After a muted start to the week, gold and silver prices rose on Wednesday as risk-off sentiment dominated the market.
Meanwhile, oil prices fell slightly amid weak economic data from top crude-importing countries, even as US inventories limited the losses.
Base metals were mostly steady after a volatile start to the week as a firmer dollar set the tone in the market.
Bullion in the green
Gold regained ground overnight, recovering some of the previous day’s decline.
Although it found support near the $3,930 mark, it remains significantly below the crucial $4,000 threshold, a level it could not sustain earlier this week.
“The move reflected some cautious buying after several sessions of sustained selling pressure,” said David Morrison, senior market analyst at Trade Nation.
Gold reached an all-time high of $4,381 just over two weeks ago, but a week later, it experienced a sharp sell-off, dropping below $3,900.
Morrison added:
It appears to be trying to consolidate now, and there’s no doubt that these latest moves have helped bring the daily MACD down from seriously overbought levels towards a more neutral area.
“But it is still far too early to suggest that gold is bottoming around current levels,” he said.
Gold might need a further downward correction to establish a base, which could then support a more significant rally, even though buyers might step in to drive prices higher sooner.
Despite rebounding this morning following Tuesday’s drop, silver is still trading below $48 per ounce.
It is currently only 4% above the low it reached at this time last week.
At the time of writing, the gold price on COMEX was at $3,985.42 per ounce, up 0.7%, while silver was also 0.7% higher at $47.595 an ounce.
Oil falls
Oil prices held steady on Wednesday as market participants considered weaker economic data from key oil importers, even as supporting data emerged from US inventory reports.
Manufacturing activity continued to contract in October, marking the seventh consecutive month of shrinking factory activity in China and the eighth straight month of contraction in the US.
The US dollar index climbed to a three-month high. This strength is supported by divisions within the Federal Reserve board, suggesting a low probability of an interest rate cut in December.
A stronger dollar makes dollar-priced oil more expensive for buyers using other currencies, which can negatively affect demand.
Conversely, a US interest rate cut is typically a factor that boosts oil demand.
According to sources citing the American Petroleum Institute (API) figures released on Tuesday, US crude oil inventories increased by 6.52 million barrels during the week concluding on October 31.
Conversely, both gasoline and distillate stockpiles saw decreases, falling by 5.65 million and 2.46 million barrels, respectively, which provided some relief to prices.
The West Texas Intermediate crude oil has experienced approximately a 25% decline from the peak levels observed in mid-January of this year.
Morrison said:
This reflects persistent worries about oversupply, even as the outlook for global demand growth continues to moderate.
Base metals
Base metal prices held steady on Wednesday and entered a phase of consolidation following a volatile opening to the week.
A stronger dollar and general cautiousness in global equity markets are currently dictating the sentiment, resulting in range-bound price movement as the market anticipates crucial macro-economic data due later in the week.
“Risk appetite remains subdued as investors reassess the Federal Reserve’s mixed messaging on December rate cut prospects while the dollar index holds just above the 100 level.” Neil Welsh, head of metals at FCA-regulated multi-asset brokerage Britannia Global Markets, said in an emailed commentary.
The correction from last week’s record highs in copper prices persists, with the metal currently unchanged near $10,675 per ton on the London Metal Exchange.
This reflects what could be seen as a healthy consolidation following a 20% year-to-date rally.
Codelco’s latest supply guidance, now set at 1.31–1.34 million tons for 2025, has helped temper concerns about imminent copper deficits.
Attention remains fixed on news coming from the Chilean miner.
Additionally, with market positioning reportedly lighter, there is potential for a moderate price recovery once the US dollar stabilises.
Zinc remains technically supported near $3,090 a ton, despite its recent retreat from higher levels. Similarly, aluminium is holding firm around $2,850 a ton, also appearing to have technical support.
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