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Gold Gains Ground After U.S. Sales Reports Comes in Under Expectations

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The entire precious metals complex gained ground today trading moderate to strongly higher. As of 4:45 PM EDT gold futures are trading $10.10 higher which is a net gain of 0.68%, and fixed at $1493.60. Silver and platinum also gained value today, however any price gains were fractional at best with silver gaining 0.15%, and platinum gaining 0.17%.

The precious metal that exhibited the strongest upside move continues to be palladium which gained 2.17% in trading today, opening above $1700 and closing at $1733.40, which is a net gain of $36.80 on the day.

Multiple factors were cited as the underlying forces taking the precious metals complex higher. First and foremost was economic data from the United States as the September U.S. retail sales report showed a contraction of 0.3% from the August numbers. Economists had forecast sales report would actually show expansion and predicted a gain of 0.2%. The fact that the cells report showed a decline from the previous month was the first occurrence of slowing retail data in many months.

There is continued concern about Britain leaving the European Union without an agreement, or a hard exit. There also continues to be real concern about recent actions by Turkey toward Syria as that geopolitical hotspot have once again got the attention of market participants and traders.

Most importantly it is now been a few days since Friday when the announcement that the United States and China had reached a tentative partial trade deal simply labeled “phase one”. When the announcement was made on Friday comments on both sides said that it would be signed a fairly soon as soon the details were put to paper. However, that changed when on Monday China signaled that they would not sign any documents without another meeting. This is obviously underlining that there are parts of the agreement that they either wish to be clarified or changed prior to signing the “phase one” agreement.

Yesterday however, Beijing set a much more optimistic tone when their media stated that both Beijing and Washington are “on the same page”. That optimistic tone was short-lived when today the house passed a bill supporting the protesters in Hong Kong and China issued a statement suggesting that they have backtracked on part of the agreement.

It was also announced yesterday by Bloomberg News that, “Beijing wants a rollback in tariffs in its trade war with the U.S. before China can feasibly agree to buy as much as $50 billion of American agriculture products that President Donald Trump claims are part of an initial deal, people familiar with the matter said.”

It seems now that some time has passed since the announcement was made on Friday that China and the United States had reached a tentative agreement, the devil is certainly in the details. As new content and context emerge it seems that there are still areas that need real clarification. That dampens the probability that the presidents of China and the United States will sign the agreement next month when they meet in Chile at the Asia-Pacific Economic Cooperation (APEC).

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Wishing you as always, good trading,

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