Price pops in gold, silver amid lower USDX, upbeat China rumors

(Kitco News, Tues. Nov. 1st, 2022) – Gold and silver prices are solidly higher in early U.S. trading Tuesday, with silver hitting a three-week high. A lower U.S. dollar index and falling U.S. Treasury yields on this day are supporting the precious metals markets. Some potentially positive news coming out of China is also working in favor of the metals market bulls. December gold was last up $15.70 at $1,656.30 and December silver was up $0.816 at $19.925.

Global stock and commodity markets were buoyed by upbeat reports coming out of China. China stock markets rallied Tuesday on rumors the Chinese government has a plan to phase out its “zero covid” policies by as soon as March. China stock prices did back off their highs on reports Foreign Minister Zhao Lijian said he is not aware of the matter. China is the world’s second-largest economy and if it gets rolling again, such would be significantly bullish on the demand front for commodities, including gold and silver.

Global stock markets were mostly firmer overnight. U.S. stock indexes are headed for higher openings when the New York day session begins. Stock traders are done with the historically rocky months of September and October, after having a very good October, with near-term price uptrends in place on the daily charts for the indexes.

In other overnight news, Australia’s central bank raised one of its main interest rates by 0.25%.

The World Gold Council has reportedly seen substantial, unreported buying of the yellow metal, as central bank bullion purchases hit a record in the third quarter. Reports said 400 metric tons of gold were bought by central banks last quarter, pushing purchases up to their highest since 1967. “Meantime, ETF selling amid soaring U.S. real yields has pushed gold prices lower, while central bankers have been meeting depressed prices with open arms,” said broker SP Angel in an email dispatch Tuesday morning. The WGC reports Turkey and Qatar both ramped up purchases, with China and Russia also expected to be partaking, although their purchases are not reported, said the broker.

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Traders are looking ahead to the Federal Reserve’s Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and a press conference from Fed Chairman Jerome Powell. Most expect the FOMC to raise the Fed funds rate by another 0.75%. Traders and investors also want to see what comments the FOMC and Powell make regarding the future path of U.S. monetary policy—specifically, when the Fed will back off the accelerator on aggressively raising interest rates.

The key outside markets today see the U.S. dollar index solidly lower. Nymex crude oil prices are higher and trading around $88.00 a barrel. The 10-year U.S. Treasury note is yielding 3.953%.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail reports, the U.S. manufacturing purchasing managers index (PMI), the ISM report on business manufacturing, construction spending and domestic auto industry sales.

Technically, the gold futures bears still have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at $1,670.90 and then at last week’s high of $1,679.40. First support is seen at the overnight low of $1,633.60 and then at the October low of $1,621.10.

The silver bulls have gained the overall near-term technical advantage. Prices are in an uptrend on the daily bar chart. 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 $20.50 and then at $20.70. Next support is seen at $19.50 and then at today’s low of $19.085.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com