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(Wallace Refiners) – Gold has had a tough start to the week as the yellow metal has dropped around 1% during the Asian session. This bearishness has continued since the price broke the consolidation low of $1818.84 per ounce on 23rd November. There is a potential support level at $1747.74 to keep an eye on this week. Silver (-2.60%) is also in the red and looks to be heading to the current consolidation low $21.66 per ounce and interestingly this move in the two major precious metals comes despite the dollar index trading 0.14% lower overnight.
The major indices in Asia closed lower as the Nikkei 225 fell 0.79%, ASX dropped 1.26% and the Shanghai Composite fell 0.18%. One of the initial moved lower in the past came as the US manufacturing PMI number came in higher than expected this time around the same thing has happened as the Chinese PMI number improved.
In terms of news overnight, Citi has lowered its forecast for the price of gold to $1700 for 2021. They expect net investment into gold ETFs to hit 800 tons in 2020, 75 tons less than previously predicted.
Tensions between the Chinese and Australian government rose during the Asian session as Australian PM Morrison stated China should be ashamed of a fake photo tweet. This is in reference to Lijian Zhao who is the spokesman & DDG, Information Department, Foreign Ministry tweeting about the official war crimes inquiry in Australia that has found some soldiers in Afghanistan murdered Afghanis.
There was also some data from Japan and China, Japanese industrial production for October (preliminary) improved to hit 3.8% m/m vs expected 2.2%. Retail sales (Japan) for October slightly disappointed to print at 0.4% m/m vs the analyst consensus of 0.5%. The big news, however, was that Chinese manufacturing PMI (Nov) hit 52.1 vs the expected reading of 51.5 and non-manufacturing PMI (Nov) 56.4 vs exp 56.0.
In regards to the Brexit saga, UK’s Dominic Raab sounded a positive tone on a Brexit trade deal over the weekend. The U.K. Foreign Secretary said the big issue to resolve in the trade deal talks with the EU is fishing rights. He added the two sides “ought to” be able to get to an agreement on fishing, given the progress negotiators have made on other issues. EU’s Barnier said, “we continue to work with patience and determination”.
Looking ahead to today’s session highlights include the OPEC meeting, Chilean copper production, CPI from Germany, UK leading figures and US pending home sales. There will also be comments from BoE’s Tenrayro, ECB’s Hakkarainen and ECB’s Lagarde.
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