Gold Backs Off A Bit; Keep Your Seatbelts Buckled

(Kitco News) – Gold prices are trading modestly down in early U.S. trading Friday, on a normal corrective pullback after scoring on Thursday the strongest daily gains in over two years. Now, the yellow metal is in a much better technical posture to suggest higher prices are likely in the coming weeks, or longer. December gold futures were last down $2.10 an ounce at $1,225.70. December Comex silver was last up $0.069 at $14.675 an ounce.

Global stock markets were mostly firmer overnight on corrective bounces from this week’s strong selling pressure. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. However, keep your seatbelts buckled today because volatility is likely to remain high on this last trading day of the week, heading into an uncertain weekend not knowing what to expect come Monday morning. Such is also likely to limit the downside in gold today.

Price action this week from a technical perspective strongly suggests the U.S. stock indexes have put in near-term tops, if not major tops. If so, such is a bullish development for the competing hard assets like the metals.

News U.S. President Trump and Chinese leader Xi Jinping will sit down and talk in November at the G20 meeting in Argentina could be helping to assuage market concerns today. For months the two largest economies have been on a downhill slide in relations. The Chinese yuan rebounded against the U.S. dollar today, in part on that news.

Another worrisome factor in the marketplace this week is notions the strong U.S. economic expansion could be coming to an end, due in part to a Federal Reserve monetary policy that got too aggressive in raising interest rates. President Trump again admonished the Fed this week for raising rates too fast. He called the Fed “crazy” and “loco.”

The key outside markets today find the U.S. dollar index modestly up. Meantime, November Nymex crude oil prices are firmer on a corrective bounce from strong selling pressure the past two days that begins to suggest that market has topped out. Take a look at a daily chart for unleaded gasoline futures and it certainly suggests lower gasoline prices at the retail pumps the rest of this year, and maybe beyond.

U.S. economic data due for release Friday includes the import and export prices report, and the University of Michigan consumer sentiment survey.

Technically, gold price action Thursday produced a big and bullish upside “breakout” from the sideways trading range seen on the daily bar chart dating back to mid-August. This suggests a market bottom is in place and that prices can trend sideways to higher for at least the near term. Gold bulls’ next upside near-term price breakout objective is to produce a close in December futures above solid resistance at $1,250.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00. First resistance is seen at this week’s high of $1,230.00 and then at $1,235.00. First support is seen at today’s low of $1,219.30 and then at $1,212.00. Wyckoff’s Market Rating: 5.0

December silver futures bears have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the September low of $13.965. First resistance is seen at this week’s high of $14.70 and then at the October high of $14.95. Next support is seen at $14.50 and then at this week’s low of $14.255. Wyckoff’s Market Rating: 3.0.

By Jim Wyckoff
For Kitco News


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