Gold and silver prices closed the week near three-month lows, but resistance around the $1,450 and $16.70 levels provided support as traders began to question U.S-China trade progress on Friday.
The correction in Gold and silver prices was triggered on news that the U.S and China were both looking at unwinding some trade tariffs as they seek a resolution to the ongoing trade war that has significantly damaged economic growth across the globe.
However, as has been the case over the last 18 months, nothing has been formally announced – with mainly ‘speculative tweets and unverified reports’ driving sentiment. Traders are not quite so confident the U.S and China are close to signing a partial trade deal. On Friday, precious metal prices managed to recover some losses as U.S President Donald Trump told reporters that he did not agree on rolling back tariffs on Chinese goods. The comment immediately halted the rally in U.S equities and provided temporary support to Gold and silver prices.
One scenario ahead that could significantly boost precious metal prices in the near-term is the 'phase one' deal delay. The largest threat to the reflation trade and for higher precious metal prices is if the December U.S-China 'phase one' trade deal signing summit is delayed or even cancelled, which would inevitability reverse all of Gold and silvers recent losses.
Next week there are several high-impact news events, which could determine gold and silver’s next big move.
On November 12, U.S President Donald Trump will deliver a speech at the Economic Club of New York, an event that traders will be monitoring very closely.
Other key events include Federal Reserve Chair Jerome Powell's testimony on the economy before Congress on November 13, as well as the release of U.S inflation data.
Overall, the bull market in precious metals remains intact.
Economically, trust in the world trade order has been damaged. Even with a U.S-China deal the economy is unlikely to go back to where we were. And let’s not forget the other on-going challenges still facing the global economy from Brexit, central bank rate cuts, slowing growth to geopolitics tensions in Middle East.
Therefore, whilst gold and silver remain vulnerable to further weakness in the near-term – it goes without saying – the fundamental backdrop in the long-term still remains extremely bullish!
Where are commodity prices heading next? Watch Phil Carr at The Gold & Silver Club review Gold, Silver and Crude Oil with the latest price forecast and predictions
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