Gold, Silver Prices Sees Some Pressure From Strong U.S. Dollar
(Kitco News) - Gold prices are modestly lower in early-afternoon U.S. trading Wednesday, on a normal corrective pullback after good gains Tuesday that pushed prices to a nearly three-month high. A strong U.S. dollar on the foreign exchange market was a bearish outside market element working against the precious metals bulls today. December gold futures were last down $2.90 an ounce at $1,233.90. December Comex silver was last down $0.088 at $14.71 an ounce.
The just-released beige book from the Federal Reserve showed the U.S. economy is growing modestly to moderately in the Fed’s 12 districts, and should continue to do so. However, the Fed is a bit worried about the tight U.S. labor market and U.S. trade disputes that could contribute to rising inflationary pressures. Some Fed districts reported rising manufacturing and shipping costs. Wage growth was deemed to be modest to moderate, according to the beige book. Markets showed little to no reaction to the report, which contained no big surprises.
Global stock markets were mixed to firmer today, rebounding from solid losses Tuesday. U.S. stock indexes were lower but off their daily lows in afternoon trading.
The S&P 500 stock index on Tuesday dropped below what was strong chart support at its October low. Such suggests a new leg down in prices is coming for the U.S. stock market. That’s bullish for hard assets such as gold and silver.
There are still geopolitical issues looming over the world marketplace, including the U.S.-China trade war, U.S.-Saudi Arabia tensions over the murdered Saudi journalist, and Italy’s recalcitrance over forming its budget to meet European Union constricts. The EU Wednesday rejected the latest Italian draft budget.
All of the above have pushed world stock markets and crude oil prices sharply lower, as well as rallied safe-haven assets like gold, U.S. Treasuries and the U.S. dollar.
Traders and investors in Europe are awaiting Thursday’s European Central Bank regular monetary policy meeting. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU.
The U.S. economic highlight this week will be the first estimate of third-quarter GDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on an annual basis.
The key outside markets today find the U.S. dollar index higher and hitting a nine-week high overnight. Meantime, November Nymex crude oil prices are firmer and trading just above $67.00 a barrel. Oil prices fell to a two-month low on Tuesday.
Technically, gold bulls have the overall near-term technical advantage. Prices Tuesday saw a bullish upside “breakout” from the recent sideways and choppy trading range. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,275.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,220.00. First resistance is seen at today’s high of $1,236.80 in December futures and then at this week’s high of $1,243.00. First support is seen at $1,225.00 and then at $1,220.00. Wyckoff's Market Rating: 6.0
Silver futures prices closed near the session low today on a corrective pullback after closing at a nearly two-month high close on Tuesday. The silver bears still have the overall near-term technical advantage. However, the bulls are working on restarting a price uptrend on the daily chart. 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 in December futures. First resistance is seen at last week’s high of $13.88 and then at the October high of $13.95. Next support is seen at this week’s low of $14.54 and then at last week’s low of $14.47. Wyckoff's Market Rating: 4.0.
December N.Y. copper closed down 40 points at 275.40 cents today. Prices closed nearer the session low today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 287.10 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 today’s high of 280.40 cents and then at this week’s high of 283.35 cents. First support is seen at this week’s low of 273.90 cents and then at the October low of 271.30 cents. Wyckoff's Market Rating: 3.0.