Precious metals start the week on the front foot

October 19, 2020

London (Oct 19)  Gold has started the week on the front foot holding above the $1900 per ounce level trading 0.33% higher. Silver also gained some ground during the Asian session trading just over half a percent. This all comes despite Chinese GDP data falling short of expectations. The quarterly GDP figure came in at 2.7% vs analyst expectations of 3.3%, but it seems traders and investors have decided to look on the positive side overnight.  Having said that the Chinese bourses all trade lower (Shanghai Comp. -0.62%) while the Japanese Nikkei 225 (1.15%) and Australian ASX (0.85%) both trade in the black.

Elsewhere, on the fiscal stimulus front, the US President Donald Trump has moved on the offensive as he told media outlets he wants a bigger stimulus deal than House Speaker Nancy Pelosi. He gave the markets some hope saying he thinks the GOP will go along with his plan. Pelosi then set a 48-hour deadline for talks which will now make the next couple of days very interesting indeed.

On late Friday, drugmaker Pfizer announced that they could have a COVID-19 vaccine ready by the end of the year. This obviously helped the risk-on theme and leading into the EU open FTSE 100 and DAX futures look set for a positive open. One thing that could flip this on is head is the Brexit saga. With both sides remaining stubborn on key issues it seems like a game of who will blink first. UK PM Boris Johnson has asked the UK to prepare for a "no deal" Brexit but there is a feeling it could just be gamesmanship.

In terms of the day ahead, once again it is dominated by speakers. Today we hear from ECB President Lagarde, Fed Chair Powell, ECB's Lane, Mersch, Weidmann, Fed's Williams, Bostic, Harker, Clarida and BoE's Cunliffe. On the data front, there is no real teir one data. Also during the EU session, BHP Group Plc will release production figures.


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