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Gold price firmer as risk appetite down-ticks Friday

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(Kitco News) - Gold prices are modestly up in early U.S. trading Friday. Some risk aversion has returned to the marketplace late this week and that’s prompting just a bit of safe-haven demand for the yellow metal, as well as some short covering by the shorter-term gold futures traders. A firmer U.S. dollar index on this day is limiting the upside for the precious metal. October gold futures were last up $2.70 at $1,750.40. December Comex silver was last down $0.074 at $22.605 an ounce.

Global stock markets were mostly weaker in overnight trading. The U.S. stock indexes are also pointed to lower openings when the New York day session begins. There is some keener risk aversion to end the trading week, as the Chinese property giant Evergrande may have missed its $83 million debt payment that was due Thursday. There was no announcement the payment had been made, so many traders and investors are taking that to mean no payment was made Thursday. There are worries one of the biggest companies in the world’s second-largest economy being on the verge of insolvency could have a contagion effect not only in China but around the globe. History shows that when a financial market contagion begins, it’s very hard to contain. Mainly, it’s a crisis of confidence as traders and investors seek to pull their money out of riskier assets, and then the exit doors become clogged.

Also, it appears the marketplace is taking Wednesday’s FOMC meeting results, including Fed Chairman Powell’s comments at his press conference, to be more hawkish on U.S. monetary policy than at first reckoned. U.S. Treasury bond yields have risen the past two trading sessions, hitting the highest level since July. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.41%. Powell is set to speak at a virtual event, along with other Federal Reserve officials, at 10:00 a.m. EDT Friday.

Meantime, the U.S. Congress is debating about how to extend the U.S. debt ceiling. Treasury Secretary Janet Yellen said the government will run out of money sometime in October. While looming over the marketplace, this situation has played out more than once over recent years, but it could still inject some anxiety into the marketplace, if the government actually nears a shutdown.

In other overnight news, China’s central bank declared all crypto-currency transactions to be illegal. China officials said the move was made to maintain national security and social stability. Bitcoin prices are down on the news.

The key outside markets today see the U.S. dollar index firmer. Nymex crude oil futures prices are near steady and trading around $73.35 a barrel

U.S. economic data due for release Friday is light and includes new residential sales.

Live 24 hours gold chart [Kitco Inc.]

Technically, October gold futures bears have the slight overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at the overnight high of $1,755.60 and then at Thursday’s high of $1,774.50. First support is seen at the overnight low of $1,741.10 and then at this week’s low of $1,736.30. Wyckoff's Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $23.50 an ounce. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $23.00 and then at this week’s high of $23.15. Next support is seen at $22.455 and then at this week’s low of $22.025. Wyckoff's Market Rating: 1.5.

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.