Gold, silver bulls work on price-stabilization at mid-week

October 7, 2020

Gold futures prices are lower in early U.S. trading Wednesday, but the cash market shows firmer prices. The reason is that the Comex gold futures market officially closed in early afternoon Tuesday—before the late-afternoon sell off that was reflected in cash market prices. So futures prices today have to reflect the Tuesday afternoon price pressure. The gold market sold off sharply Tuesday afternoon following President Trump’s tweet calling for an end to U.S. stimulus package discussions in Congress. Lately, the gold market has been acting more like a raw commodity than a safe-haven asset. The yellow metal on many days moves in tandem with the U.S. stock indexes—like Tuesday. December gold futures were last down $19.30 at $1,889.50 and December Comex silver was last down $0.296 at $23.625 an ounce.

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Global stock markets were mixed overnight. U.S. stock indexes are set to open the New York day session higher. After selling off Tuesday afternoon following a tweet from President Trump that called for an end to additional Covid stimulus package negotiations with the Democrats, U.S. stock indexes rebounded overnight when Trump in another, later series of tweets walked back his initial tweet by saying he does want certain stimulus measures passed by Congress, including stimulus checks for Americans. The matter remains up in the air, with there still being doubts Congress can soon agree on a stimulus plan for Americans and U.S. businesses.

The U.S. data point at mid-week is the FOMC minutes from the last meeting, to be released Wednesday afternoon. Fed Chairman Jerome Powell in a speech on Tuesday said the U.S. economy is recovering from the Covid-19 lockdowns faster than expected, but added that the pace of the recovery has slowed recently and that it could be a long “slog” before the U.S. economy fully recovers.

The important outside markets early today see the U.S. dollar index slightly higher. Nymex crude oil prices are lower and trading around $39.75 a barrel. The 10-year U.S. Treasury note yield is presently trading around 0.76%.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the FOMC minutes, consumer credit, and the weekly DOE liquid energy stocks report.

Technically, the December gold futures bulls have the overall near-term technical advantage but prices are still trending down on the daily bar chart. Trend-line resistance that I have shown you on the daily chart recently held fast on Tuesday. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at this week’s high of $1,927.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,851.00. First resistance is seen at the overnight high of $1,902.40 and then at $1,927.00. First support is seen at the overnight low of $1,877.10 and then at $1,851.00. Wyckoff's Market Rating: 6.0

December silver futures bulls have the overall near-term technical advantage. However, prices are still trending lower on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.81. First resistance is seen at this week’s high of $24.675 and then at $25.00. Next support is seen at this week’s low of $22.965 and then at $22.50. Wyckoff's Market Rating: 6.0.

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