Precious Metals and Markets in a Holding Pattern

APMEX

10/16/2020 8:38:59 AM

Precious Metals and the Markets are in a Holding Pattern

This has been an up and down week for Precious Metals, particularly Gold, which took a beating due to Steven Mnuchin’s admission this week that a stimulus package before the U.S. election would be “difficult”. Gold is down over the week a little over 1% after following the dollar index. Silver, Platinum and Palladium have remained in something of a holding pattern as well.

Markets for the week have mostly moved on bank earnings news from the U.S., but worrying signs in Europe related to Brexit and COVID-19 have depressed European holdings. China, meanwhile, just cracked $10 trillion in its equities markets and is within a hair of its highest market cap ever. Commodities markets will be affected soon by new rules introduced by the CFTC. These rules are meant to stop price manipulation by large banks.

U.S. Speaker of the House Nancy Pelosi and U.S. Senate Majority Leader Mitch McConnell continue to go back and forth on stimulus packages. The White House signaled at the end of the week that it may be open to a slightly larger stimulus package than Republicans thought, but there is no end in sight at this point. Gold has traditionally hedged against inflation, which would go up in any stimulus scenario, and most of the drop this week can be tied to this.

New lockdowns have gone into effect in Europe over COVID-19 surges and that has hurt markets there. In the U.S. unemployment and long-term jobless numbers are up for the week, but retail is also up, showing a mixed bag for the economy.