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Price gains for gold, silver as USDX, bond yields back down

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(Kitco News) - Gold and silver prices are solidly higher and hit two-week highs in early U.S. trading Wednesday. The key outside markets are working in favor of the precious metals bulls at mid-week, as the U.S. dollar index is lower, U.S. Treasury yields are lower and crude oil prices are higher. December gold was last up $15.50 at $1,673.50 and December silver was up $0.231 at $19.58.

Importantly, there are some very recent near-term technical developments that are now suggesting the U.S. dollar index has put in a major top and the U.S. stock indexes have put in major bottoms. To extrapolate, such could also mean inflation may be peaking and the Federal Reserve may be closer to the finish line on its aggressive monetary policy tightening path. All off the above may also mean the U.S. and/or global economy may be able to avoid a serious recession. While these are only extrapolations at present, it appears the precious metals traders are picking up on these early chart clues, reckoning not only that the greenback may have peaked but also that it could mean better consumer and commercial demand for the metals markets in the coming months.

Global stock markets were mixed overnight. U.S. stock indexes are headed for weaker openings when the New York day session begins. The U.S. stock indexes hit five-week highs on Tuesday. Price uptrends on the daily bar charts have been negated and fledgling price uptrends are now in place. Technical evidence is mounting that market bottoms are in place for the U.S. stock indexes. Focus of stock traders this week is on corporate earnings reports.

Hedge funds are still bearish; gold investors want more proof the Fed will slow its rate hikes

There were no major market news developments overnight.

The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are up and trading around $86.25 a barrel. The 10-year U.S. Treasury note is yielding 4.067%.

U.S. economic data due for release Wednesday includes the weekly mortgage applications survey, advance economic indicators, new residential sales and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bears have the firm overall near-term technical advantage. However, more upside price action in the near term would form a bullish double-bottom reversal pattern that would suggest a major market bottom is in place. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at today’s high of $1,679.40 and then at $1,700.00. First support is seen at today’s low of $1,653.80 and then at this week’s low of $1,641.20. Wyckoff's Market Rating: 2.5

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at the October high of $21.31. The next downside price objective for the bears is closing prices below solid support at the September low of $17.40. First resistance is seen at the overnight high of $19.765 and then at $20.00. Next support is seen at the overnight low of $19.18 and then at $19.00. Wyckoff's Market Rating: 3.0.

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.