Gold price pokes above $2,000, on short covering, dip in USDX

(Kitco News) - Gold prices are solidly higher and briefly traded above $2,000 in early U.S. trading Tuesday. Silver prices are posting moderate gains. The precious metals are getting support from short covering by the futures traders and amid a weaker U.S. dollar index today. Trader/investor notions of no more Federal Reserve interest rate increases on the horizon are also an underlying bullish element for the metals markets. Traders will closely examine this afternoon's minutes from the Fed's last FOMC meeting. December gold was last up $17.80 at $1,998.10. December silver was last up $0.246 at $23.86.

Asian and European markets were mixed to weaker in overnight trading. U.S. stock indexes are pointed to slightly lower openings when the New York day session begins. Marketplace attitudes are more upbeat, following recent U.S. inflation reports that came in tamer than expectations. The consumer and producer price index reports for October fell into the camp of the U.S. monetary policy doves, who want to see the Federal Reserve halt its interest-rate-tightening cycle. More Fed watchers now believe the central bank will continue its pause on raising interest rates. The U.S. stock indexes rallied to multi-week highs this week in the wake of tamer U.S. inflation data. No more Fed rate hikes would mean less chance for an economic recession, lower borrowing costs and better consumer demand for goods and services. Stock market bulls are now looking for a seasonal Santa Claus rally heading into the holidays.

It's a quieter trading week as the U.S. Thanksgiving holiday is on Thursday, and Friday is typically one of the quietest U.S. trading days of the year.

The key outside markets today see the U.S. dollar index slightly lower and hitting an 11-week low overnight. Nymex crude oil prices are slightly lower and trading around $77.50 a barrel. Reports said OPEC is considering more oil-production cuts. The cartel will meet this coming weekend in Vienna. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.414%. A Dow Jones Newswires headline today reads: “Bonds could be the star asset class of 2024."

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook retail sales report, the Chicago Fed national activity index, existing home sales and the FOMC minutes.

Technically, the gold futures bulls have the slight overall near-term technical advantage. Bulls' next upside price objective is to produce a close in December futures above solid resistance at the October high of $2,019.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at today's high of $2,002.70 and then at $2,010.00. First support is seen at the overnight low of $1,979.90 and then at this week's low of $1,967.20. Wyckoff's Market Rating: 6.0

The silver bulls have the overall near-term technical advantage. 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 the November low of $21.925. First resistance is seen at $24.00 and then at the November high of $24.22. Next support is seen at this week's low of $23.30 and then at $23.00. Wyckoff's Market Rating: 6.0.

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By

Jim Wyckoff

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