Dec Comex gold (GCZ20) on Monday closed +48.90 (+2.51%), and Sep silver (SIU20) closed up +1.578 (+6.05%).
Precious metals on Monday rallied sharply on support from U.S./China trade tensions, a weaker dollar, and short-covering from last week's 2-1/2 lows. Industrial metals prices saw support from Monday's record high in the U.S. homebuilder confidence index, which implies stronger demand for metals used in homebuilding.
Precious metals prices on Monday saw safe-haven demand from increased U.S./Chinese tensions after Saturday's U.S./China 6-month review of the phase-one trade deal was indefinitely postponed. That review was expected to be a teleconference on Saturday among U.S. Trade Representative Lighthizer, Treasury Secretary Mnuchin, and Chinese Vice Premier Liu. Scheduling delays were cited as the reason for the postponement, but the markets suspect there is a backstory that involves larger U.S./Chinese tensions. Chinese Foreign Ministry spokesman Zhao Lijian on Monday refused to answer a question about why Saturday's meeting was postponed.
Meanwhile, there was a new move on Monday by the Trump administration against China. The Commerce Department on Monday added 38 Huawei affiliates in 21 countries to the U.S. economic blacklist, seeking to more thoroughly eliminate Huawei equipment from global 5G networks and restrict Huawei's access to chips.
Industrial metals prices saw support from Monday's +6 point increase to 78 in the NAHB housing market index, which was much stronger than expectations of +2 to 74. The index matched its record 35-year high, which was originally posted in 1998 (data since 1985). On the negative side for industrial metals prices, however, was Monday's -13.5 point drop in the Aug Empire manufacturing index to 3.7, which was weaker than expectations for a smaller -2.2 point decline to 15.0.
The ongoing Covid pandemic continues to generate safe-haven demand for precious metals. Confirmed cases of Covid have risen above 21.8 million globally, with deaths exceeding 770,000.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs on Aug 6 rose to a new record high of 3,388.41 metric tons (data since 2002). Also, long silver positions in ETFs rose to a new record high of 887.668 million troy ounces last Thursday.
