(Kitco News) – Gold prices are modestly up in early U.S. trading Thursday, supported in part by a big drop in the U.S. dollar index today. Some safe-haven demand has also been featured recently, amid a very shaky U.S. stock market that saw the equity indexes hit new lows for the year overnight. February gold futures were last up $2.40 an ounce at $1,258.80. March Comex silver was down $0.013 at $14.805 an ounce.
European stock markets were mostly lower overnight, following the solid losses in the U.S. stock market Wednesday that drove the indexes to new lows for the year. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. However, the U.S. stock market is very wobbly and traders are leery of another big drop.
The world marketplace is still digesting the U.S. FOMC interest rate hike on Wednesday afternoon and the comments from Fed Chairman Jerome Powell. Traders and investors deemed the Fed’s new stance as more dovish than previously, but not dovish enough to stave off what many believe is an impending global economic slowdown. The gold market did not see a big reaction to the Fed news Thursday, but an overall easier U.S. monetary policy is supportive for the metals markets.
Chinese economic and political officials are holding key meetings late this week, at which major economic initiatives are being discussed and could be announced. China’s economy has been pinched this year by tariffs imposed by the U.S. on China’s imports.
It now appears less likely, but still not out of the question, the U.S. government will shut down Friday, as reports say the Trump administration is likely to come to an agreement with Congress on a budget.
The key outside markets today see the U.S. dollar index solidly lower and hitting a four-week low overnight. The greenback is being hit by the more dovish Federal Reserve and easing tensions in the European Union regarding Italy’s finances, which have supported the Euro currency.
Meantime, Nymex crude oil prices are lower and hit another 15-month low of $45.82 a barrel overnight. There are still no early chart clues the crude oil market is near a bottom, but there is some strong longer-term chart support at the $42 area that may halt the slide.
Traders are awaiting Friday morning’s U.S. GDP report for the third quarter, which is expected to show a rise of 3.5%, year-on-year.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.
Technically, gold bulls have the overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the July high of $1,284.10. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,230.00. First resistance is seen at this week’s high of $1,262.20 and then at $1,270.00. First support is seen at $1,250.00 and then at the overnight low of $1,246.20. Wyckoff’s Market Rating: 6.0
March silver futures bears still have the overall near-term technical advantage. However, a choppy five-week-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $15.055 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $13.985. First resistance is seen at this week’s and last week’s high of $14.90 and then at $15.00. Next support is seen at this week’s low of $14.615 and then at $14.50. Wyckoff’s Market Rating: 3.5.
By Jim Wyckoff
For Kitco News