Both Gold and Silver Prices Climb for the Third Consecutive Week

Both gold and silver experienced extremely strong finishes on the week. The cumulative effect has seen both gold and silver pricing gain value for the last three consecutive weeks, resulting in gold prices closing at a six-week high. A combination of factors have been cited as the underlying of events moving safe haven assets to new highs. These factors involve both actions by North Korea as well as current economic data.

According to the latest report by the Commerce Department, weaker than expected GDP data came in at an annualized growth rate of 1.9%. This data reflects the fact that the first half of this year came in below last year’s average in which GDP expansion averaged about 2.2% overall.

These numbers are well under expectations, goals, and campaign pledges by President Trump. They indicate that the current administration has a way to go in actualizing their vision of a revitalized and robust economy, with GDP growing at an annual rate of 3%.

In an interview with Bloomberg News, Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York said, “The economy is moving along at a pace that’s unexciting but not worrisome, I wouldn’t want to emphasize that growth is accelerating based on the second quarter. The economy is plodding along at a slow and steady pace.”

Current economic data revealed today suggests that the Federal Reserve will be more reserved in future rate hikes. This data also put significant downside pressure on the U.S. dollar which continues its freefall, losing another 6/10 of a percent in value today vis-à-vis the dollar index.

The geopolitical turmoil also influenced gold trading today, when it was revealed that North Korea fired a missile on Friday in yet another ballistics test. Based on the available information, North Korea fired a second intercontinental missile this month.

As reported by Bloomberg News, “The Pentagon’s assessment is the projectile is another ICBM, spokesman Captain Jeff Davis said in a statement. It traveled about 1,000 kilometers (621 miles), he said. South Korea’s presidential office also said it believed the latest missile was an ICBM.”

The action by North Korea coupled with economic data released today by the Commerce Department is a one-two punch prompting precious metals traders to bid gold, silver, platinum, and palladium to higher pricing.

On a technical basis, gold has broken above minor resistance at $1262, with the next major level of resistance sitting firmly around $1300 per ounce. As of 4 o’clock EDT, gold futures basis, the most active August contract is trading up $8.90 at $1268.80, which is a net gain of 7/10 of a percent on the day. Based on the information available to us we would expect more follow-through buying and higher precious metals pricing next week.

Wishing you as always, good trading,