(Kitco News) - Gold and silver prices are slightly down in early U.S. trading Monday, on mild downside price corrections following Friday’s solid gains. December gold was last down $2.30 at $3,416.20. September silver prices were down $0.279 at $38.77.
The Kansas City Federal Reserve’s annual Jackson Hole central banker symposium saw Fed Chairman Jerome Powell on Friday lean easier on U.S. monetary policy. Powell used his keynote speech to signal the Fed is headed for an interest-rate cut as soon as its next policy meeting in September. However, there are divisions among other Fed policymakers over whether that’s the right call. Even Powell noted the U.S. economy has handed Fed officials a “challenging situation.” The Fed is grappling with inflation that’s still above its 2% goal — and rising — and a labor market that’s showing signs of weakness. Powell’s speech rallied the U.S. stock market and sharply pressured the U.S. dollar index Friday. However, overnight the U.S. stock indexes pulled back a bit and the USDX posted a modest rebound.
The People’s Bank of China added a net 600 billion yuan via its one-year medium-term facility and outright reverse repos this month, the most since January, reports Bloomberg. Wang Qing, chief macro analyst at Golden Credit Rating Co, said the PBOC will keep up its longer-term liquidity injections to ensure smooth issuance of government bonds and to foster an increase in bank loans, which "reassures market of a growth-supportive monetary policy stance." The PBOC indicated it is holding back from aggressively easing its monetary policy, but pledged targeted support for the economy, and has been making short-term cash infusions to support the market. Meantime, China strengthened its yuan currency fixing by the most since January after the U.S. dollar slumped in the wake of Federal Reserve Chair Powell’s commentary at Jackson Hole. The People’s Bank of China set its daily reference rate for the local currency at 7.1161 per dollar, versus Friday’s level of 7.1321. Monday’s fixing was the strongest since last November.
China's economy is being strained by U.S. tariffs and a property crisis, yet stocks are extending their bull run, stirring doubts on the rally's staying power, reported Bloomberg today. “The rally has been driven by cash-rich investors shifting into stocks amid a lack of alternatives, with some analysts warning that a bubble is in the making, citing ‘irrational exuberance.’ A deflationary spiral and weak domestic demand are eroding corporate pricing power, with some analysts doubting the sustainability of the current rally, according to Homin Lee, senior macro strategist at Lombard Odier Ltd,” said Bloomberg.
The key outside markets today see the U.S. dollar index slightly up, with crude oil prices slightly up and trading around $63.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.337%.
U.S. economic data due for release Monday includes the Chicago Fed national activity index, new residential sales and the Texas manufacturing outlook survey.
Technically, December gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $3,500.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the July low of $3,319.20. First resistance is seen at last week’s high of $3,423.40 and then at $3,450.00. First support is seen at $3,400.00 and then at last week’s low of $3,353.40. Wyckoff's Market Rating: 6.5.
September silver futures bulls have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $39.91. The next downside price objective for the bears is closing prices below solid support at the July low of $36.28. First resistance is seen at last week’s high of $39.09 and then at $39.91. Next support is seen at $38.00 and then at $37.50. Wyckoff's Market Rating: 7.0.
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