After the precious metals rallied across the board on Friday, spot prices faded a bit in Monday morning trading. Some profit-taking was to be expected after the metals added more than 2% each to close out last week. Monday's fade for the metals is more likely due to traders scooping up profits—that tends to happen when prices surge on the last two trading days of the week—than it is attributable to any kind of correction.
It was a fresh 3-week high for gold on Friday, as the yellow metal jumped nearly $25 per ounce and held on to its gains by the closing bell.
Friday closing prices:
- Gold: $1,087.30/oz (+$24.70, 2.33%)
- Silver: $14.65/oz (+$0.47, 3.38%)
- Platinum: $822/oz (+$32.00, 3.79%)
- Palladium: $569/oz (+$29.00, 5.42%)
This movement shifted the previous resistance level of $1,079 for gold to a new support level. By 10 am ET on Monday, spot gold held around the $1,078/oz range.
The next key support levels for gold are at $1,068 and $1,062, with resistance at $1,088 and $1,100. Meanwhile, silver has staked out new support at $14.32 and $14.22, with resistance seen at $14.63 and then $14.78.
Somewhat surprisingly, stocks also rallied on Friday, rebounding from their worst trading day in 9 weeks on Thursday. Some analysts speculated that the markets have finally come around to the idea of an interest rate hike. Such a move is expected when the Federal Reserve Open Market Committee (FOMC) meets during the middle of next week.
The case for a rate hike only improved with a strong jobs report. In addition to the nonfarm payrolls for November coming in above expectations at 211,000, October's number was revised upward from 271,000 to 298,000 and September saw a revision from 137,000 to 145,000.
As has been the case all along, however, the pace of the interest rate increases and their ultimate ending point are more important than the timing of the first hike. At this point, the Fed would lose quite a bit of credibility if it balked at its December meeting.
Crude oil also fell on Monday after OPEC decided nothing at its meeting last week. WTI crude slid below $39 per barrel, while Brent crude sat a 6-and-½-year low. The dollar fell against the euro last week (its biggest drop in more than 6 months) thanks to policy moves by the European Central Bank (ECB), but the Greenback was up 0.5% on Monday to 98.8 on the DXY. Most expect the dollar to continue to rise against its peers over the near-term.
Elsewhere, political swings are also going to have some pull on the precious metals' safe haven appeal. France's conservative National Front party has been scoring unprecedented legislative victories, potentially capturing 2 districts and as much as 28% of the vote. The party leader, Marine Le Pen, is an early favorite for the country's presidential election in 2017. In Venezuela, the opposition party to the ruling socialists has won a majority for the first time in 17 years.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.