Dovish central bank Presidents that have echoed dovish commentary on short term interest rates along with continued geopolitical chaos in Washington have sent the Dollar spiraling lower while ushering in new longs in the precious metals sector. On top of that the devastation that continues in south Texas due to hurricane Harvey that continues to wreak havoc along the gulf of Mexico has also given gold and silver safe haven buying sentiment. In my view seasonal buying into September has also boosted price as gold and silver traditionally rally into Labor Day. If you add all the headlines together from the Fed symposium in Jackson Hole from last Friday through this weekends noise of a potential government shutdown, debt ceiling congressional showdown, and continued saber rattling with North Korea; the uncertainty reigns. Gold thrives in such conditions and therefore the result was a rally of $17.50 for December gold to close at 1315.4. September silver closed at 17.44, up 39.5 cents basis September.
At Jackson Hole, U.S. Federal Reserve Chair Janet Yellen made no reference to U.S. monetary policy but instead focused on financial regulations, leading traders to expect interest rates to be raised more slowly. The European Central Banks Mario Draghi said the bank’s ultra-loose monetary policy was working and that the euro zone’s economic recovery has taken hold, refraining from commenting on the euro’s recent strength. That was enough to push the euro to its highest in more than 2-1/2 years against the U.S. dollar today while the dollar index fell to its lowest since May 2016.
Traders should continue to watch the Dollar for direction and any geopolitcial headlines going forward. Support levels for tomorrows trade comes in as follows. For December gold, support is down first at 1302.4 and then 1289.3. Resistance is up at 1323.2 and then up at 1330.9. For September silver support is down at 17.14 and then down at 16.85. Resistance is up at 17.60 and then up at 17.77.
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