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Gold Steady as US-China Trade Optimism Boosts Risk Appetite

November 4, 2019 at 14:00 by Andrew Moran

Gold futures are holding steady to kick off the first full trading week of November. The yellow metal is trying to find a direction in a session that appears to be dominated by gold-negative developments. US-China trade optimism has fueled risk in equities, the US dollar is steadily rising, and recent economic data is renewing bullish sentiment in the market.

December gold futures added $1.90, or 0.13%, to $1,513.30 per ounce at 12:39 GMT on Monday on the Comex division of the New York Mercantile Exchange. Gold prices enjoyed a 1.2% weekly gain last week, lifting year-to-date gains to 18%.

Silver, the sister commodity to gold, is edging higher to kick off the trading week. December silver futures rose $0.11, or 0.6%, to $18.16 an ounce. The white metal rallied nearly 2% last week, bringing its 2019 jump to just under 17%.

Precious metals are holding steady, but their performance on Monday will depend entirely on the risk assessment in equities.

Over the weekend, Commerce Secretary Wilbur Ross stated that the US government could soon issue licenses to use Huawei devices as part of concessions in the first phase of a trade agreement. American officials also said that they anticipate the deal to be signed sometime this month, but it will not happen during the Asia-Pacific Economic Cooperation (APEC) summit due to the event being canceled amid nationwide protests.

Overall, the market seems optimistic that a deal between Beijing and Washington will happen before the year is over, which means the planned tariffs next month will be scrapped.

Last week, financial markets rallied on a better-than-expected October jobs report that found the US economy added 128,000 new jobs and September job creation was revised upward to 180,000. The unemployment rate did rise from 3.5% to 3.6%, but this was attributed to more people entering the labor market and searching for positions.

The third-quarter gross domestic product (GDP) beat expectations as the US economy expanded by 1.9%. The market penciled in 1.6%, suggesting that the country’s slowdown is not as rapid as is being reported in the business media.

These positive developments are helping the US dollar rebound from last week’s dismal 0.5% decline. On Monday, the greenback climbed 0.13% to 97.36, from an opening of 97.22. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

Financial markets can anticipate a Federal Reserve keeping interest rates at a target range of 1.50% and 1.75% after slashing rates for the third time this year. It signaled that it would hit the pause button on rate cuts, suggesting that it will only impose additional reductions should the national economy plunge.

In other metal markets, December copper futures tacked on $0.0165, or 0.62%, to $2.67 per pound. December platinum futures added $3.00, or 0.31%, to $957.00 per ounce. December palladium futures shed $1.90, or 0.11%, to $1,782.40 an ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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