(Kitco News) - Gold and silver prices are sharply up near midday Monday, with gold hitting a two-week high and silver a three-week peak. Ideas the U.S. government may be close to reopening have boosted the precious metals markets. The resumption of U.S. economic data flows sooner would provide better odds of a Federal Reserve interest rate cut in December, most gold and silver bulls believe. December gold was last up $91.10 at $4,100.70. December silver prices were up $1.707 at $49.85.
Multiple daily closes in silver back above the key $50.00 price level would open the door for a run to new record highs in silver, and even in gold, in the coming weeks/months.
The U.S. Senate on Sunday voted 60-40 on a procedural measure to advance a bill to end the federal government shutdown, with a group of moderate Democrats breaking with their party leaders to support the deal. The bill’s passage in the House of Representatives is not guaranteed due to opposition from Democratic leaders. The deal falls short of the goals of House and Senate Democratic leaders, who had demanded an extension of expiring Obamacare subsidies. Democrats secured a pledge from Republicans to vote on a bill to renew the Affordable Care Act tax credits by mid-December. The Senate adjourned until today and has not yet scheduled a vote for final passage. “It’s not yet clear how quickly the shutdown can end. The Senate will need the consent of all members to end the shutdown quickly. Any one senator can force days of procedural delays. Speaker Mike Johnson plans to give House lawmakers 36 hours’ notice to return to Washington,” reported Bloomberg. Said President Trump: “It looks like we’re getting closer to the shutdown ending,” he told reporters Sunday evening and as reported by Bloomberg.
The U.S. government shutdown has delayed the release of key economic data, including the October consumer price index and jobs reports, which will prolong the debate about whether another rate cut is needed at the Fed's December meeting. “The absence of official reports will make it difficult for policymakers to assess the trajectory of inflation and the job market, and alternatives to government inflation figures are harder to come by and more limited in scope,” said a Bloomberg report. “The shutdown's impact on data collection and release will likely give (Fed) policymakers further reason to hold off on a rate cut in December, despite market odds still favoring a reduction, and investors will monitor appearances by Fed officials in the coming week for clues on the Fed's next move,” said Bloomberg. “Even if the government were to reopen, it’s unlikely the Bureau of Labor Statistics would be able to collect and process data for both the October and November CPI reports ahead of the December FOMC meeting. We think October’s figures would have greenlit a rate cut at the final meeting of the year,” said Bloomberg Economics.
The key outside markets today see the U.S. dollar index slightly higher. Crude oil prices are slightly weaker and trading around $59.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.112%.
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 $4,200.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the October low of $3,901.30. First resistance is seen at $4,150.00 and then at $4,175.00. First support is seen at $4,050.00 and then at today’s low of $4,004.20. Wyckoff's Market Rating: 6.5.
December silver futures bulls have regained the firm overall near-term technical advantage and their 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 $46.50. First resistance is seen at $50.50 and then at $51.00. Next support is seen at today’s low of $48.235 and then at $48.00. Wyckoff's Market Rating: 7.0.
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