Gold, silver markets hit hard by profit taking, up-tick in risk appetite
(Kitco News) - Gold and silver prices are sharply lower in midday U.S. trading Thursday, on heavy more profit-taking from the shorter-term futures traders and selling pressure as investor risk appetite has at least temporarily up-ticked on news U.S.-China trade talks are set to resume in October. On Wednesday, gold futures hit a 6.5-year high and silver futures a three-year high. December gold futures were last down $34.00 an ounce at 1,526.50. December Comex silver prices were last down $0.712 at $18.83 an ounce.
Thursday's sharp losses in the gold and silver markets are certainly unnerving to the precious metals bulls--especially the shorter-term futures bulls. However, it's important to keep in mind near-term price uptrends are still firmly in place on the daily bar charts for both metals. For the near-term uptrend in gold to be seriously jeopardized, prices would have to drop below solid chart support at $1,500. For silver's uptrend to be put in peril, prices would have to drop below $17.50. If those levels are breached, then gold and silver bulls can start to fret a bit. Veteran traders know that no market's price goes straight up or down and that all price uptrends and downtrends contain "corrections." In fact, periodic significant downside corrections in price uptrends are a healthy element that suggests the uptrend can continue. A huge price spike with little to no downside correction suggests the big upside price move will likely be short-lived.
The Thursday morning release of the ADP national employment report for August showed a rise of 195,000 jobs, which was significantly higher than the forecast of up 140,000. Some other upbeat U.S. data released added to the selling pressure in the metals, as it fell into the camp of the U.S. monetary policy hawks.
With all the activity on a U.S.-holiday-shortened trading week, the marketplace almost forgot about the August U.S. employment situation report from the Labor Department that is out Friday morning. The key “non-farm” payrolls component of the report is expected to show a gain of 150,000 in August.
Global stock markets were in rally mode Thursday. Traders and investors around the globe got another attitude-booster Thursday when China’s commerce ministry said trade talks with the U.S. will restart in Washington, D.C. in October. U.S. trade officials confirmed high-level talks will take place at that time. There were notions earlier this week the China-U.S. trade war had escalated recently. As has been the case for months, this situation vacillates from one day to the next, depending on the latest rhetoric coming from the world’s two largest economies. Most market watchers are still not optimistic a U.S.-China trade deal will be reached this year.
While markets on Wednesday were relieved Hong Kong’s leader withdrew from consideration a proposed law that would allow the extradition of Hong Kong citizens to mainland China for criminal trials, reports Thursday said more protests are planned in the coming days. Right now it appears doubtful the reversal of Hong Kong’s leader on the extradition matter will be enough to quell the civil unrest.
Meantime, the Brexit turmoil continues as the October deadline for a U.K. deal with the European Union approaches. Prime Minister Boris Johnson wants out with no extension of time to reach a “soft” Brexit. However, votes this week from Parliament appear to have defeated his “hard” Brexit stance—at least for now. This news has boosted the British pound off its 34-year low against the U.S. dollar, reached earlier this week.
The key “outside markets” today see Nymex crude oil prices higher and trading around $57.00 a barrel. The U.S. dollar index is slightly lower on a normal downside correction after hitting a 27-month high Monday.
Technically, December gold futures prices were nearer the session low today. The bulls still have the solid overall near-term technical advantage. A three-month-old uptrend is still firmly 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 $1,600.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,500.00. First resistance is seen at $1,535.00 and then at $1,546.10. First support is seen at today’s low of $1,514.30 and then at $1,510.00. Wyckoff's Market Rating: 7.5
December silver futures prices were nearer the session low. The silver bulls still have the solid overall near-term technical advantage. A three-month-old uptrend is still in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $20.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support $17.50. First resistance is seen at $19.00 and then at $19.25. Next support is seen at today’s low of $18.57 and then at this week’s low of $18.365. Wyckoff's Market Rating: 8.0.
December N.Y. copper closed up 430 points at 263.75 cents today. Prices closed nearer the session high on more short covering after hitting a 2.5-year low Tuesday. The copper bears still have the firm overall near-term technical advantage. However, good gains Friday and a bullish weekly high close would suggest this market has put in a bottom. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 275.00 cents. The next downside price objective for the bears is closing prices below solid technical support at this week’s low of 248.20 cents. First resistance is seen at today’s high of 264.90 cents and then at 267.50 cents. First support is seen at 260.00 cents and then at today’s low of 258.75 cents. Wyckoff's Market Rating: 3.0.