Slight price rebounds in gold, silver on short covering
Gold and silver prices are just a bit firmer in early U.S. trading Thursday, after this week's solid selling pressure that drove December gold futures to a 6.5-month low Wednesday. Some tepid short covering in the futures markets is featured in both metals today. A lower U.S. dollar index today is also a friendly daily outside market element for the metals markets. December gold was last up $2.40 at $1,893.30 and December silver was up $0.081 at $22.805.
Asian and European stocks were mixed overnight. U.S. stock indexes are pointed to narrowly mixed openings when the New York day session begins. Risk appetite remains dented as the U.S. government shutdown this weekend looms. The Associated Press reports: "As the Senate marches ahead with a bipartisan approach to prevent a government shutdown, House Speaker Kevin McCarthy is back to square one — asking his hard-right Republicans to do what they have said they would never do: approve their own temporary House measure to keep the government open." Goldman Sachs reportedly estimates the shutdown will probably last three weeks.
A Barron's headline today reads: "Forget the shutdown. Why stocks have plenty more to worry about." The story goes on to say the main reason for recent stock market declines is changing perceptions about interest rates. Now the thinking in much of the marketplace is higher for longer, maybe much longer, including potential stagflation, as pointed out by JP Morgan CEO Jamie Dimon in the press recently.
Striking union workers in the U.S., led by the United Auto Workers, are also starting to weigh more heavily on trader and investor sentiment.
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Gold could fall to $1,850 and then $1,800 after breaking below August lows
The key outside markets today see the U.S. dollar index weaker after hitting a 10-month high on Wednesday. Nymex crude oil prices are weaker and trading around $93.25 a barrel. A Dow Jones Newswires headline today reads: "Saudi Arabia and Russia win big in gamble on oil production cuts."
Meantime, the benchmark U.S. Treasury 10-year note yield is at a 16-year high this week and presently fetching 4.647%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the third estimate of second-quarter GDP, revised corporate profits, pending home sales and the Kansas City Federal Reserve manufacturing survey.
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Technically, the gold futures bears have the solid overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close in December futures above solid resistance at $1,950.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,900.00 and then at $1,913.60. First support is seen at this week's low of $1,890.30 and then at this year's low of $1,883.80. Wyckoff's Market Rating: 2.0
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The silver bears have the overall near-term technical advantage. However, there are stiff technical support layers just below the market that may halt the decline. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at this week's high of $24.05. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at Wednesday's high of $23.12 and then at $23.39. Next support is seen at this week's low of $22.64 and then at the September low of $22.555. Wyckoff's Market Rating: 3.0.
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By
Jim Wyckoff
For Kitco News
Tim Moseley