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Marketupdate | 22/11/2023

Nov 22, 2023 | Marketupdates | 0 comments

“Gold hits a 3-week high but stalls above $2000, expect a choppy day ahead of US holidays”.

Thoughts for The Day: Gold posted its low for the day of $1978 on the opening bell in Asia on Tuesday and then embarked on a sustained rally to $1995 ahead of the release of the minutes of the latest FOMC meeting. Although these didn’t bring anything new to the table, the notes underlined the Fed pause mantra and resulted in gold spiking to a 3-week high of $2007 before the price eased back to end with a pared, but encouraging, 1.06% gain at $1999. The yellow metal has flatlined between $1995 and $2000 so far today but we could be in for a choppy session ahead of the US Thanksgiving Day holidays on Thursday and Friday with a potential trading range of $1980 to $2005.  Silver had a good day, posting a 1.325 gain to $23.75, platinum added 1.85% to $938, and palladium ended unchanged at $1087.

Market Commentary: November 22, 2023, (source Reuters)

  • Gold held below the key $2,000 level on Wednesday, as the dollar stabilised from its recent drop, although expectations that the U.S. Federal Reserve has reached the end of its tightening cycle put a floor under bullion prices. Spot gold was down 0.1% at $1,996.79 per ounce, as of 0123 GMT, after hitting a three-week high of $2,007.29 in the previous session. U.S. gold futures were also down 0.1% at $1,998.80.
  • The dollar DXY held steady against its rivals after dropping to a more than 2-1/2-month low in the previous session. A weaker dollar makes gold less expensive for other currency holders.
  • Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed. Markets are widely expecting the Fed to leave rates unchanged in December and currently pricing in a nearly 60% chance of a rate cut of at least 25 basis points by May, according to CME’s FedWatch Tool. Lower interest rates decrease the opportunity cost of holding gold.
  • Data on Tuesday showed U.S. existing home sales dropped to the lowest level in more than 13 years in October as the highest mortgage rates in two decades and a dearth of houses drove buyers from the market.
  • Meanwhile, benchmark U.S. 10-year Treasury yields languished near two-month low.
  • Swiss gold exports in October rose to their highest level since May as deliveries to India surged to meet demand during the country’s festive season, customs data showed on Tuesday.
  • Spot silver rose 0.3% to $23.79 per ounce, while platinum fell 0.3% to $931.34. Palladium slipped 0.6% to $1,072.35 per ounce.

Economic Analysis (Trading Economics):

Sales of previously owned homes in the United States sank 4.1% month-over-month to a seasonally adjusted annualized rate of 3.79 million units in October 2023, the lowest level since August 2010, and below forecasts of 3.9 million. A persistent lack of housing inventory and the highest mortgage rates in a generation continue to weigh on the housing market, but “multiple offers are still occurring, especially on starter and midpriced homes, even as price concessions are happening in the upper end of the market”, said NAR Chief Economist Lawrence Yun. Total housing inventory registered at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from one year ago. Also, the median existing-home price for all housing types in October was $391,800, an increase of 3.4% from October 2022. Meanwhile, sales slid in the Northeast, South and West but were unchanged in the Midwest. source: National Association of Realtors

Gold Chart

Silver Chart

Platinum Chart

Palladium Chart

This document is issued by Value Trading BV. While all reasonable care has been taken in preparing this document; no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only and for private circulation. It does not constitute any offer, recommendation or solicitation to any person to enter into transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration.