- Risk aversion remains the foundation of global financial and commodity markets, sending precious metals higher.
- Gold for December delivery on Comex rose $16.40, or 1.1%, to settle at $1,531.50 an ounce.
- December Silver spiked 86.2 cents, or 4.8%, to $18.711 an ounce.
Precious metals continued their way to the upside as European manufacturing reminded markets the fragility of the global economic backdrop, leading to a flight to safety, supporting both Gold and Silver prices higher. Gold prices, in particular, climbed to their highest in more than two weeks from a low of $1,511.69 reaching as high as $1,526.83, while Gold for December delivery on Comex rose $16.40, or 1.1%, to settle at $1,531.50 an ounce. Spot Silver prices, on the other hand, shot up almost 4% from a low of $17.94 to a high of $18.67 while December Silver spiked 86.2 cents, or 4.8%, to $18.711 an ounce.
Risk aversion remains the foundation of global financial and commodity markets while the uncertainty caused by the US-China trade spat continues to cause damage as reflected in the latest set of PMIs in the Eurozone. A further contraction in Germany’s manufacturing sector – to 41.4 in September from 43.5 in the previous month, will likely remain a focal point as heads turn to the next slew of key data from the US in the Producer Price Index and Consumer Price Index which should suggest a notable pick-up in August core inflation to 1.8% from 1.6% before, as temporarily-weak components continued to rebound during the month, according to analysts at TD Securities: ” Headline CPI likely rose a tenth to 1.5% y/y. Separately, personal spending data should support the view that the US consumer remains resilient. We expect a firm increase in services spending to lead the upside.”
Central banks to rinse and repeat risk-off themes
We will also here from central bank officials this week, including Federal Reserve and the Reserve Bank of Australia speakers as well as the Reserve Bank of New Zealand when they meet to decide upon interest rates. Indeed, the continued protesting in Hong Kong over the weekend, as well as U.S./China trade negotiations and the U.S./Iran situation, will, of course, be a major consideration.
Gold levels
A higher-high in the 1,500s and closing above the 21-day moving average, as well as the 4-hour 200 moving average, has encouraged further buying at the start of the week. There are now prospects to the 1,550 level which guards territories towards 1,590 as the 127.2% Fibo target area. A 50% mean reversion of the late June swing lows to recent highs around 1470 could be on the cards should the fundamentals deteriorate which guards the 19 July swing highs at 1,452.93.
Silver levels
The white metal burst through the breakout point converging around 18 the figure and shot up beyond a 50% retracement of the September swing highs and recent lows supported by the 4-hour 200 and 21 4-hour moving averages. Eyes are back on the September highs of 19.64, while on the downside, bears can look to the 21-day moving average around 18 the figure and the 16.50s further down.
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