Kitco precious metals analyst Jim Wyckoff thinks geopolitical tensions in the Middle East will continue to provide a floor to gold and silver markets as tensions remain elevated in the region.
Gold was trading in the $2,653 area Monday and silver was bringing about $31.66 an ounce.
Gold prices rebounded from a price drop around U.S. market open Monday. (Source: TradingView)
“There is keener risk aversion in the general marketplace,” Wyckoff said. “There are reports that an earthquake Saturday in Iran could have been an underground nuclear test explosion.”
Wyckoff cited a newsletter from broker SP Angel stating the earthquake, which registered 4.5 on the Richter scale appeared to be the underground firing of a nuclear device.
Doubters have speculated that because the earthquake’s source was reported to be about 10 kilometers underground, it was unlikely to be a nuclear test.
“This comes as Israel continues its offensive in Lebanon and has vowed to retaliate against Iran’s crude oil infrastructure, which is pushing oil prices higher,” Wyckoff said.
Jobs report has been digested
Wyckoff believes the markets have digested Friday’s extremely strong U.S. jobs report that has paved the way for smaller rate cuts by the Federal Reserve moving forward.
U.S. traders are anticipating a quarter-point rate cut next month. (Source:TradingView)
Traders are pricing in a 86.1% chance of a quarter-point cut, while 13.9% of the market is expecting no rate change at all.
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China backing off purchases
As The Jerusalem Post reported last week, China paused its purchases of bullion for reserve purposes for the fifth straight month in August, according to recently released data from the World Gold Council.
China holds about 72.8 million troy ounces of the yellow metal, Wyckoff wrote. He noted the value of those holdings increased from $183 billion to more than $191 billion in August alone.
Bulls and bears
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