Gold Rises To Two-Week High

Market Gage Gold Market Insights

Gold rises to two-week high earlier this morning after settling above the key $1,500-an-ounce threshold for the first time since Oct. 10. After gaining 1.1% this week, gold looks headed to its best week in five.

Investors fled to safety in the yellow metal amid weak economic data from the U.S. that also made it more likely that the Federal Reserve will boost interest rates for a third consecutive time next week. Meanwhile, the BBC reported that European Union ambassadors will meet to discuss how long a Brexit extension to offer the U.K. and Parliament considers Prime Minister Boris Johnson’s call for an early election in December.

Bullion increased 0.6% Thursday to settle at $1,504.70 an ounce on Comex. It rose 0.7% in the first four days of this week and is up 2.2% so far this month. The December contract is up to $1,514 this morning.

Now that spot gold has broken back above $1,500, bulls will seek to test resistance around $1,520 and at $1,535, while bears will look to support levels around $1,460-$1,470, then $1,450, $1,420 and $1,385, according to a technical analysis by FXStreet.

In economic news, two key measures of U.S. business investment — orders for non-military capital goods excluding aircraft and shipments of such equipment — missed analysts’ estimates for September, Bloomberg reported. Weekly initial jobless claims fell slightly to 212,000 in the week ended Oct. 19, showing that the labor market is still tight.

The CME FedWatch Tool currently shows that 92.5% of investors think the U.S. Federal Reserve will reduce interest rates by 25 basis for a third consecutive time when policy makers meet on Oct. 30. The probability of no change was 7.5%. The European Central Bank on Thursday left rates unchanged, but outgoing President Mario Draghi gave a “gloomy” assessment of the economy.

Meanwhile, the dispute over Brexit has heightened geopolitical uncertainty. Johnson agreed to give members of Parliament more time to debate his Brexit deal if they sign off on an early election Dec. 12. The government plans a vote on the election Monday if the EU consents to postpone Brexit from the current Oct. 31 deadline until January, the BBC reported.

Investors also continued to follow the U.S.-China trade dispute, which has given precious metals direction for the past few months. U.S. Vice President Mike Pence said in a major policy speech Thursday that the U.S. isn’t seeking to “decouple” from China and doesn’t want a confrontation. But he criticized its actions against protesters in Hong Kong.

Silver’s advance Thursday outpaced gold’s. The metal increased 1.3% to settle at $17.80 an ounce on Comex. The December contract is up 1.3% this week and has gained 4.7% this month. Spot palladium is flat this morning $1,778.39 an ounce, having earlier hit an all-time high of $1,785.50 due to supply deficits. Spot platinum was also higher Thursday. It’s up 3.7% this week and 4.5% this month.


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