Gold is trading near unchanged on the day but remains generally well bid given the renewed strength in the dollar. The yellow metal remains within striking distance of the 5-month high that was set Monday at 1251.01.
The greenback is garnering strength from weakness in the British pound and euro, amid ongoing Brexit concerns. On Monday, Theresa May cancelled a highly anticipated vote in Parliament that was scheduled for today. There was seemingly little hope of a vote going in favor of her Brexit deal.
The delayed vote sowed further division in Parliament, sparking renewed calls for a confidence vote. The rising prospect of a no-deal Brexit is stoking uncertainty, pressuring both Sterling and the euro. That pressure is serving to buoy the dollar, creating a headwind for the precious metals.
The start of the latest round of trade talks between the U.S. and China offered some initial encouragement to stocks. However, risk aversion resurfaced intraday after President Trump threatened to shut down the government following a heated meeting with Congressional democrats over border security.
Gold reestablished its uptrend with last week’s initial breach of the previous cycle high at 1243.44. While follow-through has been limited thus far, scope remains for a challenge of the 1255.62/1262.76 zone, where the 200-day moving average corresponds closely with the halfway back point of the entire decline off the April high. If gold can clear this technical hurdle, focus will shift to the $1300 zone.
Ideally, I’d like to see gold hold Friday’s low at 1237.29. This level corresponds closely with the 9-day MA (1236.24 today).
Silver set a new 5-week high at 14.72 in earlier trading before retreating into the range. The inability of silver to sustain gains above the 100-day and 20-week moving averages is a little concerning, particularly given that the gold/silver ratio remains underpinned.
The ratio traded as low down to 84.64 in earlier trade, leaving support at 84.58 intact. The ratio has regained the 85-handle intraday.
Platinum has firmed modestly but remains within Monday’s range. Renewed trade talks may have sparked some short covering. If this is the extent of it, the market is not terribly optimistic.
Palladium on the other hand is up about 2% today and trading close to parity with gold. Last week’s record high at 1260.33 was approached but remains intact thus far.
Fresh record highs would bode well for a push to 1280.09 initially, but potential would be toward 1300.00 and 1329.64. With the supply and demand fundamentals still positively aligned, dips are still seen as buying opportunities.
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.
