(Kitco News) - Gold and silver prices are posting strong losses in midday U.S. trading Monday, hitting three-week lows, following the weekend news that the U.S. and China are close to a major trade agreement. That put much keener risk appetite into the marketplace, as global stock markets rallied and the U.S. stock indexes set record highs today. Weak long liquidation from the futures traders is also featured today, as is technical selling. December gold was last down $141.40 at $3,996.10. December silver prices were down $2.276 at $46.31.
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Reports said the cost of borrowing silver in London has retreated from a record high, a sign that greater liquidity has returned to the silver market, said a Bloomberg report. That’s also causing selling pressure in silver. Silver lease rates fell to 5.6% on Monday after surging to an all-time peak of 34.9% on Oct. 9, data compiled by Bloomberg show. The London Bullion Market Association is considering the weekly publication of silver inventory levels, with Chief Executive Officer Ruth Crowell saying the white metal would be prioritized over gold.
Top trade negotiators for the U.S. and China over the weekend said they have come to terms on a range of contentious points, setting the stage for Presidents Trump and Xi Jinping to finalize a trade deal later this week when they are scheduled to meet. U.S. Treasury Secretary Bessent, speaking in an interview with CBS News, said Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table” and he expected China to make “substantial” soybean purchases as well as offer a deferral on sweeping rare earth controls. “So, I would expect that the threat of the 100% has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime,” Bessent said, as reported by Bloomberg.
The Federal Reserve on Wednesday afternoon is expected to deliver a second straight 0.25% interest-rate cut to support a shaky job market but may face some opposition from officials anxious over inflation. Fresh data on Friday showed U.S. consumer prices rose in September at the slowest pace in three months, supporting the Federal Open Market Committee’s plan to cut rates this week. Fed policymakers are divided, however, with some worrying that cutting rates will go too far and others supporting even further reductions, all amid the lack of U.S. government economic data releases during the federal government shutdown. Meantime, Treasury Secretary Bessent confirmed the names of five finalists to succeed Fed Chair Jerome Powell. The finalists are current Fed board members Christopher Waller and Michelle Bowman, former Fed governor Kevin Warsh, White House National Economic Council Director Kevin Hassett and BlackRock Inc. executive Rick Rieder. President Trump said he expects to make a decision on the nominee before the end of the year.
The key outside markets today see the U.S. dollar index slightly weaker. Crude oil prices are slightly up and trading around $61.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.02%.
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 have the slight overall near-term technical advantage but have faded badly. 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 $4,123.80. First support is seen at $3,950.00 and then at $3,900.00. Wyckoff's Market Rating: 5.5.
The silver market bulls have slight the overall near-term technical advantage but have faded badly. 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 $47.00 and then at $48.00. Next support is seen at $45.50 and then at $45.00. Wyckoff's Market Rating: 5.5
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