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.

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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.

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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.

Copper: Concerns About China Shortages Fuel Copper Rally

Copper prices surged to a fresh one month high this week fuelled by speculative buying pressure driven by expectations of potential shortages in China. In July & August, the government announced plans to limit imports of waste including scrap metal. It is unclear what the restrictions on copper will be, but speculators are taking an early position expecting that the supply of copper in the country will be affected.

Copper also received support this week from reports that the minister of mining in the Congo has ordered a cessation of copper exports by a joint venture of Chinese ventures due to their low value on the international market, further limiting the supply of copper.

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After a failed breach of the 2015 swing high, copper sold off back down to a retest of the broken long-term bearish trend line where it found support. It has since turned higher again and the rally this week has seen price pushing back up to just below 2017 high. The focus is firmly on further upside at this stage and a break of the 2017 high will bring the next key resistance into play at the 3.282 level which is the mid-2014 high.

Iron: Rising Inventories Continue to Weigh on Price

The price of iron ore extended its decline this week as concerns around the increasing level of steel inventories in China deepened as the domestic market returned following a week-long holiday. Steel mills have been taking a cautious approach to acquiring iron ore in light of the production cuts ordered by the Chinese government recently. Traders and investors are becoming increasingly concerned about the potential impact of steel mill closures over the National Congress in China which is due soon while rising iron ore inventories are putting downward pressure on the spot and futures price.

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The slide in prices this week has taken Iron ore back down to $60 per tonne and the year to date low is now firmly in sight as the fundamental picture looks to be worsening.