(Kitco News, Mon. Oct. 16th, 2023 ) – Gold and silver prices are weaker in early U.S. trading Monday, on normal downside corrections following last week’s solid gains. Rising U.S. Treasury yields to start the trading week are also a bearish daily outside market element for the precious metals markets. Don’t be surprised to see bulls working to “buy the dip” amid still-elevated risk aversion in the general marketplace. December gold was last down $13.30 at $1,928.20 and December silverwas down $0.13 at $22.765.

Asian and European stocks were mixed overnight. U.S. stock indexes are pointed to firmer openings when the New York day session begins. There were no surprise, major developments in the Middle East over the weekend that moved markets significantly. Still, risk appetite in the general marketplace remains dented as Israel appears poised for an all-out invasion of at least parts of the Gaza strip. The Middle East situation remains highly uncertain.

Marketplace focus is also on China’s economy. Broker SP Angel said today in an email dispatch that China’s yuan currency is under pressure as Chinese officials continue to move to restrict cash outflows. The “carry trade” continues to draw capital out of China and into the U.S. dollar, with a U.S.-China yield gap of 1.9% on in the 10-year government bonds. The People’s Bank of China has conducted medium-term lending facility operations of $108 billion to add liquidity to the banking system, said the broker. The PBOC kept the one-year policy loan rate unchanged at 2.5% as expected. Analysts see the moves as an effort to relieve stress on the banking sector. Meantime, property developer Evergrande’s debt sparked a bank run on the Bank of Cangzhou in Hebei province, reports said. Chinese officials are appealing for order following a crowd of people forming and looking to withdraw funds from that bank. “In many respects Evergrande and Country Garden are too big and too important to fail. We expect the Chinese state to avoid its ‘sub-prime, Lehman Bros’ moment and put in new management along with significant state support,” said SP Angel.

Gold sees best week since March with prices up 6% from last week’s lows

The U.S. political and economic situation is also not far from the front burner of the marketplace. Recent “Feds speak” may be leaning a bit less hawkish, but that’s debatable. A Wall Street Journal headline today reads “Chance of a recession ticks below 50%. A recession is no longer the consensus.” Meantime, the U.S. House of Representatives remains without a speaker.

The key outside markets today see the U.S. dollar index weaker. Nymex crude oil prices are near steady and trading around $87.75 a barrel. The yield on the benchmark U.S. Treasury 10-year note yield is presently fetching 4.689%.

U.S. economic data due for release Monday includes the Empire State manufacturing survey and Treasury monthly budget statement.

Live Gold Price

Technically, the gold futures bears still have the overall near-term technical advantage. However, bulls still have some momentum and recent price action suggests a market bottom is in place. Prices are still in a four-month-old downtrend on the daily bar chart, but just barely. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the October low of $1,823.50. First resistance is seen at the overnight high of $1,943.00 and then at the October high of $1,946.20. First support is seen at the overnight low of $1,921.20 and then at $1,900.00.

The silver bears still have the slight overall near-term technical advantage. Prices are still in a downtrend on the daily bar chart, but just barely. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at $23.50. The next downside price objective for the bears is closing prices below solid support at the October low of $20.85. First resistance is seen at $23.00 and then at $23.50. Next support is seen at $22.555 and then at $22.000.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com