Gold Sees Light Safe-Haven Buying On Italy Worries
(Kitco News) - Gold and silver prices are modestly up in early U.S. trading Tuesday, as there is some risk aversion in the marketplace coming from the European Union. Gold and silver bulls are especially encouraged their metals are higher today, as the U.S. dollar index is also trading up and hit a six-week high overnight. December gold futures were last up $3.40 an ounce at $1,195.10. December Comex silver was last up $0.078 at $14.585 an ounce.
Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. The Euro currency slumped and gold prices rallied overnight after a government official said Italy would be better off with its own currency. The European Union has to approve Italy’s budget plan that many are saying won’t pass muster with the EU. This matter appears to be escalating and could continue to pressure the Euro currency and provide more support to the safe-haven gold and silver markets.
World stock markets were mostly weaker overnight on the risk aversion that has crept back into the marketplace. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on some profit taking from recent gains that pushed prices to record highs. Chinese markets are closed until Friday for a public holiday.
The marketplace is also refocusing on the U.S.-China trade war. Some market watchers now reckon that with the U.S. zipping up a trade pact with Mexico and Canada, it will be that much tougher on China’s economy, as some major companies’ executives will be re-examining their supply chains that heretofore have gone through China.
In other overnight news, the Euro zone got a hot inflation report. The producer price index was reported up 4.2% in August, year-on-year. The PPI was forecast at up 3.9%.
The key other outside market today finds November Nymex crude oil prices near steady but hitting a four-year high overnight. Prices are trading just above $75.00 a barrel. The solid rally in the crude oil market is at the least limiting some selling pressure in the precious metals markets, if not even prompting some buying interest.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, and domestic auto industry sales. U.S. Federal Reserve Vice Chairman Randal Quarles also testifies to the Senate Banking Committee today.
Technically, gold bears have the overall near-term technical advantage. 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 $1,200.00 and then at $1,210.00. First support is seen at Monday’s low of $1,188.10 and then at last week’s low of $1,184.30. Wyckoff's Market Rating: 2.0
December silver futures bears have the overall near-term technical advantage, but recent price action suggests a market bottom is in place. 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 the September low of $13.965. First resistance is seen at last week’s high of $14.755 and then at $15.00. Next support is seen at Monday’s low of $14.395 and then at $14.25. Wyckoff's Market Rating: 3.0.