Gold price weaker as U.S. stock indexes rebound on Covid news

(Kitco News, Friday Oct. 1st, 2021) – Gold prices are slightly down in early U.S. trading Friday, as trader and investor risk appetite has just up-ticked a bit on some positive news on the Covid front. A normal corrective pullback from solid gains seen in the yellow metal Thursday is also featured. December gold futures were last down $3.00 at $1,754.00. December Comex silver was last up $0.328 at $22.38 an ounce.

Global stock markets were lower in overnight trading. The U.S. stock indexes are pointed to higher openings when the New York day session begins. News just out that Merck has developed a pill to stop Covid, whose trial results were very positive, has lifted the spirits of the marketplace late this week, after the stock indexes traded lower overnight.

There are still some other worries, however. U.S. House Democrats are in-fighting on a government spending bill that was set to be voted upon Thursday but now appears to be putting in jeopardy President Biden’s economic agenda. Also, reports say China this week ordered its state-owned companies to secure energy supplies at all costs, including ordering coal producers to run at full speed even if they exceed annual quota limits. That news pushed natural gas and power prices to record highs in Europe. Rising energy prices heading into winter combined with central banks reeling in their heretofore easy money policies has many market watchers worried about slowing economic growth and rising inflation—called stagflation. And there are lingering worries about the troubled China property giant Evergrande. All of the above concerns are coming as the calendar turns to October, which has a history of sometimes being unkind to stock market investors.

In other overnight news, the Eurozone reported its September consumer price index at up 3.4%, year-on-year, versus a reading of up 3.0%. The September number is the fastest pace of inflation in 13 years.

The key outside markets today see the U.S. dollar index slightly lower after hitting a 12-month high Thursday. Nymex crude oil futures are weaker and trading around $74.40 a barrel. Meantime, the 10-year U.S. Treasury note yield is presently fetching 1.494%.

It’s a busy day for U.S. economic data releases Friday, including personal income and outlays, the U.S. manufacturing PMI, the ISM report on business manufacturing, the global manufacturing PMI, domestic auto industry sales, construction spending and the University of Michigan consumer sentiment survey.

Technically, December gold futures bears have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at last week’s high of $1,788.40. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at the overnight high of $1,757.80 and then at this week’s high of $1,765.00. First support is seen at $1,740.00 and then at $1,730.00.

The silver bears have the solid overall near-term technical advantage. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at $22.50 and then at this week’s high of $22.865. Next support is seen at the overnight low of $21.99 and then at this week’s low of $21.41

Posted by :

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com