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Gold, silver see corrective price pullbacks at mid-week

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(Kitco News) - Gold and silver prices are lower in early U.S. trading Wednesday, on routine downside price corrections following solid gains posted on Monday and Tuesday. A strong rebound in the U.S. dollar index today is also a bearish outside market element for the precious metals markets. December gold was last down $10.90 at $1,719.40 and December silver was down $0.754 at $20.35.

Gold prices downticked a bit more following the release of a slightly stronger-than-expected U.S. ADP jobs report, showing a gain of 208,000 in September. That compares to expectations for a rise of 200,000. Arguably the most important U.S. data point of the week, if not the month, is Friday's employment situation report for September from the Labor Department. The key non-farm jobs number is expected to come in at up 275,000. The August report showed a non-farm jobs rise of 315,000.

Global stock markets were mixed overnight, with European shares mostly weaker and Asian shares mostly firmer. U.S. stock indexes are pointed to lower openings when the New York day session begins, on routine corrective pullbacks after solid gains posted on Monday and Tuesday that were the largest two-day advance in over two years.

Said market analyst Craig Erlam of OANDA: "It's been a very impressive relief rally, albeit one aided by a rose-tinted interpretation of certain economic indicators and a terrible plunge in the weeks before. This isn't the time to get carried away but it is understandable that we're seeing some relief. It all hangs on whether the (recent economic) data is the start of a weakening trend or just a blip, as with the July inflation drop."

Global central banks increase reserves by 20 tonnes in August - World Gold Council

In overnight news, New Zealand's central bank raised interest rates by 50 basis points, to 3.5%, and hinted of more to come, with policymakers even debating 75 basis points next time, as core inflation remains too high and labor resources are tight.

Today's OPEC+ meeting is expected to see the cartel make a large crude oil output cut of 1 million barrels or more per day, in response to a weakening global economic outlook.

The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are near steady and trading around $86.50 a barrel. Meantime, the yield on the 10-year U.S. Treasury note is falling and presently fetching 3.691%.   

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, U.S. international trade in goods and services data, the U.S. services PMI, the global services PMI, the ISM report in business services, and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the December gold futures bears have the overall near-term technical advantage but the bulls have gained some momentum to begin to suggest a market bottom is in place. A downtrend on the daily bar chart is now in jeopardy. Bulls' next upside price objective is to produce a close above solid resistance at $1,780.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,622.20. First resistance is seen at this week's high of $1,738.70 and then at $1,746.40. First support is seen at the overnight low of $1,711.80 and then at $1,700.00. Wyckoff's Market Rating: 3.0

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $22.00. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at $21.00 and then at this week's high of $21.31. Next support is seen at the overnight low of $20.275 and then at $20.00. Wyckoff's Market Rating: 5.5.

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.