Saudi Purge Boosts Oil & Gold

Walter Pehowich is off today. The Insights are compiled by Dillon Gage analysts.

As we start the week, attention is diverted off of America’s shores.

Over the weekend, oil hit a 2-year high as Saudi Arabia arrested four ministers and 11 princes in an anti-corruption scandal. Oil’s rise in turn boosted precious metals, a bit.

However, the yellow metal is still stuck in that $1,270 to $1,280 rut we mentioned on Friday. As we go to press, gold is at the lower end of the rut, while silver tip-toed upwards this morning and is hovering just below the $17 mark. While platinum holds at $922 and palladium is once again nosing above $1,000.

Turning to Asia, President Trump’s 13-day, five-country tour of Asia continues today in Japan. A focus of his meetings is expected to be how to constrain North Korea’s nuclear agenda, which could inturn prompt more verbal sparring with Kim Jong Un. If rhetoric and tempers flare, watch for safe haven inspired gold buying.

Coming up at the end of this week is the release of November’s Consumer Sentiment Index. It hit a 17 year high in October, resulting in a sell-off of gold. While the chance of setting another record is unlikely, most analysts feel the Index should remain strong.

The Fed

Last week, President Trump announced his choice of a “Dove,” Jerome Powell, for the next Fed Chair. It’s expected that later today, New York Federal Reserve President William Dudley will announce that he will retire from his post in January, that’s six-months earlier than expected. Dudley has been a solid supporter of current Chairwoman Yellen’s gradual, dovish approach to raising rates. So the question of the balance between doves and hawks on the Fed heats up again.

Have a wonderful Monday.

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