Gold and silver prices rally amid risk aversion

October 31, 2019

New York (Oct 31)  Safe-haven gold and silver prices are moderately up in early U.S. trading Thursday, on some safe-haven demand amid reports the world’s two largest economies are not close to a trade deal. A wobbly U.S. dollar index recently is also working in favor of the precious metals market bulls. December gold futures were last up $11.80 an ounce at 1,508.20. December Comex silver prices were last up $0.168 at $18.035 an ounce.

Risk appetite has been dented Thursday on reports the U.S.-China trade talks have taken a step backwards. This should not really be a surprise to anybody. Over the past many months traders and investors have been on a rollercoaster ride regarding progress or lack thereof in the trade negotiations between the two largest economies in the world. The latest reports are coming out of China, whereby Chinese officials Thursday expressed doubts about a complete trade deal with the U.S. ever being completed.

Asian and European stock indexes were mixed in trading overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

In other overnight news, the Euro zone reported its third-quarter GDP at up a paltry 0.2% from the second quarter and up 1.1%, year-on-year.

Meantime, China’s manufacturing purchasing managers’ index (PMI) was reported at 49.3 in October versus 49.8 in September and a forecast of 49.8. A reading below 50.0 suggests contraction in the sector.

 Hong Kong’s third-quarter GDP was reported down 2.9%, year-on-year, amid that city-state’s ongoing civil unrest.

The world marketplace is today digesting Wednesday afternoon’s FOMC decision to lower U.S. interest rates by 0.25%. That move was expected, but market watchers deemed the wording of the FOMC statement and Fed Chairman Powell’s press conference as suggesting the Fed is now on hold for further interest rate reductions.

The key “outside markets” find Nymex crude oil prices weaker in early U.S. trading today and trading around $54.75 a barrel. Meantime, the U.S. dollar index is solidly lower. 

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the employment cost index, personal income and outlays, and the ISM-Chicago business survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the overall near-term technical advantage and have regained some momentum late this week. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $1,525.00. Bears' next near-term downside price breakout objective is pushing December futures prices below solid technical support at the October low of $1,465.00. First resistance is seen at $1,520.90 and then at $1,525.00.


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