Gold exploded out of the gate last Friday to blast straight to a new record high. Piggybacking off the momentum that had sustained it throughout last week, the precious metal gained over 1% to settle just shy of $2,722. As central bank liquidity begins to pour, the safe haven asset appears all too happy to soak up the excess cash. With so much attention on gold, one could be forgiven for overlooking the arguably more momentous move from silver, which gained a staggering $2 on Friday to close at $33.7 an ounce. For context, we would need to turn our clocks all the way back to December 2012 to see such prices.
The Dollar finally allowed itself a moment of respite since beginning its October crusade. Over the past three weeks, the DXY has risen mercilessly from 100.5 all the way up to 103.5 as markets rebalance around predicted interest rate differentials. The European Central Bank has been relatively aggressive in lowering rates on the Euro this year – last Thursday marking the third cut since May. The Federal Reserve on the other hand has only adjusted rates on the Dollar once. Judging by the tone of the respective heads of each central bank, the gap between the two is more likely to widen than to narrow. Although still two and a half weeks away, FedWatch is massively pricing in a mere 25 bps cut in November.
Still no end in sight to the woes facing oil markets. Chinese demand forecasts continue to paint a bleak picture, as do those of many other parts of the world. There has been no resolution in the Middle East as of yet, however there are some emerging signs of mitigation between the various conflicting parties.
The economic calendar is looking particularly barren this week. Speeches from several Fed board members as well as the ECB president may provide some entertainment, but the first real tradeable event – the Bank of Canada interest rate decision – will not occur until Wednesday. Manufacturing and services PMIs litter the latter half of the week, among equally mundane publications.
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