Gold powers to 6-week high on technical buying, slumping USDX
(Kitco News) - Gold and silver futures prices are sharply up in midday U.S. trading Thursday, with gold notching a six-week high. The metals are boosted in part by a falling U.S. dollar index in the wake of the U.S. elections. Chart-based buying, including buy stop orders being triggered in the futures markets, was also featured today in both precious metals. Some safe-haven demand in the metals is also seen as the U.S. presidential election result is still up in the air. December gold futures were last up $53.10 at $1,949.20 and December Comex silver was last up $1.312 at $25.205 an ounce.
Traders were awaiting the conclusion of the Federal Open Market Committee (FOMC) meeting that started Wednesday morning and on Thursday afternoon concludes with 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 as usual the marketplace will be looking for guidance on future actions from the Fed.
Asian and European stock markets were mostly up overnight. U.S. stock indexes are solidly up at midday. The marketplace sees better risk appetite late this week, in the wake of the U.S. elections. While it’s still uncertain who will be the U.S. president in January (although Biden appears most likely to be, at present), a near certainty is that there will be gridlock in the U.S. Congress for at least the next two years. That’s good for stock and financial markets because no major, radical legislation would occur with a split U.S. Congress that will likely see the Republicans control the Senate and the Democrats control the House of Representatives.
The “inflation trade” that had gained steam in the weeks heading into the U.S. elections is now being unwound. Polls forecasting a Democratic sweep had many market watchers reckoning huge government spending programs that would help to ignite inflation. That won’t be the case now, and U.S. Treasury yields are dropping like a rock. The yield on the benchmark 30-year Treasury note is presently 0.74%.
Meantime, the U.S. dollar index has sold off sharply in the wake of the election. The other important outside market sees crude oil prices weaker and trading around $38.50 a barrel. Oil market bulls have had a very good week, to suggest at least sideways and choppy price action for that market in the near term.
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.
Technically, December gold today produced a bullish upside “breakout” from the recent sideways trading range. The gold bulls have the firm overall near-term technical advantage and gained fresh power today. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at today’s high of $1,954.30 and then at $1,975.00. First support is seen at $1,939.40 and then at $1,936.00. Wyckoff's Market Rating: 7.0
December silver futures prices also hit a two-week high today. Silver futures bulls have the overall near-term technical advantage and gained some more power today. 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 October low of $22.625. First resistance is seen at $25.425 and then at $25.71. Next support is seen at $24.50 and then at $24.00. Wyckoff's Market Rating: 6.5.
December N.Y. copper closed up 25 points at 310.95 cents today. Prices closed near mid-range 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 today’s high of 313.65 cents and then at 317.50 cents. First support is seen at 306.00 cents and then at this week’s low of 302.80 cents. Wyckoff's Market Rating: 7.5.