Precious metals are two tales. One is physical demand and the other driven by safe-haven froth. On Monday, physical demand fell out of gold, pushing it to a nearly two-month low, while palladium rose to record highs on fears of a supply loss.
December delivery for U.S. gold futures settled down $33.50, or 2.2%, at $1,472.90 per ounce on the Comex division. Also, marking a bottom since August 6, the session low was $1,470.65.
Moreover, according to Philip Streible, they broke below the September 18 Comex low of $1,490.70. As a result, the bottom has run out of gold for now.
He also added that if the momentum stays, they have a bearish head-and-shoulders pattern now and could go as low as $1,450.
Spot gold was down $27.67, or 1.9%, at $1,469.31, reflective of trades in bullion.
Until last week gold held firmly at the critical $1,500 bullish level, and a rampant dollar also undid it. On Monday, the U.S dollar index surged to four-week highs of 99.113, measured against a basket of six currencies. Besides, it became the preferred hedge again for investors seeking protection against the U.S-China trade war.
Palladium opposed the trend in precious metals. Most-active futures on Comex settled down $5.40, or 0.3%, at $1,647.50 per ounce.
Furthermore, an all-time high of $1,669.40 goes to palladium futures. Spot palladium, reflective of physical trades, hit a record high of $1,702.20 before trading down $10.85, or 0.6%, at $1,674.95.
Serving as an emissions-reducing agent for gasoline-powered engines, prices of palladium rose about 33% this year. Also, it rose nearly 9% this quarter on fears of tight supply despite a weakening auto sector.
Precious Metals Demand
Precious metals have fabrication demand, but a good part of this is speculative demand from investors. Besides, people who are getting out of gold, silver, and platinum expect prices to rise. As a result, some of the investors and people are shifting into palladium.
President Trump, who’s got a cellphone with Twitter on it, can move markets 700 points at one time. Also, with just one tweet on China, it will not only be a dollar that’s moving, according to Streible.
Furthermore, Streible says he will not bet against gold returning to $1,500 in short order. Besides, this thing could change at whim.
Gold has also lost much of the geopolitical risks that have been common over the past two weeks.
Also, it started after Saudi Arabia’s quick action to restore output following the September 14 attack on its energy infrastructure. Riyadh’s stand not to engage militarily with Iran disadvantaged gold of any war premium risk from the attack.
Gold futures fell rapidly. U.S stocks and bond yields dulled investor demand for the precious metal, settling at their lowest in two months. Also, Altavest’s managing partner says a strong U.S dollar is a headwind for gold priced in U.S dollars. Technical considerations may be more influential on today’s action in the gold market. According to FactSet data, prices for the contract lost 3.7% for the month but gained 3.4% for the quarter.
- Trading Instrument