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Gold price weaker amid powerful U.S. dollar, rising Treasury yields

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(Kitco News) - Gold and silver prices are modestly lower in early U.S. trading Tuesday. A very strong U.S. dollar index that hit a nearly 20-year high overnight is keeping the precious metals market buyers scarce at present. Rising U.S. Treasury yields are also bearish for the safe-haven metals. October gold futures were last down $2.90 at $1,735.90. September Comex silver futures were last down $0.143 at $18.735 an ounce.

Global stock markets were mixed to lower overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, on tepid corrective bounces after Monday's big sell offs. Traders and investors early this week are concerned about a still-aggressive Federal Reserve that is fighting problematic price inflation by raising U.S. interest rates at a rapid pace--even if it causes a U.S. economic recession. A Wall Street Journal news headline read: “Wall Street swings from greed to fear as the Fed's message sinks in.” The marketplace is awaiting the late-week Jackson Hole, Wyoming Federal Reserve annual symposium, including a speech from Fed Chairman Jerome Powell Friday morning. Past Jackson Hole Fed meetings have significantly moved markets.   

In overnight news, the Chinese currency, the yuan, fell to a two-year low against the U.S. dollar, following recent weak Chinese economic data and China's interest rate cuts.

The Euro zone's August manufacturing purchasing managers index (PMI) was 49.7 versus 49.8 in July. The August PMI was just above market expectations. The August services PMI was 50.2 versus 51.2 in July. A reading below 50.0 suggests contraction in the sector.

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The key outside markets today see Nymex crude oil prices higher and trading around $91.25 a barrel. The U.S. dollar index is firmer and hit a nearly 20-year high in early U.S. trading. The surging greenback is denting bullish enthusiasm in many raw commodity markets, as they are priced in U.S. dollars on the world market. The appreciating greenback is making those commodities more expensive to purchase in non-U.S. currency. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.016%.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail reports, the flash manufacturing and services PMIs, the Richmond Fed business survey and new residential sales.

Live 24 hours gold chart [Kitco Inc.]

Technically, the October gold futures bears have the firm overall near-term technical advantage. 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 Monday's high of $1,752.30 and then at last Friday's high of $1,762.70. First support is seen at Monday's low of $1,730.40 and then at $1,717.00. Wyckoff's Market Rating: 2.5

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $20.00. The next downside price objective for the bears is closing prices below solid support at the July low of $18.01. First resistance is seen at Monday's high of $19.065 and then at $19.48. Next support is seen at Monday's low of $18.605 and then at $18.35. Wyckoff's Market Rating: 2.0.

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.