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Solid U.S. stock market gains stifle gold, silver rallies

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(Kitco News) - Gold and silver futures prices are lower in midday U.S. trading Wednesday. Big, post-U.S. election rallies in U.S. stock indexes and less risk aversion at mid-week have put the brakes on this week’s rallies in the two precious metals. December gold futures were last down $13.80 at $1,896.60 and December Comex silver was last down $0.364 at $23.97 an ounce.

The U.S. presidential election is still a cliffhanger, with President Trump once again performing much better than the polls were forecasting. It could be days before a final result is seen and a winner declared. Trump has already said he will challenge the results if he loses. Some markets could remain in limbo and languish until a winner is declared.

Meantime, the Republicans appear to have kept control of the U.S. Senate, while the Democrats kept control of the House of Representatives. The “grid-lock” scenario in the U.S. Congress for at least the next two years—no matter who is declared the winner in the presidential election—is a bullish element helping to boost the stock market today. An orderly election with no major civil unrest also calmed traders and investors today.

A feature in the marketplace today is the big price range in U.S. Treasury bond and note prices. Yields (which trade in the opposite direction of price) are dropping significantly today, based on notions of no radical U.S. spending packages being likely now that the Congress will likely be spit between a Democrat-controlled House and a Republican-controlled Senate. The big drop in U.S. bond and note yields also takes a bit away from the “inflation trade” that had been supportive for the metals markets in recent months.

It’s also a week in which the Federal Open Market Committee (FOMC) meets starting Wednesday morning and on Thursday afternoon issues a statement on U.S. monetary policy. Fed Chairman Powell will also hold a press conference Thursday afternoon. No major changes in U.S. monetary policy are expected, but the marketplace will be looking for guidance on future actions from the Fed.

And on Friday the U.S. employment situation report for October from the Labor Department is out. The key non-farm payrolls number is seen up 530,000 and the unemployment rate is seen at 7.7% versus 7.9% seen in September.

The important outside markets early today see the U.S. dollar index modestly down. Nymex crude oil prices are solidly higher today and presently trading around $39.00 a barrel. Crude oil has seen a very strong rebound after hitting a five-month low Monday. The yield on the benchmark U.S. 10-year Treasury note is 0.78% today.

Live 24 hours gold chart [Kitco Inc.]

Technically, December gold futures bulls have the overall near-term technical advantage but prices are still trapped in a sideways trading range on the daily chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the October high of $1,939.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,851.00. First resistance is seen at today’s high of $1,917.90 and then at $1,925.00. First support is seen at today’s low of $1,881.80 and then at this week’s low of $1,873.30. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the October high of $25.71 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.81. First resistance is seen at today’s high of $24.62 and then at $25.00. Next support is seen at today’s low of $23.26 and then at $23.00. Wyckoff's Market Rating: 6.5.

December N.Y. copper closed up 160 points at 310.85 cents today. Prices closed nearer the session high today. The copper bulls have the solid overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the October high of 321.80 cents. The next downside price objective for the bears is closing prices below solid technical support at 290.00 cents. First resistance is seen at this week’s high of 312.30 cents and then at last week’s high of 314.30 cents. First support is seen at this week’s low of 302.80 cents and then at 300.00 cents. Wyckoff's Market Rating: 7.5.

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.