(Kitco News) – Gold prices are moderately lower in early U.S. trading, on a normal corrective pullback after good gains Tuesday that pushed prices to a nearly three-month high. Also, there is a modest uptick in investor risk appetite at mid-week. December gold futures were last down $7.50 an ounce at $1,229.30. December Comex silver was last down $0.073 at $14.715 an ounce.
Global stock markets were mixed to firmer overnight, rebounding from solid losses Tuesday. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
The S&P 500 stock index on Tuesday dropped below what was strong chart support at its October low. Such suggests a new leg down in prices is coming for the U.S. stock market. That’s bullish for hard assets such as gold and silver.
There are still geopolitical issues looming over the world marketplace, including the U.S.-China trade war, U.S.-Saudi Arabia tensions over the murdered Saudi journalist, and Italy’s recalcitrance over forming its budget to meet European Union constricts. The EU Wednesday rejected the latest Italian draft budget.
All of the above have pushed world stock markets and crude oil prices sharply lower, as well as rallied safe-haven assets like gold, U.S. Treasuries and the U.S. dollar.
In overnight news, the Euro zone got some dour economic data when the composite Markit purchasing managers index (PMI) fell to 52.7 in October from 54.1 in September. The October number was lower than expected and the lowest level in two years.
Traders and investors in Europe are awaiting Thursday’s European Central Bank regular monetary policy meeting. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU.
The U.S. economic highlight this week will be the first estimate of third-quarter GDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on an annual basis.
The key outside markets today find the U.S. dollar index higher and hitting a nine-week high overnight. Meantime, November Nymex crude oil prices are weaker and trading just above $66.00 a barrel. Oil prices fell to a two-month low on Tuesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the monthly house price index, the flash services PMI, the flash manufacturing PMI, new residential sales, the weekly DOE liquid energy stocks report and the Federal Reserve’s beige book.
Technically, gold bulls have the near-term technical advantage and gained more power Tuesday as prices saw a bullish upside “breakout” from the recent sideways trading range. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $1,275.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,220.00. First resistance is seen at the overnight high of $1,236.50 and then at this week’s high of $1,243.00. First support is seen at $1,225.00 and then at $1,220.00. 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 last week’s high of $14.88 and then at the October high of $14.95. Next support is seen at this week’s low of $14.54 and then at the October low of $14.255. Wyckoff’s Market Rating: 4.0.
By Jim Wyckoff
For Kitco News