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Gold Tops $1,300 for First Time Since October 4

November 2, 2016 at 17:17 by Andrew Moran

November is already looking to be a great month for both gold and silver. After advancing more than 1% to start the month, the yellow metal has now topped $1,300 for the first time in nearly a month.

December gold futures climbed $18.70, or 1.45%, to $1,306.70 per ounce at 16:50 GMT on Wednesday. The last time gold traded this high was on October 4. This is good news for gold as the precious metal finished October down 3.3%.

Silver is also putting up a strong rally. December silver futures rose $0.29, or 1.61%, to $18.71 an ounce. Silver also has not traded this high since October 4. Silver is looking to regain momentum after falling nearly 8% last month.

What is behind this rally?

The Federal Reserve is not expected to announce a rate hike at the end of its two-day policy meeting on Wednesday. The Federal Open Market Committee (FOMC) may just provide further hints as to what it will do at next month’s meeting. The CME Group FedWatch tool suggests there is an 80% likelihood that the US central bank will raise interest rates at next month’s FOMC meeting for the first time since December 2015.

Gold prices extended their gains following a new report from Automatic Data Processing (ADP) that showed private-sector employers added just 147,000 jobs last month, which is the slowest pace since May. Economists surveyed by MarketWatch had anticipated 169,000 jobs.

Investors are now anxious over next week’s US presidential election between Donald Trump and Hillary Clinton. For weeks, traders have expected a Clinton victory, but after the FBI confirmed that it was further probing the former Secretary of State’s emails, investors are now uncertain about the results.

According to the latest poll, there is now a deadlock between the Republican and Democratic nominees ahead of Tuesday’s general election.

Ostensibly, the election uncertainty impacted the US dollar as the greenback weakened on Wednesday.

Gold is sensitive to a rising-rate environment because it lifts the opportunity cost and it sends investors into yield-bearing assets. Gold is negatively affected by a stronger greenback because it makes dollar-denominated commodities more expensive for foreign investors.

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

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