Written Commentary
GOLD
December gold futures are higher and closing in on record high levels, as markets shift their focus to a series of U.S. economic reports there are scheduled to be released this week.
Prospects of easier credit conditions from the U.S. Federal Reserve remain an underlying supportive influence on the price of gold. Modest interest rate cuts are being factored in, including increasing probabilities that the Federal Open Market Committee will lower its key interest rate at its November 7 policy meeting.
Lower interest rates are bullish for the price of gold since easier credit conditions reduce the opportunity cost of holding non-interest-bearing bullion.
SILVER
December silver futures are higher, following the price of gold, and are now above a four-day downtrend line. Some of the strength in silver is linked to flight to quality buying and ongoing uncertainty around the U.S. presidential election and tensions in the Middle East, which are boosting safe-haven demand for precious metals.
Silver futures have remained firm despite the bearish influences of the rally in the U.S. dollar and rising U.S. Treasury yields.
COPPER
December copper futures are higher and are now trading above a five-day narrow congestion range. Investors remain cautiously optimistic ahead of key policy announcements from China’s leadership meeting next week.
In addition, China’s PMI reports for October, which are due later this week, could provide insights into the effects of recent stimulus measures in light of ongoing demand uncertainties that have been impacting commodity prices.
A strong U.S. dollar and rising U.S. Treasury yields have also weighed on commodities. In addition, increasing prospects of a less accommodative Federal Reserve have been limiting the upside for industrial metals.
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