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Gold price up on safe-haven demand; U.S. credit rating downgraded

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(Kitco News) - Gold and silver prices are higher in early U.S. trading Wednesday. The safe-haven metals are getting a lift following a surprise downgrade of U.S. government debt from a major credit rating agency, which has cast a bit of a pall over the marketplace at mid-week. December gold was last up $11.10 at $1,989.90 and September silver was up $0.204 at $24.53.

There is some keener risk aversion in the marketplace at mid-week, following the surprise move by the Fitch credit rating agency to downgrade U.S. the government's credit rating to AA+ from AAA. It was the first downgrade by a major credit rating agency in more than a decade. Fitch cited “expected fiscal deterioration" of the U.S. government in the coming years, amid a growing government debt burden. Traders and investors are not badly shaken over the surprise Fitch news, but it did somewhat deflate heretofore upbeat marketplace attitudes that had recently pushed U.S. stock indexes to new highs for the year. The news came just as former President Donald Trump was indicted for trying to overthrow the 2020 U.S. presidential election. Needless to say, this is not one of the U.S.'s finer moments, as viewed by global market participants.   

Asian and European stock markets were mostly lower in overnight trading. U.S. stock indexes are pointed to lower openings when the New York day session begins.

Traders today will closely examine this morning's U.S. ADP national employment report for July, which is expected to come in at up 175,000 versus a gain of 497,000 in the June report. Traders are awaiting the U.S. data point of the week on Friday: the U.S. employment situation report for July. The key non-farm payrolls number is expected to come in at up 200,000 jobs, compared to a rise of 209,000 in the June report.

Gold weighed down by rate uncertainty as banks do the Fed's heavy lifting

The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices are firmer and trading around $82.00 a barrel. A Wall Street Journal story today has the headline: Oil prices perk up as recession worries ebb and supply tightens." Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 4.025%.  

U.S. economic data due for release Wednesday includes the MBA weekly mortgage applications survey, the ADP national employment report and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls and bears are on a level overall near-term technical playing field. Bulls' next upside price objective is to produce a close in December futures above solid resistance at the July high of $2,028.60. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,939.20. First resistance is seen the overnight high of $1,992.20 and then at $2,000.00. First support is seen at the overnight low of $1,982.10 and then at this week's low of $1,978.30. Wyckoff's Market Rating: 5.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at the July high of $25.475. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the overnight high of $24.63 and then at $25.00. Next support is seen at the overnight low of $24.39 and then at last week's low of $24.18. 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.