Dec Comex gold GCZ19 on Thursday closed up +9.0 +0.60 and Dec silver SIZ19 closed up +0.224 +1.27
Precious metals rallied Thursday with Dec gold at a 1-1/2 high on weak global economic data and on dovish comments from ECB President Draghi.
Thursday's weak global economic data was dovish for central bank expectations and bullish for gold. Thursday's data showed the Eurozone Oct Markit manufacturing PMI was unchanged at 45.7, weaker than expectations of +0.3 to 46.0. Also, the Japan Oct Jibun manufacturing PMI fell -0.4 to 48.5, the steepest pace of contraction in 3-1/4 years. In addition, the U.S. Sep core capital goods orders report fell -0.5%, weaker than expectations of -0.1%.
Dovish comments Thursday from ECB President Draghi bolstered the outlook for additional ECB stimulus measures, which was positive for gold prices, when he said the incoming data confirm "protracted weakness of the Eurozone economy, the persistence of prominent downside risks and muted inflationary pressures."
Gold is also seeing support from the delay in the Brexit process. The UK government now awaits an answer from the EU on a Brexit extension. The Brexit turmoil worsened on Thursday, however, after UK Prime Minister Johnson said he will call for a snap election on Dec 12.
Precious metals prices also have support from strong expectations for a Fed rate cut next week. Market expectations have risen to a 90% probability for the Fed to cut interest rates by 25 bp at the Oct 29-30 FOMC meeting.
Ongoing trade and geopolitical tensions, along with dovish central bank expectations, sparked fund buying of precious metals as long gold positions in ETFs have risen steadily over the past four months up to a new 6-1/2 year high Monday and long silver positions in ETFs rose to a new record high on Sep 2. In the short-term, fund demand for silver has slipped after long silver positions in ETFs fell to a 4-week low Wednesday.