The gold and silver markets continue to consolidate with the approach of the Fed meeting next week.
Some traders appear to be viewing Brexit as a fait accompli and have started talking about unwinding trades that they had established as hedge against a no-deal Brexit, but others think there is still enough uncertainty to fuel some safe-haven inflows. The timing of the Brexit is still up in the air, and France is reluctant to extend the October 31st deadline, and this has increased the chance of a no-deal Brexit in some traders' minds.
December gold traded higher on Wednesday but still held within last week's range, and it gave up some of those gains overnight, as the coiling action of the recent weeks continued. With the Fed in its quiet time ahead of next week's FOMC meeting, there isn't a lot for traders to chew on, but the market seems to be expecting a 25 basis-point rate reduction.
India's Diwali festival begins on Friday, and some analysts have warned that gold sales for the holiday could be down sharply from last year due to higher prices and the gold import duty. However, cash gold trade should still see a seasonal boost.
China has approved three new gold ETFs, the first in six years, which means more opportunities for gold investment there.
Long term supportive factors for gold include, central bank buying, low and in some cases negative interest rates, and the possibility of extraordinary easing measures if the economic data worsens, but in the meantime gold and silver are stuck in their ranges.
It would probably take some sort of dramatic event on the global stage to spark a move out of the current range for either gold or silver, at least until the FOMC meeting next week.
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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 Financial Services LLC, unless otherwise expressly noted.
