Precious metals rebound on dollar weakness

Precious metals rebound on dollar weakness

By Margaret Yang, CMC Markets

Gold, silver and platinum rebound from multi-month lows

Precious metals rebounded from multi-month lows as the US dollar index retraced from its recent highs and entered into a correction phase. The dollar index fell for a third day to 101.30 this morning, probably due to profit taking activities following the big post-election rally. Expectations of a  Dec rate hike are extremely high, as the futures market now implies 100% probability of a 25bps hike in Dec.

Gold, silver and platinum prices have been hammered by a strong dollar this month. Gold is now trading at $1,192, challenging a key Fibonacci level at $1,193. Silver prices jumped to $16.61 from $16.18 two days ago. Platinum also rose to $924 – the previous support level which has now become an immediate resistance level.

US GDP data in spotlight

The US 3Q GDP data (preliminary) tonight will set the tone for US equities and the  dollar index tonight and tomorrow. The previous “advance” estimate released last month showed the US economy grew at an annual rate of 2.9 percent and the preliminary data tends to be very close to the “advance” reading. Thomson Reuter’s consensus forecast is 3% GDP growth in the third quarter, much higher than the second quarter reading of 1.1%.

A better-than-expected reading will likely to fuel the dollar’s rally and boost stock markets, whereas a worse-than-expected reading will probably do the reverse.

Silver – cash


Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore

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