Certain Uncertainty

After trying to hold the $1200 level, gold has shied back and is hovering right below that psychological mark. The continued strength in equities has helped limit gold’s upside, although silver, due to industrial factors, found a tiny bit of power – well, a spark, is more like it.

Some of the uncertainty in gold is the nature of this week’s holiday aura. It is a short trading week in the United States. Formally, Thursday is the holiday, but Wednesday and Friday will end up being lighter days in New York trading because people tend to slip out early Wednesday and simply not work on Friday.

That should make gold enthusiasts wary, though, because any large move may inject volatility into the pricing of precious metals. Friday – and therefore Wednesday – is the end of the month, so accounts may be squared up ahead of Thanksgiving.

Tuesday will give us two economic indicator readings. U.S. leading economic indicators and consumer confidence reports are due out, and while the former may show some wavering on growth, the latter will probably at least hold steady. But, the uncertainty will hold back any bold moves until the dust from the gauges’ release settles.

An unexpected surge in business sentiment in Germany also gave some strength to the euro, sending the dollar down and lending support to the price of gold.

What, exactly, the European Central Bank will do regarding stimulus still remains a mystery. If they are serious about pushing the union’s economy over the top, that will probably mean renewed strength for the dollar, and therefore lower gold prices.

Also adding uncertainty is the Swiss referendum concerning the mandating of a certain amount of its reserves in physical gold. While the amount seems indeterminate at this point, the actual amount in dollars will not be far off the amount, by percentage held by other major western economies. So, this seems to us a tempest in a teapot.

One last element of volatility remains on our radar: Ukraine and the Russian invasions of that country’s territory. Today, another former Russian-dominated country, Lithuania, offered military assistance to Ukraine.  While Lithuania is a small country with limited military resources, it is a member of NATO.
 

Wishing you as always, good trading,