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Gold sees more price pressure; near-term uptrend in jeopardy

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(Kitco News) - Gold and silver prices are lower in the early U.S. trading Wednesday. Gold hit a six-week low and silver fell to a seven-week low. Silver has seen its near-term price uptrend (on the daily chart) negated this week and gold is in serious danger of seeing its near-term uptrend ending. A rallying U.S. dollar index recently and a rebound in global stock markets at mid-week are bearish elements for the precious metals markets. December gold futures were last down $13.40 at $1,885.90 and December Comex silver was last down $0.803 at $23.72 an ounce.

Gold and silver bulls are confounded this week. Their markets sold off, along with the global stock markets, on Monday, but then also see selling pressure at mid-week when the world stock indexes are rebounding. It appears the safe-haven metals need a new fundamental spark to jumpstart upside price action. Don’t be surprised if such occurs sooner rather than later.

Global stock markets were mostly firmer overnight. U.S. stock indexes are set to open the New York day session higher. At mid-week there is less risk aversion in the global marketplace compared to Monday. The U.S. House of Representatives late Tuesday passed a short-term funding bill that will keep the federal government running until early December. However, it’s still unlikely the Congress and President Trump will get a new, second financial stimulus package for Americans out the door before the November elections.  

Reports overnight said a U.K. scientist has warned a full second lockdown is coming, as Prime Minister Boris Johnson considers banning household visits and other restrictions. Johnson warned the U.K. faces a long, hard winter of lockdowns.

Meantime, the Euro zone composite purchasing managers index (PMI) for September came in at 50.1 vs 51.9 in August. Better growth in manufacturing led by Germany was offset by a renewed downturn in the service sector as a result of Covid-19 restrictions.

The important outside markets today see the U.S. dollar index near steady following solid gains this week that have pushed the USDX to a six-week high. Nymex crude oil prices are slightly firmer and trading around $40.00. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.66% today.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the monthly house price index, the U.S. flash and services PMI’s, and the weekly DOE liquid energy stocks report. Several Federal Reserve officials are slated to give speeches today, including Fed Chairman Powell to a House committee.

Live 24 hours gold chart [Kitco Inc.]

Technically, the December gold futures bulls have the overall near-term technical advantage but are fading and need to show fresh power very soon to keep the near-term price uptrend alive. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at this week’s high of $1,962.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,874.20—which would negate the near-term price upternd. First resistance is seen at the overnight high of $1,900.00 and then at the overnight high of $1,909.90. First support is seen at the overnight low of $1,876.10 and then at $1,874.20. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bulls have the overall near-term technical advantage but have faded badly this week and need to stabilize prices very soon, to avoid more serious technical damage being inflicted. The near-term price uptrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $27.13 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.00 and then at the overnight high of $24.62. Next support is seen at the overnight low of $23.22 and then at $23.00. Wyckoff's Market Rating: 6.0.

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.