Gold, silver see follow-through price pressure as USDX rallies
(Kitco News) - Gold and silver prices are lower in the early U.S. trading Thursday. Both metals hit two-month lows overnight. A rallying U.S. dollar index that hit a two-month high overnight and eroding near-term technical postures have the gold and silver bulls on the ropes. December gold futures were last down $8.90 at $1,859.50 and December Comex silver was last down $0.77 at $22.34 an ounce.
Not quite half-way through the “rough waters” period (September and October) for the stock market, it seems odds do not favor a strong recovery to new record highs in the U.S. stock indexes. It’s also a period when North Americans and Europeans will be staying inside more as colder weather approaches, with the potential for new Covid restrictions on businesses crimping their revenues. And there is no new financial stimulus package for Americans in sight. Throw in the element of the high potential for a disputed and even protracted U.S. presidential election result (President Trump said Wednesday the presidential election in November will likely be decided by the Supreme Court), and all of the above should favor trader/investor demand safe-haven assets like gold, silver, the U.S. dollar and U.S. Treasuries. Yet, many longtime market watchers are presently scratching their heads that only the greenback is benefiting at present, while gold and silver are tanking and U.S. Treasuries languish.
Global stock markets were mostly weaker overnight. U.S. stock indexes are set to open the New York day session mixed. Stock markets have turned more wobbly this week. Said one analyst in a morning email dispatch: “If the latest sell-off is just about the removal of froth and a healthy correction, it may indicate we are near a bottom and it’s time to reaccumulate stocks. This approach would be based on the notion that the U.S. and the global economy will continue heading in the right direction towards a full recovery. And with central banks across the globe remaining extremely generous with their policies, we should not worry about some bumps along the road. However, the risks of a stalling recovery are growing as spikes in Covid-19 cases surge across Europe and expectations are for similar trends in the U.S. if no action is taken. The virus continues to be winning at this stage and there are no clear answers as to when a vaccine will be delivered.”
The important outside markets today see the U.S. dollar index up and hitting another two-month high overnight. Nymex crude oil prices are near steady and trading around $40.00. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.67% today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, new residential sales and the Kansas City Fed manufacturing survey. Once again, several Federal Reserve officials speak today, including Fed Chairman Powell speaking to a Senate panel.
Technically, the December gold futures bulls have the slight overall near-term technical advantage but are fading fast. The near-term price uptrend has been negated and prices are now trending down on the daily chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at the overnight high of $1,872.20 and then at $1,885.00. First support is seen at the overnight low of $1,851.00 and then at $1,825.00. Wyckoff's Market Rating: 5.5
December silver futures bulls have lost their the overall near-term technical advantage as an uptrend has been negated and prices are now trending lower on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at Wednesday’s high of $24.62 an ounce. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at the overnight high of $23.065 and then at $23.60. Next support is seen at the overnight low of $21.81 and then at $21.50. Wyckoff's Market Rating: 5.0.