(Kitco News) - Gold prices are sharply higher in early U.S. trading Wednesday, with December gold hitting a new contract/record high of $4,071.50. Silver prices hit a 14-year high overnight and silver is nearing its record high of just above $50.00. Safe-haven demand amid the U.S. government shutdown and other uncertain geopolitical matters are boosting the precious metals. December gold was last up $53.90 at $4,059.00. December silver prices were up $1.155 at $48.67.
The U.S. government shutdown is now the fourth-longest in modern history. Most federal government shutdowns last only hours or a few days. The current lapse is now the fourth-longest in modern history. One sign the government shutdown may not last much longer is U.S. air travel delays. Reports said the last government shutdown in late 2018-early 2019 was ended by air travel delays. Apparently, U.S. lawmakers on both sides of the aisle get spooked by angry U.S. travelers/voters. Bloomberg reported air traffic into and out of Chicago and Dallas was plagued by delays Tuesday night due to staffing shortages caused by the government shutdown, according to advisories from the Federal Aviation Administration. Delays at Dallas Fort Worth International Airport, a main hub for American Airlines Group Inc., reached an average of 30 minutes Tuesday. With the shutdown now a week old, air traffic controllers and other essential staff are still working — even though they won’t be paid until the impasse between Democrats and Republicans ends, and a resolution is reached.
In other news, another heavyweight, The Bank of England, says stock markets overvalued. Stretched valuations for artificial intelligence companies and challenges to the Federal Reserve’s independence have fueled the risks of a “sharp market correction,” the Bank of England said today, in its strongest warnings yet. In its quarterly financial stability update, the U.K. central bank said asset valuations have continued to rise and credit spreads tighten since its June review, despite “persistent material uncertainty around the global macroeconomic outlook.” Equity market valuations appear “stretched” with “technology companies focused on AI” particularly vulnerable, especially if “expectations around the impact of AI become less optimistic,” officials said, according to minutes of the Financial Policy Committee meeting held on Oct. 2 and reported by Bloomberg. The latest BOE report follows similar comments from other notables, including famed trader Paul Tudor Jones, who this week said the U.S. stock market may be entering a blow-off top phase.
The U.S. dollar index hit a nine-week high as Euro currency sinks amid French political crisis. The USDX has rallied sharply the past three weeks, hitting a nine-week high today, while the Euro currency sunk to a two-month low today, mostly due to a French political crisis that has the European Union and European markets on edge. Outgoing French Prime Minister Sebastien Lecornu has expressed optimism that an accord can be reached to allow the formation of a new government without fully endorsing a new proposal to rethink a controversial pension law, Bloomberg reported. Former French prime minister Elisabeth Borne said she was open to a suspension of the pension law if it meant bringing stability to the country, which would be a major concession to the Socialist Party. Lecornu noted that the goal of getting a budget by the end of the year "distances the prospect of a dissolution" of the National Assembly and "requires that everyone have the capacity to move forward.” The greenback got an additional boost today as the New Zealand dollar tumbled to a six-month low after its central bank delivered a larger-than-expected interest-rate cut and signaled a willingness to ease its monetary policy further.
Global stock markets were mixed to weaker overnight. U.S. stock indexes are set to open slightly higher when the New York day session begins.
The other key outside markets today see crude oil prices firmer and trading around $62.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.11%.
U.S. economic data due for release today includes the weekly MBA mortgage applications survey.
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 $4,100.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,850.00. First resistance is seen at today’s record high of $4,071.50 and then at $4,100.00. First support is seen at the overnight low of $4,005.60 and then at $4,100.00. Wyckoff's Market Rating: 9.5.
December silver futures bulls have the strong overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $50.00. The next downside price objective for the bears is closing prices below solid support at $45.00. First resistance is seen at the overnight high of $48.835 and then at $49.00. Next support is seen at the overnight low of $47.53 and then at $47.00. Wyckoff's Market Rating: 9.0.
(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Sign up here; it’s real easy. https://www.kitco.com/services
