Corrective price pullbacks for gold, silver, after Tuesday’s solid gains

(Kitco News, Wed. Nov. 9th, 2022) – Gold and silver prices are weaker in early U.S. trading Wednesday, on routine downside corrections following Tuesday’s solid gains. The bulls have momentum to suggest still more price upside in the near term. A higher U.S. dollar index, an uptick on U.S. Treasury yields and lower crude oil prices at mid-week are also daily negatives for the precious metals markets. December gold was last down $7.90 at $1,708.00 and December silver was down $0.287 at $21.20.

Global stock markets were mostly lower overnight. U.S. stock indexes are headed for mixed openings when the New York day session begins. The U.S. mid-term elections proved pollsters wrong as there was no “Republican wave” of victories. It appears the Republicans will have a slight majority in the House of Representatives, but the Democrats appear to be keeping control of the Senate. However, several key races in both the House and Senate have not been decided, and which could still tip the scales. Still, if history proves correct, a divided Congress that cannot pass new legislation does favor the stock market bulls.

The marketplace is still buzzing about the turmoil in the crypto currency markets on Tuesday that spilled over into safe-haven buying in gold and sharply boosted the yellow metal’s and silver’s prices. The crypto exchange FTX suffered a major liquidity crisis and had to be absorbed by its bigger rival Binance. The cryptos are still a bit shaky Wednesday, in the aftermath of Tuesday’s jolt. The cryptos are just like other markets. When a crisis of confidence occurs, traders and investors all running for the exit door at the same time creates a severe liquidity crunch.

In other news, China’s inflation cooled in October. It’s consumer price index rose just 2.1%, year-on-year, compared to a rise of 2.8% in September. Rising Covid cases in China may further hobble the world’s second-largest economy.

Safe-haven demand, shifting market expectations drive gold prices above $1,700, but CPI remains major risk

The key outside markets today see the U.S. dollar index slightly firmer. Nymex crude oil prices are weaker and trading around $88.25 a barrel. Oil prices have slipped this week on worries of slowing demand from China, due to rising Covid cases there. The 10-year U.S. Treasury note is yielding 4.134%.

Traders are anxiously awaiting the next U.S. report inflation Thursday morning, with the release of the consumer price index report for October, which is expected to come in up 7.9%, year-on-year, compared to the 8.2% rise seen in the September report.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, monthly wholesale trade and the weekly DOE liquid energy stocks report.

Gold Price in US Dollars

Technically, the gold futures bears still have the slight overall near-term technical advantage. However, bulls have momentum and the recent choppy and sideways price action suggests a market bottom is in place. This week’s bullish upside breakout from the choppy trading range on the daily bar chart suggests still more upside is likely in the near term. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,618.30. First resistance is seen at thi week’s high of $1,720.40 and then at the October high of $1,738.70. First support is seen at $1,700.00 and then at $1,675.00.

The silver bulls have the firm overall near-term technical advantage. A choppy, nine-week-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at this week’s high of $21.72 and then at $22.00. Next support is seen at $21.00 and then at this week’s low of $20.435.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com