Strong Upside Move in Both Gold & Silver

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Both gold and silver had a stellar performance today, moving sharply to higher pricing as the net result of both dollar weakness and market participants bidding up these precious metals. As of 3:15 PM Eastern standard time, gold futures are trading up $21.40 (+1.76%), and silver is up 3.38% (+ $ 0.473). Currently, the most active December Comex gold contract is fixed at $1,236.30, and silver futures are currently priced at $14.75.

Spot gold is currently fixed at $1,233.80, which is a net increase of $19.70 on the day. On closer inspection, we can see that dollar weakness and selling pressure each contributed about half of today’s realized gains. According to the KGX (Kitco Gold Index), dollar weakness has added $10.30 of value, with the remaining gains of $9.40 a direct result of traders bidding up the precious yellow metal.

The U.S. dollar had a dramatic fall from grace today as it lost almost 82 points (-0.84%) and is currently fixed at 96.085. Today’s decline is primarily attributed to both euro dollar and British Sterling strength. Gains in these two currencies are the result of a report by the Times newspaper that announced a “tentative deal between the United Kingdom and the eurozone which would grant British companies the ability to continue to work within the European markets after Brexit is complete.”

However, according to Reuters officials in Brussels and London, the report by the Times newspaper was, in fact, incorrect. “The United Kingdom and the European Union have made progress on a deal to give London’s dominant financial center basic access to EU markets after Brexit, two British officials said, but no agreement has yet been clinched.”

The euro-dollar is currently up 94 points and fixed at 1.14077 which is a net increase of 0.83% on the day.

Today’s economic news also included a report by the Institute for Supply Management regarding the ISM manufacturing index which came in below expectations. Analysts had predicted that the index would come in at 59% when in actuality the real numbers were 57.7% in October. This created bullish market sentiment for the precious metals complex across the board, with silver exhibiting the most significant percentage gain.

Tomorrow, the U.S. Labor Department will release its monthly employment report. Currently, analysts are predicting that 188,000 new non-farm jobs were added last month. However, based upon yesterday’s ADP employment report, the Labor Department numbers could actually be stronger than current forecasts.

Lastly, Reuters reported that President Trump and President Xi Jinping both expressed “optimism” that upcoming talks will result in a mutually acceptable solution to the current trade war.

President Trump said that discussions with the Chinese President during a telephone call today indicated “some optimism” when tweeting that “We talked about many subjects, with a heavy emphasis on trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina.”

The trade dispute between the United States and China has had an adverse effect on the Chinese Yuan, as it trades against the U.S. dollar. If the two superpowers can resolve issues stemming from the current trade dispute, it would undoubtedly diminish U.S. dollar strength and strengthen the Chinese Yuan.

However, what began as a trade dispute is certainly much closer to a full-blown trade war.  More importantly, the upcoming meeting needs to bring the two superpowers closer to an agreement, because President Trump has threatened to levy additional tariffs on the remaining $257 billion worth of Chinese imports currently not been taxed if he “doesn’t walk away satisfied from the upcoming meeting.”

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer