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Choppy Two Sided Action as Metals Reel from Election Ebb & Flow

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OUTSIDE MARKET DEVELOPMENTS: Global markets were weaker across the board again today as they could not shake off a developing “risk off” mood over the upcoming US election. The European session started out with October Euro zone Services PMI and German Services PMI numbers that bested expectations. The North American economic calendar will start out with what is the highlight for global markets, the latest look at the US employment situation. October non-farm payrolls are expected to come in around +175,000 which would be a moderate improvement from September, while the October unemployment rate is forecast to downtick to 4.9%. A key gauge for the Fed will be October average hourly earnings which are expected to see a modest uptick to +0.3%. The September trade balance is expected to show a smaller monthly deficit. Canadian jobs data will also come out, with their unemployment rate expected to hold steady at 7.0%. Later in the morning, the October Ivey Canadian PMI is expected to decline from September’s 58.4 reading. Fed speakers will include Atlanta Fed President Lockhart and Dallas Fed President Kaplan during morning US trading hours, while Fed Vice Chair Fischer speaks during the afternoon. Earnings announcements will include Duke Energy, PG&E, Regeneron Pharmaceuticals and Humana before the Wall Street open.

gold-bars-595GOLD / SILVER: While the gold and silver trade continues to follow the ebb and flow of election mongering and the polls, therefore the bull camp might be a little discouraged this morning by the weak start in prices in the wake of fresh polls that show the Presidential race is tightening. Even more surprising is the lack of bullish action this morning in the wake of suggestions of Chinese buying overnight. Perhaps the gold market was knocked off balance by signs of flagging demand in India where discounts were growing in an effort to stimulate buying! Some players might be afraid to enter the long side of gold today because of the US payrolls which might temporarily distract the precious metals market’s attention away from the election. However gold prices have been unable to benefit from news that world central bankers bought 13 tonnes of gold in September and that highlights today’s partially negative tilt. The world’s largest gold ETF saw their holdings rise by 4.43 tonnes on Thursday and those holdings reached their highest level since October 25th.

Platinum BarsPLATINUM: While the PGM sector received carryover support from gold and silver earlier this week, slumping risk appetites are now front and center with both metals and there would seem to be a developing positive correlation with equities and that means the election process will continue to interject 2 sided volatility. However, this week’s lukewarm US auto sales numbers did not help the bull camp but the higher high overnight has helped to improve the technical picture for January platinum. In the short term the PGM complex will be held hostage by action in gold and at times by action the equity markets.

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