King U.S. dollar continues to push gold price lower

(Kitco News, Fri. Oct. 14th, 2022) – Gold and silver prices are lower in early U.S. trading Friday. The two precious metals continue to trade in a strong inverse relationship with the powerful U.S. dollar index. Gold and silver bulls remain confident that the end is near for dollar strength and then gold begins a truly legendary bull run, catching a safe-haven bid amid heightened geopolitical and marketplace uncertainties. December gold was last down $16.00 at $1,661.10 and December silver was down $0.258 at $18.65 as buying opportunities abound for the gold market say the bulls.

Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed to mixed openings when the New York day session begins. Thursday’s strong rebounds and sharply higher closes in the indexes really surprised the marketplace. The hot U.S. consumer price index report released in the morning dropped the U.S. stock indexes sharply, only to seen them rapidly “turn on a dime.” Analysts scrambled to make sense of the rebounds, with some saying short covering and others saying bargain hunting. Some said there must have been a bullish technical signal, while others, still, reckoned all the bearish news in the marketplace has been factored into prices. It’s likely all of the above were responsible.

U.S. Federal Reserve officials have recently reiterated their aggressively hawkish stance on monetary policy, which has kept the general marketplace uneasy, for fear of pending U.S. and/or global recession. Thursday’s CPI report suggests the Fed is correct regarding its belief that inflation is still not under control. To many experts the Fed is on the thinnest of ice here, literally trying to raise rates on a $31 trillion U.S. debt load that just cannot end well for American consumers.

Risk aversion in the general marketplace was only briefly assuaged on news the U.K. government is going to roll back part of its controversial tax and spending plans that had roiled the financial markets the past two weeks. However, there are now rumblings the U.K. government’s reckless moves have put Prime Minister Truss in jeopardy of losing her job. This morning it was reported U.K. Chancellor of the Exchequer Kwarteng has been fired. A Barron’s headline today reads, “The U.K. is heading for crisis….” As always in these cases of a government and/or its economy in turmoil is the dreaded contagion effect.

Now is the time to find value in the junior mining sector – Radisson Mining director Michael Gentile

The key outside markets today see the U.S. dollar index sharply higher. Nymex crude oil prices are lower and trading around $87.50 a barrel. The U.S. Treasury 10-year note yield is presently fetching 3.901%.

U.S. economic data due for release Friday includes import and export prices, retail sales, manufacturing and trade inventories and the University of Michigan consumer sentiment survey.

Technically, the December gold futures bears have the solid 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 the overnight high of $1,677.80 and then at Thursday’s high of $1,688.90. First support is seen at this week’s low of $1,648.30 and then at $1,622.20.

September silver futures bears have the firm 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 the September low of $17.40. First resistance is seen at the overnight high of $19.055 and then at Thursday’s high of $19.29. Next support is seen at this week’s low of $18.41 and then at $18.00.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com