Price pressure on gold, silver as USDX rallies, crude oil weaker
(Kitco News) - Gold and silver prices are lower in early U.S. trading Thursday. Once again, the buyers in the metals are scarce when the U.S. dollar index is in rally mode. Lower crude oil prices on this day are also negative for the metals market bulls. December gold was last down $10.30 at $1,765.60 and December silver was down $0.484 at $21.035.
Global stock markets were mostly lower overnight. U.S. stock indexes are headed for weaker openings when the New York day session begins. Still, trader and investor attitudes in the U.S. are mostly upbeat after a much-better-than-expected U.S. retail sales report for October that was released Wednesday morning. Read a Barron’s headline this morning: “The Fed may actually engineer a soft landing….”
In overnight news, the Euro zone reported its October consumer price index at up 10.6%, year-on-year, which was just slightly below expectations for a rise of 10.7%.
The London Metals Exchange has increased scrutiny of nickel trading as volatility has spiked. Broker SP Angel said Thursday morning in an email dispatch that nickel prices slid 12% Wednesday following a week of whipsawing volatility. “The LME nickel contract has seen its highest levels of volatility since the infamous nickel short squeeze in March.” The LME has hiked the nickel margin 28% to $6,100 per MT in a bid to limit intraday swings. Liquidity has increased dramatically on the Shanghai exchange following the March saga, with volatility on that contract far lower. “Traders have been put off by the LME’s decision to suspend trading during the fiasco, hitting buyers who were long at a time when prices hit $100,000 per MT.”
The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are lower and trading around $84.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently 3.736%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, new residential construction and the Kansas City Fed business survey.
Technically, the gold futures bulls have the slight overall near-term technical advantage amid a fledgling price uptrend in place on the daily bar chart. 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 last week’s low of $1,667.10. First resistance is seen at the overnight high of $1,777.60 and then at this week’s high of $1,791.80. First support is seen at this week’s low of $1,755.80 and then at $1,750.00. Wyckoff's Market Rating: 5.5.
The silver bulls have the overall near-term technical advantage. A choppy, 2.5-month-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $22.38. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at the overnight high of $21.535 and then at $22.00. Next support is seen at $20.50 and then at $20.00. Wyckoff's Market Rating: 6.0.