Gold, Silver Prices Down Amid Keener Risk Appetite, Strong Dollar

(Kitco News) – Gold and silver prices are moderately lower in early U.S. trading Wednesday. Improving trader and investor risk appetite in the marketplace at mid-week is bearish for the safe-haven metals. Also, a stronger U.S. dollar index that scored a new for-the-move high overnight is weighing on the precious metals markets this week. December gold futures were last down $7.50 an ounce at $1,217.80. December Comex silver was last down $0.172 at $14.29 an ounce.

The just-released ADP national employment report for October came in at up 227,000 jobs. That much better than the reading of up 180,000 that was expected. Gold prices down-ticked a bit further just after the report’s release.

Global stock markets were mixed to mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. There is still strong near-term technical evidence the U.S. stock indexes have put in market tops. Volatility in the U.S. stock market could still appear at any time, as seen with Monday afternoon’s price swoon.

Today is the last trading day of the month, which makes it a more important trading day, from a technical chart perspective.

China’s official purchasing managers’ index also fell to 50.2 in October from 50.8 in September. The October number is the lowest in two years. A reading below 50.0 suggests contraction in the sector.

The Chinese yuan has dropped to a 10-year low against the U.S. dollar this week. There is a debate on whether the Chinese government wants the yuan to depreciate to gain world trade advantages. Or, the government may want to stem the yuan’s slide due to fears of capital flight out of China.

In another sign of the stark divergence between the U.S. and European Union economies, the Euro zone reported its unemployment rate for October today, at 8.1%. The U.S. rate is 3.7%. Meantime, the Euro zone inflation rate rose to a nearly six-year high of 2.2%, basis its latest consumer price index report for October issued today.

The other key outside markets today finds November Nymex crude oil prices firmer on a corrective bounce and trading around $66.50 a barrel after hitting a nine-week low on Tuesday.

The key U.S. economic data point of the week, if not the month, will be Friday’s November employment report from the Labor Department.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the employment cost index, the ISM Chicago business survey, the weekly DOE liquid energy stocks report, and the U.S. Treasury quarterly refunding announcement.

Technically, gold bulls have lost their slight near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the October high of $1,246.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00. First resistance is seen at the overnight high of $1,225.00 and then at Tuesday’s high of $1,232.50. First support is seen at the overnight low of $1,216.10 and then at $1,210.00. Wyckoff’s Market Rating: 5.0

December silver futures bears have the solid 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 overnight high of $14.49 and then at this week’s high of $14.78. Next support is seen at the October low of $14.255 and then at $14.00. Wyckoff’s Market Rating: 2.0.

By Jim Wyckoff
For Kitco News


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