(Kitco News) - Gold and silver prices are modestly lower near midday Tuesday but well up from their daily lows. Some selling from the chart-based traders is featured as the near-term technical postures for both metals have deteriorated a bit the past few sessions. The precious metals bulls are still feeling the sting of a Federal Reserve interest rate cut in December now not being a “done deal,” after most reckoned the past few weeks it was a done deal. December gold was last down $19.70 at $4,054.80. December silver prices were down $0.296 at $50.42.
China added an estimated 15 tons of gold to its forex reserves in September as central banks accelerated their purchases of bullion after a seasonal summer lull, according to Goldman Sachs Group and as reported by Bloomberg. Analysts estimated that central banks globally bought 64 tons of gold in September, more than tripling from the month before. The buying spree is likely continuing in November, according to Goldman. “Central-bank buying has been a key driver of gold’s ferocious run in the past three years, with prices reaching all-time highs above $4,380 an ounce in October before pulling back in recent weeks. Despite the sovereign purchases’ key role in gold’s prices, they are shrouded in mystery as countries often under-declare their buying,” said the Bloomberg report.
Following a rout in the U.S. stock indexes on Monday, stock markets sold off across the globe Tuesday. “The artificial intelligence trade has started to wobble as investors worry the amount of borrowing needed to fund its buildout will become a burden. Just Monday, Amazon.com Inc. tapped the credit market for $15 billion in a bond sale. The U.S. economy is showing signs of slowing, particularly in the labor market, and low-end consumers appear increasingly under pressure. With technical indicators also flashing warnings — both the S&P 500 and Nasdaq 100 closed below their average price for the past 50 days, for example — Wall Street strategists are questioning whether a year-end rally is in the cards,” Bloomberg reported overnight. “The rest of the week is shaping up as critical for any run back toward all-time highs. Consumer giants like Walmart Inc., Home Depot Inc. and Target Corp. will deliver results and commentary on the looming holiday shopping period. Nvidia Corp. is the last of the big seven to give its business update. And government economic data, absent for the past seven weeks, will begin trickling out.” Bitcoin’s slide below $90,000 worsened a slump across global financial markets, fueling concern that leveraged investors would set off a spiral of selling pressure. “The decline of the world’s most popular cryptocurrency comes as investors fret about the pace of U.S. interest rate cuts and shift their focus to high-profile earnings. A sell-off across markets can become self-reinforcing even without the amplifying effect of leverage, with cryptocurrencies having boomed alongside stocks this year before hopes started to fade,” said Bloomberg.
While the gold and silver markets have not reacted much to the wobbly global stock markets the past few days, stronger selling pressure in equities would likely drive keener safe-haven buying of the two metals.
The key outside markets today see the U.S. dollar index slightly higher. Crude oil prices are near steady and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.127%.
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 the 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 today’s high of $4,082.30 and then at this week’s high of $4,107.60. First support is seen at $4,000.00 and then at today’s low of $3,997.40. Wyckoff's Market Rating: 6.5.
December silver futures bulls have the overall near-term technical advantage and their next upside price objective is closing prices above solid technical resistance at last week’s record high of $54.415. The next downside price objective for the bears is closing prices below solid support at $47.50. First resistance is seen at today’s high of $50.655 and then at $51.00. Next support is seen at today’s low of $49.115 and then at $49.00. Wyckoff's Market Rating: 7.0.
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