(Kitco news) - Gold and silver prices are lower in midday U.S. trading Tuesday. A stronger U.S. dollar index that hit a nearly six-month high today is weighing on the precious metals. A global stock market sell off and keener risk aversion in the general marketplace has not benefitted the two safe-haven metals—at least not yet. However, don’t be surprised to see gold and silver rally if the selling pressure in the stock market intensifies this afternoon or Wednesday. December gold was last down $37.20 at $3,976.10. December silver prices were down $0.569 at $47.495.
Global stock markets were under significant selling pressure today, with U.S. stock indexes solidly down, as Wall Street is getting nervous about high stock valuations and an artificial intelligence stock bubble. Wall Street chief executives said investors should brace for a stock market drop of more than 10% in the next 12 to 24 months, and such a correction may be a positive development, reported Bloomberg today. Corporate earnings are strong but “what’s challenging are valuations,” said Mike Gitlin, president and chief executive officer of Capital Group, during a financial summit by the Hong Kong Monetary Authority today. On whether stocks are cheap, fair or fully valued, Gitlin said most people “would say we’re somewhere between fair and full, but I don’t think a lot of people would say we’re between cheap and fair.” The same goes for credit spreads, Gitlin added. Bond traders have been extra worried about private credit deals that may not have solid financial footing. Gitlin’s views were echoed by Morgan Stanley CEO Ted Pick and Goldman Sachs Group Inc.’s David Solomon, who also see the possibility of a significant selloff in the coming period and said pullbacks are a normal feature of market cycles. In another worrisome sign, Palantir Technologies Inc. raised its annual revenue outlook to $4.4 billion and outpaced analyst estimates for third-quarter sales. The company's revenue increased 63% to $1.18 billion in the period ended in September, with profit, excluding some items, at 21 cents a share. Yet, Palantir's shares fell about 3% in extended trading due to concerns about the company's lofty valuation after a record run-up, despite the company's strong quarterly results.
In other overnight news the Associated Press reports that Brazilian police, backed by Interpol, have destroyed hundreds of dredges used in illegal gold mining along the Madeira River, in one of the biggest coordinated crackdowns yet on criminal networks operating across the Amazon Basin. The international police agency said officers dismantled 277 floating mining rafts worth an estimated $6.8 million. When factoring in lost gold, equipment and environmental damage, officials estimated the total financial blow to organized crime groups at about $193 million.
The U.S. government shutdown is poised to become the longest ever this week as the impasse between Democrats and Republicans has dragged into a new month. However, some U.S. lawmakers are now saying the federal government will open back up by the end of this week.
The key outside markets today see the U.S. dollar index firmer and at a nearly six-month high. Crude oil prices are weaker and trading around $60.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.09%.
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’ 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 $3,800.00. First resistance is seen at this week’s high of $4,043.10 and then at last Friday’s high of $4,059.90. First support is seen at today’s low of $3,937.10 and then at $3,900.00. Wyckoff's Market Rating: 5.5.
December silver futures 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 $48.00 and then at $48.50. Next support is seen at $47.00 and then at $46.50. Wyckoff's Market Rating: 6.0.
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