Strong greenback squelches precious metals bulls
(Kitco News) - Gold prices are posting modest losses in midday U.S. trading Thursday. A strong rebound in the U.S. dollar index from early week lows is limiting buying interest in the precious metals markets today. Rising U.S. Treasury yields are also a bearish outside market force for gold and silver. December gold was last down $3.10 at $1,717.50 and December silver was up $0.005 at $20.55.
Early this week there were some notions in the marketplace that the Federal Reserve could ease up on its aggressive monetary policy tightening. However, stronger U.S. economic data this week and still-hawkish comments from Fed officials have pretty much dashed those notions. One analyst said it's a misconception to believe the Fed will start to ease as soon as the U.S. economy shows deterioration. He suggested the Fed will have to remain restrictive until inflation starts to drop significantly.
Global stock markets were flat to weaker overnight. U.S. stock indexes are lower at midday, still on corrective pullbacks after solid gains posted on Monday and Tuesday that were the largest two-day advance in over two years.
The USDX has made a strong rebound from solid early week selling pressure. Broker SP Angel said this morning in an email dispatch: Is the Fed purely combatting inflation by rising interest rates? Personally, we reckon the Fed is happy for higher U.S. interest rates to draw capital out of other economies and back into the U.S. dollar and the U.S. economy. Russia and China have been trying to break the dominance of the U.S. dollar as the global reserve currency. The U.S. Fed is currently demonstrating why the U.S. dollar is a better place to be when risk rises and times get tough. Sadly, the British pound and a few other highly liquid currencies are casualties of the move and easy targets for short sellers. The UK, Europe and others will suffer higher input costs and reduced economic activity as funding moves west unless the BOE, ECB and other central banks opt to match Fed rate rises and risk deepening recession, said the broker.
|Gold price gets another downgrade as Fed has another 175bps to hike, says Commerzbank|
Meantime, Nymex crude oil prices are firmer and trading around $88.50 a barrel, after OPEC-plus on Wednesday decided to reduce the cartel's collective oil production by 2 million barrels per day. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.769%.
Traders and investors are awaiting what is arguably the most important U.S. data point of the week, if not the month: 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.
Technically,December gold futures prices saw another corrective pullback from recent gains. Bears have the overall near-term technical advantage. However, it appears a near-term market bottom is in place. Bulls' next upside price objective is to produce a close above solid resistance at $1,778.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week's low of $1,666.50. First resistance is seen at this week's high of $1,738.70 and then at the September high of $1,746.40. First support is seen at Wednesday's low of $1,708.80 and then at $1,700.00. Wyckoff's Market Rating: 3.0
December silver futures prices saw a corrective pullback after hitting a three-month high Tuesday. The silver bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $22.50. 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 $20.25 and then at $20.00. Wyckoff's Market Rating: 5.5.
December N.Y. copper closed down 635 points at 343.75 cents today. Prices closed near the session low today and hit a three-week high early on. Prices scored a bearish "outside day" down today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 369.25 cents. The next downside price objective for the bears is closing prices below solid technical support at the July low of 315.55 cents. First resistance is seen at 350.00 cents and then at today's high of 359.30 cents. First support is seen at this week's low of 335.20 cents and then at the September low of 324.30 cents. Wyckoff's Market Rating: 3.0.