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Gold Backs Down On Strong U.S. Data, Rally in Greenback

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(Kitco News) - Gold prices are moderately lower in early-afternoon U.S. trading Wednesday. A very upbeat U.S. economic report that lifted the U.S. stock indexes and a rally in the U.S. dollar index worked against the safe-haven metals today. There was also less risk aversion in the marketplace at mid-week. December gold futures were last down $4.30 an ounce at $1,202.70. December Comex silver was last up $0.002 at $14.695 an ounce.

Today’s U.S. ADP national employment report for September showed a gain of 230,000. Forecasters were expected a rise of 185,000 jobs. Gold prices down-ticked following the report, while U.S. stock indexes up-ticked. This report comes ahead of the more important Labor Department Employment Situation Report for September on Friday morning. The non-farm payrolls number is expected to come in up 180,000.

Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. Reports overnight said Italy is backing down from its hardline stance with the European Union over the matter. The Euro currency today stabilized on the news, after being under selling pressure earlier this week.

In other overnight news, U.S. Federal Reserve Bank of Chicago President Charles Evans said in a speech in London the U.S. economy is humming right along and that the Fed will likely have to put the brakes on the economic growth by continuing to gradually raise interest rates. He added such Fed policy moves are historically normal during stronger economic expansion periods.

U.S. retail giant Amazon has significantly raised its minimum wage for its workers to $15 an hour. While this move seems benign right now, it’s just one more small clue of rising price inflation that could very well become problematic at some point—and just maybe sooner than even economists expect. Fed Chairman Jerome Powell reiterated on Tuesday that price inflation is not a problem. Problematic inflation is generally bullish for hard assets like raw commodities and bearish for paper assets like stocks and bonds.

The key outside markets today find the U.S. dollar index higher after hitting a 2.5-month high on Tuesday. Meantime, November Nymex crude oil prices are slightly up after hitting a four-year high Tuesday. Prices are trading around $75.50 a barrel.

Live 24 hours gold chart [Kitco Inc.]

Technically, gold prices are back into the recent trading range, which suggests a market bottom is in place. The gold bears still have the overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical 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 this week’s high of $1,212.30 and then at $1,220.70. First support is seen at $1,200.00 and then at this week’s low of $1,188.10. Wyckoff's Market Rating: 3.0

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures prices are in a fledgling three-week-old uptrend on the daily bar chart. The silver bears still have the overall near-term technical advantage but recent price action suggests a market bottom being in place. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.07 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 today’s high of $14.855 and then at this week’s high of $14.95. Next support is seen at $14.50 and then at this week’s low of $14.395. Wyckoff's Market Rating: 3.5.

December N.Y. copper closed up 235 points at 283.00 cents today. Prices closed near the session high today. The copper bears have the overall near-term technical advantage, but recent gains suggest a market bottom is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the 290.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 257.45 cents. First resistance is seen at this week’s high of 285.25 cents and then at the September high of 287.10 cents. First support is seen at 280.00 cents and then at this week’s low of 275.55 cents. Wyckoff's Market Rating: 4.0.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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