(Kitco News) – Gold prices are modestly up and not far below Monday’s 10-week high in early U.S. trading Tuesday. The near-term technical posture for the yellow metal has dramatically improved the past few sessions, which continues to invite the chart-based buyers. Also, the recent volatility in world stock markets and some heightened geopolitical tensions are continuing to provide some demand for safe-haven gold. December gold futures were last up $1.80 an ounce at $1,232.50. December Comex silver was last up $0.063 at $14.79 an ounce.
Global stock markets were mixed overnight, with European stocks mostly up and Asian stocks mostly down. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
European shares were lifted today by reports the new Italian government is more or less falling in line with European Union constricts, with the new Italian Prime Minister saying Italy’s membership in the EU is “unrenounceable.”
The rift between the U.S. and Saudi Arabia regarding a missing Saudi journalist who many think was killed by the Saudi Kingdom is still on the front burner of the marketplace. The U.S. Secretary of State is in Saudi Arabia talking to the king. President Trump over the weekend said there would be “severe punishment” of the Saudi Kingdom if it was determined it killed the journalist. Some reports are now saying a Saudi may admit to killing the journalist.
In other overnight news, China’s consumer price index hit a seven-month high in September—at up 0.7% from August and up 2.5%, year-on-year.
The closely watched German economic indicator, the ZEW index, dropped to -24.7 in October from -10.6 in September. ZEW officials said the steep drop is mostly due to worries about world trade wars—especially the U.S. vs. China.
In a sign of the wide spread between U.S. government and German government bond yields, the German government auctioned a two-year note today, which fetched an average yield of -0.56%. The U.S. two-year note is currently yielding 2.87%.
The key outside markets today find the U.S. dollar index slightly lower. Meantime, November Nymex crude oil prices lower and trading just above $71.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, industrial production and capacity utilization, the NAHB housing index, and Treasury international capital data. The Treasury will also issue a report on world currency markets, but is not expected to label China a currency manipulator.
Technically, gold price action last week produced a big and bullish upside “breakout” from a sideways trading range on the daily bar chart. 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 Monday’s high of $1,236.90 and then at $1,240.00. First support is seen at the overnight low of $1,228.40 and then at Monday’s low of $1,220.40. Wyckoff’s Market Rating: 6.0
December silver futures bears still 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 the October high of $14.95 and then at $15.00. Next support is seen at Monday’s low of $14.615 and then at last week’s low of $14.255. Wyckoff’s Market Rating: 3.5.
By Jim Wyckoff
For Kitco News