Weekly Commodities Wrap: Precious Metals Rise On Weaker USD & Geopolitical Concerns

Gold: Fed’s Inflation Concern Fuels Gold Rally

Following a decline which lasted four consecutive weeks, the price of Gold rebounded this week to recoup some of its losses, helped mostly by a weaker US Dollar. The release of the FOMC minutes sparked some covering of recent longs in the Dollar as they showed that many on the committee highlighted their concern about persistently low inflation. While the Fed still intends to push ahead with their plan for a December rate hike, there seems to be a strong risk that further weakness in inflation could delay the move. With this in mind, Friday’s CPI reading will take on even greater importance, and if inflation falls short once again, we will likely see the chances of a December rate hike priced down which should further support Gold prices.

The rally in gold this week has seen price trade back up to retest the key 1295.80s level which has been pivotal over the year. A break back above this level should see further topside momentum kick in with the 2017 high & top of the bullish channel the next clear target zone. To the downside, support remains at the October low around 1260.30s with the rising bullish channel support around the same level.

Silver: Geopolitical Concerns & USD Weakness Keep XAG Supported

Silver prices tracked the yellow metal higher this week as the weaker US Dollar provided support. The precious metals have also been bolstered by an increase in geopolitical tensions linked to reports that US President Trump will stop at the North Korea – South Korea demilitarised zone during his Asia trip next week to deliver a staunchly anti-North Korea speech.

The rally in silver over the last month has seen prices jumping from mid 16s to mid 17s. The next key resistance will be a test of the 17.74s level which was the June high. Price continues to move within a large, longer-term bearish channel but for now, the focus remains on further upside.