On Friday, interestingly enough, the Gold 100-day moving average settled exactly on the Dillon Gage asking price of $1,226.20. As we indicated in our last report, Wall Street traders were looking for a breakout in the price of Gold if it settled above that level.
Nonetheless, we start the week lower, as the U.S. Dollar is seen trading higher again and approaching the 96 handle. Not helping matters are higher U.S. Ten Year Treasury yields, once again are up over 3.2 percent.
The majority of Gold traders I spoke with this morning indicated that at this juncture, all the markets are focusing on the mid-term elections, as there are no other significant headlines that they see impacting the price of Gold at this time.
So unless something comes out of the woodwork, we can expect the spot price of Gold to sit in a technical trading range between $1,210 and $1,230 until the elections.
Traders don’t expect much movement in the price of Silver either at this time and will probably will stay range bound as long as the price of Gold stays put. But in the back of the minds of traders is the significant amount of Silver sitting in the CME warehouses (almost 289 million ounces). Not to mention the amount of Silver that is being held off the exchanges at this time. How anyone can claim in advertisements that Silver is in short supply leaves me scratching my head.
The Lively Palladium Market
The Palladium market continues to get all the attention of the Hedge Fund managers, and the ETF investor. Fresh buying is emerging from both participants and with a recovery in the Chinese Equity markets should give the price of Palladium the fuel to break thru its soft resistance levels and test the $1,100 level.
China released news that it’s long anticipated plan to reduce personal taxes in hopes to jump start its economy will begin the first of the year. After a series of weaker than expected economic data reports, China is enthusiastic to put in place the right policies to achieve the GDP number it has set and to add an economic buffer to the continuing trade war with the United States.
The Platinum Market
I felt guilty leaving out the news on the Platinum market as it seems there is little if any investor interest at this time. Hurting the price of Platinum are European Diesel Engine sales dropping to just 29 percent of new vehicle sales in Germany. Suzuki and Mitsubishi are the latest manufacturers to announce they will cut diesel engines from their European line up, also joining the likes also of Nissan and Toyota. This news doesn’t bode well for the price of Platinum going forward.
No wonder we continue to hear traders talking about buying Palladium and selling Platinum in an arbitrage play.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.