Gold Prices Firmer On Some Risk Aversion
(Kitco News) - Gold prices are modestly up in early U.S. trading Monday. The safe-haven metal is benefitting from a bit of risk aversion seen in the marketplace to start the trading week as U.S.-China trade tensions are rising. A weaker U.S. dollar index today is also working in favor of the precious metals market bulls. December gold futures were last up $3.30 an ounce at $1,204.60. December Comex silver was last up $0.016 at $14.375 an ounce.
The big news in the metals industry today sees Barrick Gold Corp. moving to acquire Randgold Resources Ltd. in an all-stock merger that will create the largest gold-mining company in the world. Based on Friday’s closing prices, the new company would have market capitalization of $18.3 billion.
World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. There is a bit more risk aversion in the world marketplace to start the trading week, as U.S.-China trade tensions are back on the front burner after China accused President Trump of being a trade bully and cancelled trade talks that had been set up for this week. And tariffs on $200 billion more in Chinese imports to the U.S. are set to kick in today. Stocks markets in China, Japan and South Korea were closed Monday for a holiday.
Focus this week will also be the Federal Reserve’s two-day Open Market Committee (FOMC) meeting that begins Tuesday. The FOMC is expected to slightly raise U.S. interest rates at this meeting. Fed Chairman Jerome Powell will also hold a press conference after the meeting.
The key outside markets today find the U.S. dollar index lower. Prices Friday hit a 2.5-month low. The greenback bears have downside technical momentum to suggest a market top is in place for the USDX. Meantime, November Nymex crude oil prices are solidly higher and hit a contract high today, and trading just above $72.00 a barrel.
U.S. economic data due for release today includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
Technically, gold bears have the overall near-term technical advantage. However, recent sideways price action favors the bulls and suggests a market bottom is in place. Gold bulls' next upside near-term price breakout objective is to produce a close in December futures above solid resistance at $1,220.70. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the August low of $1,167.10. First resistance is seen at Friday’s high of $1,215.80 and then at last week’s high of $1,218.00. First support is seen at $1,200.00 and then at Friday’s low of $1,196.00. Wyckoff's Market Rating: 3.0
December silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.50. First resistance is seen at last week’s high of $14.465 and then at $14.59. Next support is seen at $14.18 and then at last week’s low of $14.065. Wyckoff's Market Rating: 2.5.