Gold surges overnight on Saudi drone attack, levels off in early COMEX trading

(USAGOLD – 9/16/2019) – Gold surged overnight as markets weighed the potential outcome of the drone attack on Saudi Arabia’s key oil processing facility on Saturday.  The headline to a Bloomberg article this morning summed up the impact on the gold market:  Gold rallies on concern Saudi attack may presage wider conflict.  In the past, we have featured four major concerns in these reports underpinning and driving gold demand – recession fears, central bank interest rate policies, the trade wars and competitive currency devaluations. To that already formidable list, the markets will now add a fifth – the possibility of expanded conflict in the Persian Gulf.

Gold and silver have leveled as COMEX opens.  Still, gold is up $14 over Friday’s close.  Silver is up 39¢ at $17.82.  Brent crude, by the way, is up about 10% (+$6.30) at $65.80 and the dollar index is up sharply as well.

This morning’s headlines pushed another important event for the week into the background – the Fed meeting on Tuesday and Wednesday.  Historically gold and silver tend to retreat in advance of FOMC meetings.  Given the volatile circumstances in the Persian Gulf, that might not be the case this week.

Quote of the Day
What a difference a few years makes. Back in the summer of 2015, a WSJ op-ed writer,  who somehow was unaware of the past 6,000 years of human history, infamously and embarrassingly said ‘Let’s Be Honest About Gold: It’s a Pet Rock.’ Fast forward to today, when with every central bank once again rushing to debase its currency in what increasingly appears to be the final race to the debasement bottom, when even BOE head Mark Carney recommends that it is time to retire the dollar as the world’s reserve currency, pet rock gold has emerged as the second best performing asset of the year… and at the rate it is going – 4th in 2017, 3rd in 2018, 2nd in 2019 – gold will be the standout asset class of 2020.” – Tyler Durden, ZeroHedge

Chart of the Day

Chart note:  It has been a good year thus far for gold and silver.  Gold is up 16.1%  since the beginning of 2019 and silver 12.8%.  Silver is still in catch-up mode with its ratio to gold now sitting just under 85.5 to one. This chart reflects London pricing and does not include Friday’s weaker U.S. close near $1489 for gold and $17.42 for silver.

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