(Kitco news) - Gold and silver prices are sharply lower in early U.S. trading Tuesday. Better risk appetite in the general marketplace early this week is bearish for the safe-haven metals. The U.S. stock indexes have rallied back close to their recent record highs. December gold was last down $90.00 at $4,269.10. December silver prices were down $2.234 at $49.16.
Would-be bargain hunters were featured in gold and silver Monday as they stepped in to buy last Friday’s big price dips. Gold futures notched a record high of $4,398.00 an ounce Monday. However, daily price volatility in gold and silver futures markets has turned extreme. This is not bullish and suggests, at most, a climaxing phase of the major bull market runs. And, at least, it suggests an unknown time period of choppy, highly volatile trading that could drive away both speculative bulls and bears in the gold and silver futures markets, for fear of getting whipsawed. Commodity market traders are keeping a closer eye on the gold and silver markets this week. Their extreme price volatility could spill over into some higher price volatility in other futures markets.
Global stock markets were mixed overnight. U.S. stock indexes are pointed to mixed openings when the New York day session begins.
U.S., Australia team up on rare earths to compete against China. President Trump on Monday signed a landmark pact with visiting Australian Prime Minister Anthony Albanese to boost U.S. access to rare earth minerals and other critical minerals in an effort to counter China’s tight grip on the supply chains of key metals. The two governments will jointly invest in a swath of mines and processing projects in Australia to boost production of commodities used in advanced technologies from electric vehicles to semiconductors and fighter planes. Australia has an $8.5 billion “pipeline that we have ready to go,” Albanese said at a meeting between the two leaders at the White House and as reported by Bloomberg. “In about a year from now, we’ll have so much critical mineral and rare earths that you won’t know what to do with them,” Trump said. The U.S. has been locked in a rare-earths competition with China since Beijing fought back against Trump’s trade offensive earlier this year, imposing export curbs on the materials. It has since expanded those restrictions.
Shipping backing up in China; commodity supply chain disruptions possible. Waiting times for commodity vessels stacking up off China’s ports increased to the longest this year, as the geopolitical sparring between Beijing and Washington disrupts global trade, reported Bloomberg today. It took an average of 2.66 days for a vessel to get into a berth after arrival in the week to Oct. 19, according to Bloomberg calculations based on data from ship-tracking platform Kpler. That’s an increase of 17% week-on-week and the longest period this year, the calculations show. “China is the world’s largest commodity importer, and vessel snarls — if prolonged — could ripple through the global supply chain, affecting liquid cargoes such as crude, as well as bulks like iron ore. Beijing and Washington have sparred over shipping, with China introducing a hefty extra fee on vessels known to have American links, following a similar U.S. move,” said Bloomberg.
Nymex crude oil futures traded firmer overnight, around $58.00 a barrel, after dropping to a 5.5-month low Monday as traders weighed signs of a swelling surplus ahead of trade talks between the U.S. and China. The amount of crude on tankers at sea has risen to a record high as producers keep adding barrels, according to data from Vortexa and reported by Bloomberg. The International Energy Agency is projecting a record crude oil surplus next year as the OPEC-plus alliance and producers from outside of the group ramp up output. “We’ve got supply growth running three times faster than demand growth,” Bob McNally, founder and president of Rapidan Energy Group, said in an interview on Bloomberg Television. “Near-term we have a glut.” Down-trending crude oil prices are a bearish outside-market element for the ag futures markets, as crude is considered the leader of the raw commodity sector.
The other key outside market today see the U.S. dollar index firmer. The yield on the benchmark 10-year U.S. Treasury note is presently 3.98%.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
Technically, December gold futures bulls still have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract/record high of $4,398.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,000.00. First resistance is seen at $4,300.00 and then at $4,350.00. First support is seen at the overnight low of $4,257.70 and then at this week’s low of $4,229.70. Wyckoff's Market Rating: 7.0.
The silver bulls have the overall near-term technical advantage. However, a bearish “key reversal” down occurred Friday, which is one chart clue that a market top is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at the contract/record high of $53.765. The next downside price objective for the bears is closing prices below solid support at $46.70. First resistance is seen at $50.00 and then at $51.00. Next support is seen at the overnight low of $48.10 and then at $47.50. Wyckoff's Market Rating: 7.0.
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