Metals Close Higher On Weak Stocks And Fed Rate-Cut

Dec Comex gold GCZ19 on Wednesday closed up +6.0 +0.40 and Dec silver SIZ19 closed up +0.036 +0.20.
Metals Close Higher On Weak Stocks And Fed Rate-Cut

Precious metals closed higher Wednesday on weakness in stocks along with the action by the FOMC to cut the fed funds target range by 25 bp.

Metals prices fell back from their best levels Wednesday afternoon when the Fed signaled that it may pause its rate-cutting campaign when it omitted its pledge to "act as appropriate" from its post-FOMC meeting statement.

Wednesday's U.S. economic data was hawkish for Fed easing expectations and negative for gold prices. U.S. Q3 GDP rose +1.9% (q/q annualized), stronger than expectations of +1.6%. as Q3 personal consumption rose +2.9%, stronger than expectations of +2.6%. Also, Oct ADP employment rose +125,000, stronger than expectations of +110,000.

European economic data on Wednesday was mixed for ECB easing expectations. The Eurozone Oct economic confidence index fell by -0.9 points to a 4-3/4 year low of 100.8, weaker than expectations of -0.6 to 101.1. Also, German Oct unemployment rose +6,000, weaker than expectations of +3,000. However, the German Oct CPI (EU harmonized) rose +0.1% m/m and +0.9% y/y, slightly stronger than expectations of unch m/m and +0.8% y/y.

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 last 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 1-month low Tuesday.

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