Gold is maintaining a generally positive short-term bias in quiet pre-holiday trading, underpinned by safe-haven interest. U.S. markets will be closed on Thursday for the Thanksgiving holiday and market conditions are likely to be thin into the weekend.
UK Prime Minister Thresa May is in Brussels with the hope of finalizing a Brexit deal. The EU missed a deadline on Tuesday to deliver a declaration on future relations with the UK. European leaders will meet over the weekend.
Ms. May remains under intense political pressure at home, raising uncertainty as to whether her government will survive. Many seem to fear that Brexit without a deal will result in considerable market turmoil.
Tensions between the U.S. and China remain elevated ahead of next week’s G20 meeting in Argentina. U.S. trade representative Robert Lighthizer accused China of failing to alter its “unfair and unreasonable, and market distorting practices”.
Trade, geopolitical and political risks have weighed on global shares in recent weeks. While U.S. stocks are trading higher today, continued uncertainty is likely to remain a millstone around the neck of the markets. If more investors rotate out of stocks, they very well may find their way into the precious metals.
Gold has retraced all of yesterday’s minor pullback and then some. The breach of yesterday’s high at 1228.78 bodes well for the anticipated retest of the October peak at 1243.44. An eventual breach of the latter would put gold back on track for a push to the 1262.76 level, which marks 50% retracement of this year’s decline off the April high. It also corresponds closely with the 200-day MA (1262.60 today).
Silver continues to retrace recent losses as well. More than 61.8% of the decline from 14.92 to 13.90 has now been retraced, favoring a full retracement back to the 14.92 high. An eventual breach of this level would confirm a rather large double bottom at 13.95/90.
Mike McGlone of Bloomberg Intelligence categorized silver market sentiment as “maximum contempt,” noting that such a condition often marks significant bottoms. Renewed weakness in the gold/silver ratio also lends some credence to a bottoming scenario.
Platinum has firmed modestly, leaving the trendline intact on a close basis. A breach of the highs from earlier in the week at 855.08/36 is needed to further ease pressure on the downside and keep focus on the uptrend that has emerged since mid-August.
Palladium is consolidating within yesterday’s range, having held support marked by the 9-day MA (1139.25 today). The dominant trend remains decisively bullish, so short-term setbacks will continue to be viewed as buying opportunities.
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