Fundamental News and Triggers
Precious Metals retreat as strong US data lifts the Dollar.
- As robust economic data supported higher interest rates, gold remained below $3800. While durable goods orders unexpectedly increased and initial jobless claims dropped to a two-month low, the US GDP was revised higher to represent a 3.8% rise in Q2. As a result, the opportunity cost to store bullion decreased, reducing forecasts of three rate reductions by the Fed this year.
- In the meantime, further tariff threats strengthened gold’s appeal as a safe-haven. US President Donald Trump announced intentions to apply duties starting on October 1 that would include 25% on heavy-duty vehicles, 50% on kitchen cabinets, 30% on upholstered furniture, and 100% on imported branded pharmaceuticals.
- $10.5 billion was invested in gold exchange-traded funds (ETFs) in September, bringing the total amount invested to about $50 billion so far this year.
- On the other hand, China wants to establish itself as the guardian of sovereign gold reserves held by other countries, which might increase its power in the world bullion market.
Technical Triggers
- I expect a price retracement anytime soon. Silver must break below $44.50 to show a correction, while Gold must sustain below $3750, indicating further profit-booking to $3600.
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