(Kitco News) - Gold prices are slightly up and hit contract/record highs in early U.S. trading Monday, on growing ideas the Federal Reserve will make three quarter-point interest rate cuts this year. December gold was last up $2.10 at $3,655.20. December silver prices were up $0.298 at $41.845.
Friday’s jobs report showed the U.S. job market cooled further in August, with nonfarm payrolls rising by just 22,000, well below forecasts of 75,000 and a sharp drop from July’s revised 79,000. The U.S. unemployment rate edged up to 4.3%, the highest since 2021, signaling a slowdown in hiring momentum. That’s not good news for the U.S. economy and the stock market sold off following the news. Continued selling pressure in the stock market in the near term could crimp consumer confidence this fall, which would dampen consumer confidence. The markets read Friday’s jobs data as meaning the Federal Reserve will cut interest rates by at least 0.75% by the end of this year. Lower interest rates are a positive for most commodity markets, suggesting improved demand.
U.S. stock indexes are pointed toward firmer openings today in New York. Global stock indexes were mixed overnight.
In overnight news, China’s export growth slowed to the weakest in six months as a slump in shipments to the U.S. deepened again, although a surge in sales to other markets kept China on track for a record trade surplus of over $1.2 trillion this year. Overall Chinese sales abroad rose 4.4% in August from a year earlier to $322 billion, according to a statement from the General Administration of Customs on Monday. Exports to the U.S. fell 33%, the fifth month of double-digit declines. China’s imports climbed 1.3% in August, leaving a trade surplus of $102 billion. China’s surplus is still on course to exceed last year’s record of almost $1 trillion, with overseas sales making up for weaker domestic demand.
Prime Minister Francois Bayrou’s government will likely fall today, Bloomberg reports, a victim of his push to reduce France’s massive debt load. Bayrou will face a confidence motion in France’s lower house, a vote he called in a bid to pressure lawmakers to back his budget proposals. He said over the weekend that it was needed as a “clarification.” His plan may have backfired, however, as opposition parties in the National Assembly have mobilized against Bayrou’s minority government. “There are moments when we need a rude shock,” Bayrou told a French television station on Saturday. “There’s never been a situation as blindingly clear as this one.” Bayrou will make a policy speech starting at 3 p.m. Paris time, followed by interventions by the political groups in the National Assembly. The vote will take place in the evening, with the result expected between 8:00 and 9:00 p.m, said Bloomberg.
Crude oil futures prices rallied overnight after OPEC-plus agreed on Sunday to raise its collective oil production at a modest rate. The Organization of the Petroleum Exporting Countries and its partners will add 137,000 barrels a day to the cartel’s production starting in October, a move that marks the reversal of cuts set to remain in place until the end of 2026. The actual volume of the production increase is likely to be lower than announced, as some OPEC-plus members face pressure to forgo their share of increases or lack spare capacity.
The key outside markets today see the U.S. dollar index slightly lower, while crude oil futures are higher and trading around $63.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.08%.
U.S. economic data due for release today is light and includes the employment trends index.
Technically, December gold futures bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $3,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,500.00. First resistance is seen at today’s contract high of $3,662.50 and then at $3,675.00. First support is seen at the overnight low of $3,621.70 and then at $3,600.00. Wyckoff's Market Rating: 9.0.
December silver futures bulls have the solid overall near-term technical advantage. A bull flag pattern has formed on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $45.00. The next downside price objective for the bears is closing prices below solid support at $38.00. First resistance is seen at the September high of $42.29 and then at $43.00. Next support is seen at $41.00 and then at this week’s low of $40.555. Wyckoff's Market Rating: 8.5.
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