Gold price up slightly on tepid short covering

(Kitco News, Tues. Oct. 11th, 2022) – Gold prices are slightly higher in early U.S. trading Tuesday, on some mild short covering in the futures market and timid bargain hunting and/or safe-haven demand in the cash market. December gold was last up $2.60 at $1,677.80 and December silver was down $0.10 at $19.52.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed to lower openings when the New York day session begins. Dour comments on the global economic/political outlook from the respected chief of JP Morgan, Jamie Dimon, as well as an escalation in the Russia-Ukraine war, are keeping a “risk-off” trader and investor mentality in the general marketplace.

It appears the safe-haven assets of choice at present are the U.S. dollar and U.S. Treasuries. The greenback has been appreciating and U.S. bond yields have been rising due to Fed rate hikes, don’t expect that to continue much longer with a lower Fed rate pivot coming

Meantime, the price of gold has been performing admirably in light of the hawkish U.S. Fed. One element for which traders should take note: Recent history shows that when the going gets really tough in the marketplace and anxiety is extreme, gold still performs as THE safe-haven store of value. In other words, don’t rule gold out as a safe-haven asset despite its underperformance in recent months and I f history is repeating itself gold may be the one asset ripe for a buy.

The U.K. government bond market is still roiled, as the Bank of England was forced to stepped in to buy inflation-linked bonds to its bond-buying program. There are worries U.K. pension funds could be lost in any more serious U.K. bond market rout.

The key outside markets today see the U.S. dollar index weaker on a corrective pullback from recent strong gains. Nymex crude oil prices are lower and trading around $89.75 a barrel. The U.S. Treasury 10-year note yield is presently fetching around 3.9%.

Traders are looking ahead to key U.S. inflation reports on Wednesday and Thursday mornings. The producer price index report for September is out Wednesday and the consumer price index report for September is out Thursday. The consumer price index is expected to come in at up 8.1%, year-on-year, following a rise of 8.3% in August. It is vitally important that U.S. and global investors realize this 8.1% inflation rate excludes food and energy from its CPI report . With food and energy included the actual inflation rate could be through 15% and there’s nothing but potential global recession in that real inflation number.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store sales indexes, the NFIB small business index, and the IDB/TIPP economic optimism index.

Technically, the December gold futures bears have the firm overall near-term technical advantage and have regained power. Bulls’ next upside price objective is to produce a close above solid resistance at the October high of $1,738.70. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,622.20. First resistance is seen at $1,700.00 and then at Monday’s high of $1,707.40. First support is seen at the overnight low of $1,667.50 and then at $1,650.00. Wyckoff’s Market Rating: 2.5.

September silver futures bears have the overall near-term technical advantage and have momentum. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the October high of $21.31. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at the overnight high of $19.725 and then at $20.00. Next support is seen at today’s low of $19.225 and then at $19.00.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com