Mild price pressure on gold, silver as bond yields rising

(Kitco News) - Gold and silver prices are slightly down in early U.S. trading Monday, as U.S. Treasury yields are on the rise and at multi-year highs, while the U.S. dollar index overs near its 6.5-month high. The gold market bears remain confident after last week's monetary-policy-hawkish FOMC meeting of the Federal Reserve. December gold was last down $1.90 at $1,943.70 and December silver was down $0.019 at $23.825.

Asian and European stocks were mixed to weaker overnight. U.S. stock indexes are pointed to slightly lower openings when the New York day session begins. A Barron's headline today reads: "Shutdown, strikes, sticky inflation, and more…brace for a bumpy fourth quarter."

Traders and investors are in risk-off moods to start the trading week, amid the high potential for a U.S. government shutdown. The U.S. House and Senate return Tuesday after a long weekend in observance of Yom Kippur. The Senate will vote on a measure Tuesday to take up a short-term funding solution, called a continuing resolution.

In overnight news, China property developer Evergrande's stock plunged as much as 25% Monday after the developer said it cannot meet regulator conditions to issue new bonds as part of its planned restructuring of at least $30 billion of offshore debt, according to Bloomberg.

The key outside markets today see the U.S. dollar index slightly higher and near a 6.5-month high. Nymex crude oil prices are firmer and trading around $90.50 a barrel. The benchmark U.S. Treasury 10-year note yield is presently at a multi-year high and fetching around 4.5%--the highest since 2007.

U.S. economic data due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.

Technically, the gold futures bears have the firm overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close in December futures above solid resistance at the September high of $1,980.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at $1,950.00 and then at last week's high of $1,968.90. First support is seen at the overnight low of $1,940.10 and then at last week's low of $1,933.10. Wyckoff's Market Rating: 3.0

The silver bears have the overall near-term technical advantage. However, there are stiff technical support layers just below the market that may well halt the decline. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at last week's high of $24.05 and then at $24.25. Next support is seen at the overnight low of $23.67 and then at $23.325. Wyckoff's Market Rating: 4.0.

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By

Jim Wyckoff

For Kitco News

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