Rising bond yields, firmer USDX put price pressure on gold
(Kitco News) - Gold prices are solidly lower and hit a six-week low in early U.S. trading Tuesday. Silver prices are also sharply down. Rising government bond yields and a firmer U.S. dollar index early this week are bearish elements for the metals markets. The safe-haven metals bulls are once again frustrated that risk-off attitudes in the marketplace today are not providing any price support to their markets. December gold futures were last down $18.60 at $1,733.50. December Comex silver was last down $0.504 at $22.19 an ounce.
Global stock markets were mostly lower in overnight trading. The U.S. stock indexes are also pointed to lower openings when the New York day session begins. There is keener risk aversion in the marketplace early this week. Rising bond yields have gotten the attention of traders and investors. The 10-year U.S. Treasury note yield is presently fetching 1.529% and at a three-month high. The major central banks of the world are preparing to wind down their easy-money policies of the past many years and that’s bearish for bond prices.
Federal Reserve Chairman Powell and U.S. Treasury Secretary Yellen will appear before a Senate committee Tuesday morning to discuss the U.S. economy and monetary policy.
Also of concern, European countries and China are experiencing serious energy shortages that are not expected to be resolved anytime soon. Nymex crude oil futures prices are higher again today and trading around $76.25 a barrel. Meantime, natural gas futures prices are at a seven-year high. Rising energy prices heading into winter are sapping some trader and investor enthusiasm, especially in Europe, where some panic buying of gasoline is already occurring.
Focus this week is also on U.S. government spending. President Biden’s infrastructure package is set for a House of Representatives vote on Thursday, while the U.S. government’s funding will expire at midnight Thursday, which if not extended, would shut down part of the government Friday. Some anxiety in the market place is already surfacing as Republicans shot down one plan to keep the government running. Democrats said they are working on another plan.
The other key outside market today sees the U.S. dollar index higher.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail sales reports, the monthly house price index, the S&P Core-Logic home price indexes, the Richmond Fed business survey, and the consumer confidence index.
Technically, December gold futures bears have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at last week’s high of $1,788.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,750.00 and then at this week’s high of $1,760.90. First support is seen at the overnight low of $1,731.50 and then at $1,725.00. Wyckoff's Market Rating: 3.0
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 the overnight high of $22.68 and then at this week’s high of $22.865. Next support is seen at the overnight low of $22.14 and then at last week’s low of $22.025. Wyckoff's Market Rating: 1.5.