(Kitco News) - Gold and silver prices are lower in early U.S. trading Tuesday. 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 $39.40 at $4,035.30. December silver prices were down $0.771 at $49.925.
Asian and European stock markets mostly lower overnight. U.S. stock indexes are pointed to lower openings when the New York day session begins.
China stocking up on gold. 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.
U.S., global stock markets turn wobbly. Following a rout in the U.S. stock indexes on Monday, stock markets sold off across the globe overnight. “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.
“Sell Japan” trade emerges. Japanese stocks and government bonds extended losses today on concerns about a diplomatic spat between Japan and China, and fiscal health at home. Investor worries deepened that a coming economic package from Prime Minister Sanae Takaichi would strain Japan’s public finances, causing longer-maturity government bonds to tumble. Concerns about lofty tech valuations also weighed on Japanese stocks, with AI-related stocks dragging down the Topix and chip-gear makers among the Nikkei’s worst performers. “There’s rising uncertainty about government finances, as well as nerves around Japan’s relationship with China,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan Ltd. “Overall market sentiment is worsening, and it’s fueling a ‘sell Japan’ movement,” he added and as reported by Bloomberg.
U.S. jobless claims on the rise. Initial jobless claims in the U.S. totaled 232,000 for the week ending October 18th, remaining firmly above the averages from the period since the end of the second quarter. It was the first data update by the Department of Labor since the U.S. government shut down its federal operations the first day of October, which risked the employment standing for a large portion of federal government workers. With the new entries, outstanding unemployment claims rose to 1.957 million in the previous week on non-seasonally adjusted basis, remaining relatively close to the highest level since 2021, and aligning with other evidence of lower hiring activity in the U.S. economy, according to the U.S. Department of Labor.
The key outside markets today see the U.S. dollar index slightly lower. 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 4.1%.
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 the overnight high of $4,055.40 and then at this week’s high of $4,107.60. First support is seen at $4,000.00 and then at the overnight 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 the overnight high of $50.38 and then at $51.00. Next support is seen at the overnight low of $49.115 and then at $49.00. Wyckoff's Market Rating: 7.0.
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