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Gold And Silver Prices Close Moderately Higher As The Dollar...

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    Gold And Silver Prices Close Moderately Higher As The Dollar Index Falls To A 1-Week Low And Stocks Slide

    Dec Comex gold (GCZ20) on Friday closed up +12.2 (+0.63%), and Dec silver (SIZ20) closed up +0.029 (+0.11%).

    Precious metals prices on Friday closed moderately higher. A decline in stocks and a fall in the dollar index to a 1-week low on Friday boosted metals prices. Also, dovish comments from global central bankers are positive for gold demand as a store of value. In addition, a surge in new Covid infections in Europe is boosting the safe-haven demand for gold.

    Dovish comments on Friday from Fed and ECB members are positive for gold prices. Atlanta Fed President Bostic said he is "definitely" seeing signs of the economy slowing, and the Fed is committed to growing the economy faster than otherwise. Also, ECB Governing Council member de Cos said removing stimulus has greater risks than keeping it, and the need for additional ECB stimulus "can't be ruled out."

    Friday's U.S. economic data was mixed for metals prices. The University of Michigan U.S. Sep consumer sentiment rose +4.8 to a 6-month high of 78.9, stronger than expectations of +0.9 to 75.0. Conversely, Aug leading indicators rose +1.2% m/m, weaker than expectations of +1.3% m/m, although Jul was revised upward to +2.0% m/m from the initially reported +1.4% m/m.

    Slack price pressures in Japan are negative for gold demand as a hedge against inflation. Japan Aug national CPI ex -fresh food & energy fell -0.1% y/y, right on expectations, and the first decline in more than 3-1/4 years.

    Gold prices still have safe-haven support on heightened U.S/China tensions and risks of no-deal Brexit.

    Precious metals prices have ongoing support from the Covid pandemic that has curbed global growth prospects and prompted the world's central banks to maintain or even expand their QE programs, which is bullish for gold demand as a store of value. The Covid virus has now infected 30.407 million persons globally, with deaths exceeding 951,000.

    A resurgence of the Covid pandemic throughout Europe may prompt the re-imposition of lockdown measures that are positive for gold but negative for industrial metals demand and silver prices. France reported that new Covid infections rose by more than 10,000 Friday, the most since the end of the lockdown in May. Also, Germany reported that new Covid cases rose above 2,000 Friday, the most since late April. In addition, new Covid infections in the UK have climbed to 6,000 per day in the week ended Sep 10, up from 3,200 the week before.

    Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs on Thursday rose to a new record high of 3,415.72 metric tons (data since 2002). However, liquidation of long silver positions has emerged with long silver positions in ETFs falling to a 1-1/4 month low Monday. Long silver positions in ETFs had risen to a new record high of 897.10 million troy ounces on Aug 25.

    Big Picture Gold-Silver Market Factors: Bullish factors include (1) highly stimulative monetary policies by the world's key central banks to prevent systemic stress in the global financial system and combat the economic damage from the Covid pandemic, (2) low global bond yields, which boost demand for gold as a store of value, (3) low global inflation that is dovish for central bank policies, (4) fund and retail buying of precious metals with long gold and long silver positions in ETFs at all-time highs, and (5) safe-haven demand due to the Covid pandemic, trade tensions, end-2020 Brexit risks, and global geopolitical risks involving Iran, North Korea, and Venezuela. Bearish factors include (1) fears of long-term deflation due to the massive economic damage from the pandemic, and (2) sharply reduced industrial metals demand, including for silver, due to the plunge in global economic activity from the Covid pandemic.
    https://www.barchart.com/story/futures/quotes/GC*0/futures-prices/288910/gold-and-silver-prices-close-moderately-higher-as-the-dollar-index-falls-to-a-1-week-low-and-stocks-slide


 
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