GOLD: Gold & Silver Rally, Silver Breaches Bull Trigger Reinstating Uptrend
Gold finished November almost 6% higher with a 2% rise to $4239.44/oz in holiday- and outage-thinned Friday trading. The US dollar was slightly softer (BBDXY -0.1%) but 2-year yield a little higher. Gold and silver were supported over the latter half of November by growing expectations of a Fed rate cut with 22bp continuing to be priced in by the market. Silver breached the bull trigger confirming its uptrend.
- Bullion reached a high of $4239.67 below the 13 November peak at $4245.23, which is also initial resistance. Technicals are signalling a bullish trend structure with the bull trigger at $4381.5. Gold has begun Monday’s trading lower at $4220.0.
- A 5.8% jump in silver to $56.500 on Friday made a significant contribution to the metal’s 16% November gain. It reached $56.532, above the bull trigger at $54.480 and three other resistance levels including $56.153, a Fibonacci projection, confirming a resumption of the primary uptrend. It has started today higher again at $56.82.
- It has more than unwound October’s correction to be 3.7% above October’s high and 24% above its low. The tightness in the physical market continues to drive its outperformance over gold.
- Silver was added to the US Geological Survey list of critical minerals last month and so imports could face duties.
- Markets will continue to data watch ahead of the 10 December Fed decision and government shutdown delayed data are released. The focus this week is likely to be on Friday’s September PCE prices & December consumer sentiment as well as November ISM, November Challenger job cuts & ADP employment.
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
