Positive Development In Gold Even With Dollar Strength

Although the biggest story of the day was rising oil prices, let’s talk about gold first.

Physical buyers in China, just returned from a week-long holiday, jumped in and helped push up gold in regular spot trading. Traders in China are generally more active in the gold markets, whether physical, spot or futures. Spot is up less than $1.80 despite a decline of $5.65 due to a strong greenback.

Gold slid 4.5% last week, touching a four-month low of $1,241 per ounce on Friday, breaking support of $1,300. That unleashed a wave of technically driven selling, but the trend seems to be changing today.

There are a number of fundamental reasons why.

Friday’s jobs report was fair-to-middling, but it certainly points in the direction of December as the likely meeting for a rate hike by the Fed. There is also a current of sentiment that says the gold and silver markets were oversold.

Wall Street likes stability and the notion that traders can count on something a little more certain on the rate front helps to engender positive sentiment.

On the stability question – really volatility in a broader sense – traders are beginning to settle on Hillary Clinton as the likely next President of the United States. That is not necessarily a political endorsement by them, but an endorsement of the resolution of a topsy-turvy campaign.

It should be noted, however, that elections are often only a temporal influence and we are apt to find ourselves in January with a divided government once more that will impede economic progress.

Crude oil hit a one-year high after Russia said it would join OPEC’s production control program that is designed to push prices back into a “normal” range. West Texas Intermediate settled up 3.00% but has since backed off its top.

There are a few spanners in the works. Libya and Nigeria want exceptions because of domestic unrest and production difficulties.

But the real 800-pound gorilla in the marketplace is North America. The U.S. and Canada are already gearing up shale and tar-sand production, which will continue to exert heavy bearish influence on prices. Look for serious downward pressure at $55 per barrel and again at the psychological barrier of $60 per barrel

U.S. equites traded up across the board. The Down and S&P bumped up about 0.50% while the NASDA rose about 0.70%.

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Wishing you as always, good trading,