Buckle Up! Gold Gains As Volatile Trading Day Expected
(Kitco News) - Gold prices are moderately higher in early U.S. trading Friday, on more safe-haven buying ahead of a likely volatile trading session in the U.S. stock market, and an uncertain weekend on the geopolitical front. December gold futures were last up $3.00 an ounce at $1,235.00. December Comex silver was last down $0.005 at $14.625 an ounce.
The U.S. economic highlight this week is this morning’s first estimate of third-quarter GDP, which came in at up a solid 3.5%. GDP was forecast at up 3.4% in the third quarter, on an annual basis. Gold prices down-ticked just slightly on the news, but quickly rebounded to pre-report levels.
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. It’s likely going to be another volatile day during the U.S. trading session today. Disappointing earnings reports from Amazon and Alphabet stocks are helping to press the U.S. equities lower.
There are near-term technical clues the U.S. stock indexes have put in near-term market tops, if not major tops. If that’s indeed the case, it’s a bullish element for hard assets like the precious metals and other raw commodities. Today will be an extra important trading day for U.S. stock indexes. Solid losses to end the week will further exacerbate trader and investor anxiety heading into an uncertain weekend. A big rally in U.S. stocks today would assuage the marketplace anxiety to some degree.
Traders and investor can point to no single factor that is spooking the world marketplace in late October. There are ongoing geopolitical concerns that include the U.S.-China trade war, U.S.-Saudi Arabia tensions over the murdered Saudi journalist, and Italy’s defiance over forming its budget to meet European Union rules. It’s not going to be surprising to see some fresh news on one of these fronts in the next few days.
The Chinese yuan fell to a multi-year low versus the U.S. dollar overnight. The U.S. is worried China is devaluing its currency to gain trade advantages.
In other overnight news, the European Union got more dour economic news today when the European Central Bank’s survey of professional forecasters reported weaker economic projections for the Euro zone in the coming years. The survey projected a 2.0% GDP gain this year and 1.8% growth in 2019.
The key outside markets today find the U.S. dollar index firmer and hovering near this week’s nine-week high. Look for the greenback to remain supported on safe-haven demand amid wobbly world stock markets. Meantime, November Nymex crude oil prices are lower and trading around $66.50 a barrel. Oil prices fell to a two-month low earlier this week, on worries about slowing world economic growth, due in part to the U.S.-China trade war.
Other U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey.
Technically, gold bulls have the near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid 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 this week’s high of $1,243.00 and then at $1,250.00. First support is seen at $1,228.00 and then at $1,220.00. Wyckoff's Market Rating: 6.0
December silver futures bears still have the 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 the September low of $13.965. First resistance is seen at last week’s high of $14.88 and then at the October high of $14.95. Next support is seen at this week’s low of $14.54 and then at the October low of $14.255. Wyckoff's Market Rating: 4.0.