precious metals

Precious metals advance amid general dollar weakness


Prices of precious metals advanced on Tuesday (Oct. 19), as a decline in the U.S. dollar provided support to the safe-haven assets.

Gold gained 0.86% to $1,779.9 per ounce at 3:35 am ET, while silver jumped 2.06% to go for $23.67 a minute later. Platinum increased by 1.84% to $1,057.82 an ounce at 3:36 am ET, while palladium surged by 3% to $2,075.76 per ounce.

Uncertainty of inflationary pressures, supply chain issues, heightened energy prices, and data suggesting a slowdown in China kept investors in a risk-off stance.

A weaker U.S. dollar drives the price of gold higher through increasing demand because more gold can be purchased when the dollar is weaker. Gold is often seen as a hedge against inflation. As inflation ratchets up, so too does the price of gold.

precious metals
(Source: Trading Economics)

Data from the National Bureau of Statistics showed China’s economy expanded 4.9% year-on-year in the third quarter of 2021, easing sharply from a 7.9% growth in the previous period and missing forecasts for 5.2%. It was the slowest pace of expansion since the third quarter last year, amid power shortages, supply bottlenecks and major wobbles in the property sector.

The bureau also said that China’s industrial production gained an annual 3.1% in September, slowing from 5.1% on August and missing forecasts for 4.5%.

And in the world’s largest economy, the US, factory output dropped in September,  the most in seven months as a global shortage of semiconductors depressed motor vehicle output, further evidence that supply constraints are a strain on economic growth.

Manufacturing output dropped 0.7% last month, the largest decline since February. Economists polled by Reuters had forecast manufacturing production edging up 0.1%.

Meanwhile, Bank of America’s (BofA) Global Fund Manager Survey showed on Tuesday that global growth expectations have turned negative for the first time since April 2020, mostly due to inflation worries

Carl Icahn warned that the U.S. stock markets could see major challenges over the long term in the face of excessive money supply and rising inflation. “In the long run we are certainly going to hit the wall,” the active investor told CNBC on Monday” “I really think there will be a crisis the way we are going, the way we are printing money, the way we are going into inflation. If you look around you, you see inflation all around you and I don’t know how you deal with that in the long term.”

The U.S. dollar index fell 0.2% against a basket of currencies, weighed down by weak U.S. factory data.