(Kitco News) - Gold and silver prices are lower in early U.S. trading Wednesday, on follow-through selling pressure from Tuesday’s mammoth losses that have even the general marketplace taking note. Better risk appetite in the general marketplace this week is also 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 $77.10 at $4,031.50. December silver prices were down $0.31 at $47.38.
Huge downdrafts in gold, silver prices have general marketplace attention. Gold and silver prices overnight extended losses after both metals on Tuesday suffered major losses and saw their worst routs in many years, on concerns the rallies had run too far, too fast. Gold futures prices at one point Tuesday were down over $250 an ounce, while silver saw prices down over $3.50 an ounce at one point. The general marketplace at mid-week will continue to pay closer attention to gold and silver markets, as more extreme volatility could cause concerns about market-making efficiency and even market dislocations—which if occur could spill over into selling pressure in other commodity futures markets, due to the uncertainty of the situation.
Global stock markets were mixed overnight. U.S. stock indexes are pointed to mixed openings when the New York day session begins.
In other news, the U.S. government shutdown, now in its 22nd day, has become the second-longest in history as the stalemate between the two parties over expiring health-care subsidies persists. U.S. Senate Democratic leaders have asked to meet with President Trump before his Asia trip later this week, but Trump said he would only talk to them after the shutdown ends. The shutdown's economic disruption will deepen as civilian federal workers are set to miss their first full paychecks on Friday. Bloomberg reported a Tuesday meeting at the White House between Trump and Senate Republicans appeared to only strengthen the GOP resolve to refuse to negotiate with Democrats, who have demanded as their price for reopening the government that Congress provide relief to Americans whose health-care premiums will rise in January.
Crude oil prices stabilize on reports India may reduce Russian oil imports… Crude oil prices overnight rebounded from 4.5-month lows hit Tuesday, due in part to reports the U.S. and India are nearing a trade deal that could see the India gradually reduce imports of Russian crude oil, which would boost demand for alternative supplies. December Nymex crude oil futures today were trading around $58.00 a barrel early this morning, up around 80 cents from Tuesday’s close. President Trump said India’s Prime Minister Narendra Modi assured him that India would wind down the oil purchases from Russia. Modi acknowledged a call with Trump, without mentioning what was discussed, according to Bloomberg. India’s refiners have previously indicated they would trim, but not stop the imports of Russian oil.
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 3.95%.
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 are fading fast. Bulls’ next upside price objective is to produce a close above solid resistance at $4,200.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,900.00. First resistance is seen at $4,100.00 and then at the overnight high of $4,175.00. First support is seen at the overnight low of $4,021.20 and then at $4,000.00. Wyckoff's Market Rating: 6.0.
The silver market bulls are also fading fast. A bearish “key reversal” down occurred last 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 $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 $48.65 and then at $49.00. Next support is seen at the overnight low of $46.82 and then at $46.00. Wyckoff's Market Rating: 6.0.
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