Gold Sees Modest Support As U.S. Stocks Erode
(Kitco News) - Gold prices are modestly up in early-afternoon U.S. trading Thursday. The yellow metal garnered mild safe-haven demand support from a crumbling U.S. stock market. A weaker U.S. dollar index on this day also worked in favor of the precious metals market bulls. February gold futures were last up $2.90 an ounce at $1,245.50. March Comex silver was down $0.037 at $14.545 an ounce.
Today’s ADP national employment report showed a rise of, 179,000, which was just below the expectations for a gain of 190,000. The metals markets upticked modestly on this report, which is a precursor to the more important Labor Department Employment Situation Report on November Friday morning. The key non-farm jobs number in that report is forecast up 198,000.
Risk aversion is back in the world marketplace Thursday, to provide some support for gold. World stock markets were solidly lower overnight, also. There are several bearish factors at work spooking world stock markets.
Chinese tech giant Huawei’s chief financial officer was arrested in Canada, on behalf of the U.S., and will be extradited to the U.S. Her company may be shipping high tech products to Iran, which would violate U.S. sanctions against Iran. This sparked fears the U.S.-China trade tensions could rise further, despite last weekend’s trade truce between the world’s two largest economies. Chinese government officials may have already known of the arrest days ago, and said Thursday they are still planning to work with U.S. trade officials over the next 90 days to come to agreement. Still, the matter is very unsettling to traders and investors as China’s tenor could change quickly, as some Chinese press accounts hinted today.
A big drop in crude oil prices Thursday is also weighing on trader and investor sentiment. Nymex crude oil prices are sharply lower and trading just above $51.00 a barrel. The OPEC oil cartel is meeting in Vienna, Austria on Thursday. Reports said OPEC heavyweight Saudi Arabia has not yet agreed to a production cut, but that it may before the meeting ends on Friday. This has many crude oil market watchers wondering about any collective production cut being extended, after most reckoned such would be the case before the meeting began.
Trader are also anxiously awaiting another speech from Federal Reserve Chairman Jerome Powell today, wondering if he will elaborate on U.S. monetary policy direction.
Another feature in the marketplace recently that also has the stock market wobbly is falling U.S. Treasury yields (rising prices). The five-year T-Note yield this week dropped below the lower maturities. A fully inverted yield curve has been historically bearish for the U.S. economy and stock market. Right now the 10-year Treasury note yield remains above the 2-year, so the yield curve is not fully inverted.
Technically, February gold futures bulls and bears are on a level overall near-term technical playing field, but the bulls have some momentum on their side. A price uptrend line is in place on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,252.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,216.80. First resistance is seen at $1,252.00 and then at $1,260.00. First support is seen at today’s low of $1,240.00 and then at $1,235.80. Wyckoff's Market Rating: 5.0
March silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the October high of $15.055 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $13.985. First resistance is seen at this week’s high of $14.745 and then at $15.00. Next support is seen at this week’s low of $14.28 and then at $14.115. Wyckoff's Market Rating: 2.5.
March N.Y. copper closed down 355 points at 273.85 cents today. Prices closed near mid-range and hit a three-week 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 288.80 cents. The next downside price objective for the bears is closing prices below solid technical support at the November low of 266.20 cents. First resistance is seen at today’s high of 277.10 cents and then at 280.00 cents. First support is seen at today’s low of 270.80 cents and then at 268.30 cents. Wyckoff's Market Rating: 3.0.