(Kitco News) - Gold and silver prices are trading sharply lower in early U.S. trading Thursday, as worries about lessening global demand for metals are on this day trumping any safe-haven demand bids amid keener risk aversion in the marketplace at present. Gold prices hit a more-than-two-week low and silver dropped to a 2.5-month low. Heavy profit taking and weak long liquidation from futures traders are featured. August gold was last down $48.10 at $2,367.40. September silver was down $1.621 at $27.70.
The just-released advance second-quarter GDP report showed a rise of 2.8%, year-on-year, which is better than the rise of 2.1% in the consensus forecast. This stronger report likely eliminates the talk in the marketplace that the Federal Reserve could cut U.S. interest rates at next week’s FOMC meeting. Today’s report did add a bit more selling pressure to the gold and silver markets.
China’s central bank Thursday unexpectedly cut its one-year lending facility rate by 0.2% to 2.30%, days after reducing another key short-term rate. There are growing worries the world’s second-largest economy is seriously listing. That’s weighing on marketplace sentiment, including the metals, from a weakening demand perspective.
Traders now await Friday’s U.S. personal income and outlays report, including its inflation indicators.
Asian and European stock indexes were mostly lower overnight, following the rout in the U.S. stock market Wednesday that pushed the S&P 500 and Nasdaq indexes to five-week lows. Risk aversion in the marketplace is keener late this week. U.S. stock indexes are pointed toward near-steady openings when the New York day session begins. Downbeat earnings reports from Tesla and Alphabet are weighing on stock trader/investor sentiment. Reads a Barron’s headline today: “Nasdaq sell off, Fed rate outlook, recession fears indicate a market pivot.”
Trade Nation’s Angus Campbell writes this morning in an email dispatch: “So where has the money gone? Not into mid-caps. The Russell 2000 lost over 2%. Gold and silver? No, both were rinsed overnight. Cryptos? Not this time. Bonds? Bingo! Treasury yields have dropped significantly as investors rushed for safety. …And even though yesterday’s equity sell off simply blew more froth off a very frothy market, there are already calls that the Fed must do something, such as cutting rates at next week’s (FOMC) meeting rather than waiting until September.”
The key outside markets today see the U.S. dollar index slightly weaker. Nymex crude oil prices are lower, hit a six-week low and are trading around $76.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently 4.235%.
U.S. economic reports out Thursday includes the weekly jobless claims report, the GDP report, durable goods orders and the Kansas City Fed manufacturing survey.
Technically, August gold bulls still have the overall near-term technical advantage but are fading. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,488.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at $2,385.00 and then at $2,400.00. First support is seen at the overnight low of $2,362.00 and then at $2,350.00. Wyckoff's Market Rating: 6.5.
September silver futures bears have gained the overall near-term technical advantage. Prices are now trending down on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $29.63. The next downside price objective for the bears is closing prices below solid support at the May low of $26.55. First resistance is seen at $28.00 and then at $28.50. Next support is seen at $27.50 and then at $27.00. Wyckoff's Market Rating: 4.0.
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