Gold price punished by stronger U.S. dollar, weaker crude oil

(Kitco News) Gold and silver prices are lower again in early U.S. trading Thursday, with gold hitting a six-week low and silver a more-than-two-year low. Falling crude oil prices and a strong U.S. dollar index, as well as rising U.S. Treasury yields, are all bearish forces pushing the metals markets south. October gold futures were last down $15.00 at $1,701.30. September Comex silver futures were last down $0.322 at $17.555 an ounce.

Global stock markets were lower overnight. U.S. stock indexes are pointed toward lower openings and at five-week lows when the New York day session begins. Risk aversion is higher on this first day of September, a month that history has shown can be a rocky one for stock and financial markets. There are new reports of major Covid lockdowns in China, the world’s second-largest economy. Reports said 21 million people have been locked down in a major industrial region of the country. Economic data out of China Friday was also dour, with the purchasing managers indexes (PMIs) and housing/property indicators showing weakness. This has prompted concerns of slowing consumer and commercial demand in China, which have pressured raw commodity markets this week, with crude oil leading the way down. Other major economies are tightening their monetary policies, which will also work to slow their growth. Many market watchers fear U.S. and global economic recessions are setting in.

Traders are awaiting Friday morning’s employment situation report from the Labor Department. That report is expected to show the key non-farm payrolls growth number at up 325,000 in August versus the July report showing a gain of 528,000 non-farm jobs.

The key outside markets today see Nymex crude oil prices lower and trading around $87.50 a barrel. The U.S. dollar index is solidly higher in early U.S. trading. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.2%. The 2-year U.S. Treasury note yield hit a 15-year high today, at 3.51%. The inverted yield curve is another clue suggesting a U.S. economic recession is imminent.

It’s a busy slate of U.S. economic data due for release Thursday, including the weekly jobless claims report, the Challenger job-cuts report, revised productivity and costs, the U.S. manufacturing PMI, the ISM report on business manufacturing, the global manufacturing PMI, monthly chain store sales, domestic auto sales and construction spending.

Technically, the October gold futures bears have the solid overall near-term technical advantage. Prices are trending down on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the July low of $1,686.30. First resistance is seen at the overnight high of $1,713.10 and then at Wednesday’s high of $1,728.70. First support is seen at $1,700.00 and then at $1,686.30. Wyckoff's Market Rating: 2.0

September silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $19.00. The next downside price objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $18.00 and then at $18.50. Next support is seen at today’s low of $17.46 and then at $17.25. Wyckoff's Market Rating: 1.0.