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  • Metals prices are higher at the start of the month on a weaker dollar due to risk on relief rally following news of a trade ceasefire between the United States, and China revived investor demand for riskier assets.
  • Gold bulls target the 200-D SMA located at 1258.

Industrial metals rose across the board, with benchmark London copper hitting a near two-month high. Gold hit a more than three-week high, and at the time of writing, Gold prices are currently up 1.0% at $1,230.87, having been as high as 1235.06 from a low of $1,221.26. Silver is currently trading at $14.37, up from a low of $14.16 having made a high of $14.58.  

Copper, which has been battered by an uncertain economic outlook for most of 2018 amid the trade row now stands with the potential to outperform base and other hard commodities considering the prospect for global growth under a Sino/US ceasefire. Three-month copper on the London Metal Exchange climbed as much as 2.5 percent to $6,352 a tonne, its highest since Oct. 4. The most-traded January copper contract on the Shanghai Futures Exchange rose 2.4 percent to 50,790 yuan ($7,333.55) a tonne, the highest since Oct. 15, before closing up 1.3 percent at 50,250 yuan.  

“We think the Trump-Xi ceasefire is a positive risk event, but caution that this may not be the catalyst needed for prices to revert towards fundamentals just yet,” analysts at TD Securities argued. “A “deal to make a deal” may be positive, but we continue to see headwinds for a deal to be made in the near term, which opens up the door for continued uncertainty.”

Gold positioning

The U.S. Commodity Futures Trading Commission (CFTC) said on Friday that CFTC Hedge funds and money managers increased their net short position in Comex gold contracts in the week to Nov. 2. They also trimmed their net short position in silver and cut a net long position in copper contracts in the week, the data showed.

As far as currency market correlation, the fact that the Chinese currency can now appreciate following the recent developments in the EM-FX space considering the US and Chinse talks and removal of some pressures in risk appetite from both trade sentiment and Powell’s fine-tuning should be a boon for gold and friends as the dollar falls behind.

Technical levels (Gold & Silver)

Gold climbed away from the cluster of 4hr and daily MAs, reaching to R3 at 1235 but fell shy of the 38.2% Fibo target at 1238.06. So long as the bulls hold above the 21-D SMA at 1220, the price should breach the target, and a break above the Oct 25th high of 1243 leaves the yellow metal in good stead to go onto to challenge the 200-D SMA located at 1258, guarding the 50% fibo at 1262. RSI on a daily time frame is supportive along with 4hr DMIs and RSI. However, 1180 double bottom lows will be critical on the way there. Bulls will need to get over the 38.2% retracement Fibo of the 2018 decline to recent lows at 1238.  

As for silver, technically, there is a neutral-bearish outlook although the recent spike keeps the bullish case alive so long as the price holds above the 21-D SMA. The 50-D SMA was pierced but rejected by bears; those Mas are located at 14.32 and 14.46 respectively. 4hr RSI is biased lower on the rejection and daily holds in neutral territory. Vital support is at 13.90 – as being the November low while key resistance is at 14.79 – as being the 23.6.% Fibo retracement 2018 downtrend.