Weekly Gold Report

Gold prices fell on Friday after the Senate approved a budget blueprint that paves the way for tax cuts, causing stocks, the dollar and bond yields to rise. For the week gold slipped almost two percent ($23.90) to close at 1280.5 basis December futures. December silver almost 34 cents to close the week at 17.07.The Republican-controlled Senate voted by 51-to-49 late on Thursday for the measure, clearing a hurdle for tax cuts that would add up to $1.5 trillion to the federal deficit over the next decade. In my view, investors betting on faster economic growth as a result bought riskier assets namely stocks, while bond holders reduced their positions on worries that inflation and federal borrowing could rise.Higher bond yields increase pressure on bullion because gold does not offer a yield, while a stronger dollar makes it more expensive for holders of other currencies. The net long position of money managers in Comex gold has fallen from a peak in early September but is still at an elevated level near 240 thousand longs.Meanwhile, President Trump could announce his choice for the next chair of the U.S. Federal Reserve as early as next week after he interviewed five candidates including current chief Janet Yellen.A report on Thursday suggested Trump was leaning towards Fed Governor Powell, perceived as a less hawkish candidate in my opinion.

Although next week is relatively quiet, there are still a few reports investors should monitor. Markets will receive preliminary manufacturing data, and durable good numbers. The week ends with the release of the first look at third quarter U.S. economic growth.The European Central Bank is expected to say on Oct. 26 it will start trimming its monthly asset purchases to 40 billion euros from 60 billion euros in January, a Reuters poll showed. The Bank of Canada will also hold its monetary policy meeting and could create some limited volatility in the U.S. dollar. My technical swing numbers for next week come in as follows. For December gold, support comes in first at 1269.2. a close under and 1258.0 is next. Resistance is up at 1300.0 and with a close over 1319.6 is next. For December silver, support is down first at 1683.0. A close under and the next level of support is down at 1658.8. Resistance is up at 1740.6. a close over and 1773.8 could be next.

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