline). At that point, the 200-day moving average (1270.66 today) would looking increasingly attractive.

Silver rebounded to new 2-week highs after setting a 3-week low just yesterday. The low from 10-Oct at 14.25 successfully contained the downside and the fact that silver was a leader on today’s rally is encouraging for the whole precious metals complex.

That is reflected in price action in the gold/silver ratio, which was unable to sustain the most recent probes above 85. The ratio has fallen about 2% from yesterday’s high at 85.22, which has got to make the holders of the massive short position in silver futures really nervous.

The cycle high in silver 14.92 (02-Oct high) is very much back in play. IT now corresponds fairly closely with the 100-day moving average (15.06 today). A sustained push above 15.00 would suggest that silver has indeed bottomed.

Platinum surged to new 4-month highs, buoyed by those hopes for an easing of U.S.-Sino trade tensions. The 859.92 Fibonacci objective has been satisfied, shifting focus to the 200-day MA (882.31 today).

Palladium continues to recover from recent losses, but platinum has stolen the spotlight today. A climb back above 1100.00/1102.92 is needed to ease pressure on the downside. While this level was pressured, it has capped gains thus far today.


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