The gold price rose Thursday, thanks to safe-haven buying. Oil prices continued their dismal week.
The oil prices are down because of concerns about oversupply, and due to geopolitical uncertainty.
Silver prices on COMEX were stable, but the London Metal Exchange’s three-month contract for copper rose by more than 1 percent.
Gold rallys
The December COMEX gold contract traded above $3,900 per ounce on Thursday.
The gold price rose, driven by the expectation of more US interest rates reductions in the coming year, and the political uncertainty caused by the ongoing US government shutdown.
Recently, the US Dollar Index dropped to a near-one-week low. This was a level that last appeared on Wednesday.
The decline in private sector payrolls is a result of data that was released Wednesday. It showed a drop of 32,000 US employees for September.
The August figures were revised downwards by 3,000 positions.
US Government has mostly ceased its operations. This could threaten thousands of jobs in the federal government and delay important economic reports, like Friday’s Non-Farm Payrolls report (NFP).
David Morrison is a senior analyst for Trade Nation. He said that the US shutdown and the continued weakening of the US dollar gave the bulls more reasons to hold on to their positions and to add to them.
The daily MACD is still stretched upwards. The MACD may not be as extreme as in April when gold reached a new record of $3500 but it still serves as a caution to bulls.
Morrison said that while gold is likely to continue its upward trajectory, it may first need a consolidation period or a pullback.
Copper and silver
Silver contract prices on COMEX were $47.650 per ounce at the time this article was written, which is largely the same as the previous closing price.
The silver price has followed the gold rally with a rise of more than 56% in this first half of 2018. The return on gold in 2025 is less than this.
Morrison pointed out that silver tells the same story as gold. It appears even more upside-extended when examining its MACD daily.
The silver price is still behind gold. It has not yet reached its record high $50 set in April 2011
Silver prices are currently supported by several factors: the US shutdown of the government, the weakening of the dollar and expectations of lower US rates of interest.
Morrison stated that “both gold and silver have shown a remarkable resilience which has been pleasantly surprising to many.”
But traders must ride these rallies carefully. If history is any indication, traders should prepare for wild swings in price and volatility if this bull market continues.
Copper prices are also on a roll.
The LME contract has been above the crucial psychological level of 10,000 per ton.
The copper contract at the LME is currently trading for $10,493.70 a ton. This represents an increase of 1.1% over the previous closing price.
Oil extends losses
The oil prices fell for the fourth day in a row on Thursday due to concerns about an oversupply of crude.
The US shutdown of the government and the expectation of an increase in output by OPEC+, the Organization of the Petroleum Exporting Countries (and its allies), have contributed collectively to a feeling of uncertainty about the outlook for the global economy.
Reuters reported that OPEC+ could increase oil production in November by up to 500,000 barrels a day, a tripled amount compared with October. Saudi Arabia is aiming to regain market share.
Morrison stated that this has “only added to the concerns about the ongoing global growth slowdown and once again raised fears of the world soon drowning in petroleum”.
The finance ministers of the Group of Seven announced Wednesday they will intensify their pressure against Russia.
The actions are aimed at entities who continue to buy Russian oil or assist those in evading the sanctions.
According to the Wall Street Journal, US officials plan to give Ukraine intelligence that will facilitate missile attacks on Russian energy infrastructure.
According to the WSJ, this intelligence aims at enabling Ukraine to target pipelines and refineries in order to deprive the Kremlin oil and revenue.
Morrison, from Trade Nation, says that the front-month WTI crude oil has regained significant support and is currently trading at around $61,50.
If the price breaks below this level, it could lead to a decline towards $60. A rebound from current levels is not impossible, but it’s unlikely given the recent weakness.
The post Commodity Wrap: Precious metals shine amid uncertainty in the economy, Oil declines could be updated as new developments unfold.
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