(Kitco News) - Gold and silver prices are posting mild gains in early U.S. trading Thursday. Some safe-haven demand is featured amid a general marketplace that sees somewhat elevated risk aversion. A strong rebound in the U.S. dollar index from early week lows is limiting the upside in the precious metals markets. December gold was last up $2.10 at $1,723.10 and December silver was up $0.086 at $20.63.
Early this week there were some notions in the marketplace that the Federal Reserve could ease up on its aggressive monetary policy tightening. However, stronger U.S. economic data this week and still-hawkish comments from Fed officials have pretty much dashed those notions. One analyst said it’s a misconception to believe the Fed will start to ease as soon as the U.S. economy shows deterioration. He suggested the Fed will have to remain restrictive until inflation starts to drop significantly.
Global stock markets were flat to weaker overnight. U.S. stock indexes are pointed to lower openings when the New York day session begins, still on corrective pullbacks after solid gains posted on Monday and Tuesday that were the largest two-day advance in over two years.
The key outside markets today see the U.S. dollar index higher. The USDX has made a strong rebound from solid early week selling pressure. Broker SP Angel said this morning in an email dispatch: Is the Fed purely combatting inflation by rising interest rates? Personally, we reckon the Fed is happy for higher U.S. interest rates to draw capital out of other economies and back into the U.S. dollar and the U.S. economy. Russia and China have been trying to break the dominance of the U.S. dollar as the global reserve currency. The U.S. Fed is currently demonstrating why the U.S. dollar is a better place to be when risk rises and times get tough. Sadly, the British pound and a few other highly liquid currencies are casualties of the move and easy targets for short sellers. The UK, Europe and others will suffer higher input costs and reduced economic activity as funding moves west unless the BOE, ECB and other central banks opt to match Fed rate rises and risk deepening recession, said the broker.
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| Gold price rally to resume after foundation akin to 1999 is built, watch USD vs. EUR disparity, says Bloomberg Intelligence |
Meantime, Nymex crude oil prices are a bit weaker and trading around $87.50 a barrel, after OPEC-plus on Wednesday decided to reduce the cartel’s collective oil production by 2 million barrels per day. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.773%.
Traders and investors are awaiting what is arguably the most important U.S. data point of the week, if not the month: Friday’s employment situation report for September from the Labor Department. The key non-farm jobs number is expected to come in at up 275,000. The August report showed a non-farm jobs rise of 315,000.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, and the monthly retail chain stores report. Several Federal Reserve officials and U.S. Treasury Secretary Yellen are also slated to speak today.
![Live 24 hours gold chart [Kitco Inc.]](/images/live/gold.gif?0.2924175530478188){kind=small}
Technically, the December gold futures bears have the overall near-term technical advantage but the bulls have some momentum to begin to suggest a market bottom is in place. A downtrend on the daily bar chart is now in jeopardy. Bulls’ next upside price objective is to produce a close above solid resistance at $1,780.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,622.20. First resistance is seen at this week’s high of $1,738.70 and then at $1,746.40. First support is seen at the Wednesday’s low of $1,708.80 and then at $1,700.00. Wyckoff's Market Rating: 3.0
![Live 24 hours silver chart [ Kitco Inc. ]](/images/live/silver.gif)
September silver futures bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $22.00. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at $21.00 and then at this week’s high of $21.31. Next support is seen at $20.30 and then at $20.00. Wyckoff's Market Rating: 5.5.
