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Gold, silver see price pressure as stock markets sell off

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(Kitco News) - Safe-haven gold and silver prices are seeing selling pressure Thursday morning despite degraded trader/investor risk appetite and global stock markets that are weaker today. This seemingly conflicting scenario has played out often the past few months, confounding the precious metals market bulls. Still, such situations have also invited metals bulls to step in and buy the dips to keep the overall price uptrends alive in gold and silver. October gold futures were last down $15.40 at $1,946.60 and December Comex silver was last down $0.391 at $27.09 an ounce.

Global stock markets were mostly down overnight. U.S. stock indexes are set for lower openings when the New York day session begins. Traders and investors are more downbeat late this week, following a reminder from the Federal Reserve on Wednesday afternoon that the U.S. economic outlook is “highly uncertain.” Wednesday afternoon’s conclusion of the Open Market Committee meeting (FOMC) saw no change in U.S. interest rates, as expected, but the Fed signaled U.S. rates will not rise for at least three years. The Fed reiterated it wants to see inflation at 2% or slightly above. Many were hoping for more clarity on how the Fed plans to stoke inflation in the coming months. A Wall Street Journal report by Greg Ip suggested the FOMC statement and Chairman Jay Powell’s press conference were strong on words but weak on actions.

It could be that the marketplace late this week, following the FOMC meeting, may be considering more the longer-term implications of the Covid-19 economic damage, instead of the recently better-than-expected recoveries in some sectors of world economies. When one thinks about when most economic and social conditions could be “back to normal” the horizon for such is a long way off. And there are sure to be permanent and deep Covid-19 scars in sectors of the major global economies.

In overnight news, the Euro zone August consumer price index was down 0.4% from July and down 0.2%, year-on-year. These numbers are a stark reminder of the difficulty central banks may have in reigniting inflation in the coming months.

The Bank of Japan left its monetary policy unchanged at its regular meeting Thursday, continuing its easy-money stance. The Bank of England is meeting today on its monetary policy.

The important outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices are near steady and trading around $40.00. The yield on the U.S. Treasury 10-year note is trading around 0.68% today.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and new residential construction.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage and have gained momentum early this week. Prices are in an overall near-term uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at the September high of $1,992.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at the overnight high of $1,960.50 and then at this week’s high of $1,975.40. First support is seen at the overnight low of $1,935.60 and then at $1,925.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bulls have the firm overall near-term technical advantage. Prices are still in an overall price uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the August high of $30.19 an ounce. The next downside price objective for the bears is closing prices below solid support at the August low of $23.80. First resistance is seen at $27.50 and then at this week’s high of $27.865. Next support is seen at $26.75 and then at $26.50. Wyckoff's Market Rating: 7.0.

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.