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How Low Can Metals Go

By:
Barry Norman
Updated: Nov 10, 2015, 06:47 UTC

Tuesday morning trading saw gold prices added just under $4 as traders continued to buy up the cheaper metal. Gold moved to 1091.80 while the US dollar

How Low Can Metals Go

How Low Can Metals Go
How Low Can Metals Go
Tuesday morning trading saw gold prices added just under $4 as traders continued to buy up the cheaper metal. Gold moved to 1091.80 while the US dollar kept its momentum moving up 7 points to 99.20. While the market braces for the first US rate hike since 2006, a consensus is forming at the European Central Bank to take the interest rate it charges banks to park money deeper into negative territory in December, in a move that could weaken the euro and push up inflation.

The Federal Reserve would require a “few more data points from around the globe” before they raised rates. Getting it right is of the utmost importance. You need these sorts of numbers to flow through for a few consecutive months before you’re really confident that you can push the button.

Gold could fall further, to around $1050 or so. It’s fair to say there’s little more downside risk.

There’s no real incentive for it to go up, notwithstanding some commentary from the Federal Reserve that might suggest Yellen’s comments were a little too aggressive and they might prefer to take a more conservative stance. If that happens, the gold price might rebound a little bit.

gold

Silver took its cues from gold to add 67 points to trade at 14.48 well below the $16 level seen just in October while platinum is flat at 914.65 taking the hardest beating over the past week.

The precious metal remains below a key psychological mark of $1,100/oz. Low prices have helped to solidify a pickup in Chinese physical demand seen since July, but Indian demand remains relatively subdued during the ongoing peak festival season. Investors have also been pulling out of electronically traded gold as they are worried about the prospect of a rate increase.

Industrial metals have been hit the hardest by the climbing US dollar and weak global growth which lowers demand. Copper is down 7 points at 2.223. Speculators attributed the fall to weakness in base metals at the London Metal Exchange after Chinese inflation data were weaker than expected, deepening concern about a slowdown in the world’s biggest consumer.

Copper hit a six-week low and was sliding towards the lowest level in six years after the dollar firmed on prospects of an interest rate rise in the United States and trade data from top consumer China underlined struggling growth. Strong U.S. jobs data last week lifted the dollar to its loftiest peak since mid-April by boosting chances of the Federal Reserve raising interest rates in December.

China’s trade figures disappointed analysts expectations by a wide margin in October. The Organization for Economic Co-operation and Development also warned that global trade flows had fallen dangerously close to levels usually associated with recession, though actions taken by China and others should ensure a pick-up in 2016. China’s imports of copper fell 8.7 percent from a month ago to 420,000 tonnes in October, data from the General Administration of Customs showed, but for the first ten months of the year, they were down just 4 percent.

copper gold

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