Safe-haven buying boosts gold, silver prices sharply higher

(Kitco News, Mon. PM, Oct. 3rd, 2022) – Gold and silver prices are posting strong gains in midday U.S. trading Monday. Silver is out-performing and scored a six-week high, while gold notched a three-week high and poked above the key $1,700 level. The two precious metals are catching a solid safe-haven bid as the global stock and financial markets remain jittery, as media outlets are focusing on a desperate Russian president that may resort to using nuclear weapons in his war with Ukraine, and amid bullish outside markets that see higher crude oil prices and a weaker U.S. dollar index on this day. December gold was last up $27.40 at $1,699.20 and December silver was up $1.516 at $20.555.

The marketplace is uneasy to start the month of October, which history shows can be rocky for the stock and financial markets. There are reports and rumors swirling that investment bank Credit Suisse may be in serious financial trouble. Global stock markets were mostly lower overnight. Markets in mainland China were closed for a holiday. U.S. stock indexes are firmer at midday, on  corrective rebounds after hitting new for-the-move lows last Friday.

Broker SP Angel this morning said in an email dispatch: “A global tightening of liquidity by central banks is hitting the credit sector, with signs of a credit crunch beginning to surface. A syndicate of banks including Barclays and Bank of America cancelled a $3.9 billion debt offering last week amid a lack of demand. Bloomberg reports a group of underwriters including Goldman Sachs, Bank of America and Credit Suisse took losses estimated at over $1 billion on a debt package to private equity firms amid higher yields and lower demand. Outflows in U.S. investment grade bonds hit their third largest outflow on record last week, following six weeks of withdrawals totaling $22.3 billion. Credit default swaps across major European banks have soared in September, with Credit Suisse’s CEO noting the bank was facing a “critical moment.”

Several news outlets the past few days have done op-ed pieces on the increasing odds of Russia using tactical nuclear weapons as Russian President Putin appears in the desperate situation of losing his war with Ukraine and amid an increasingly discontented Russian public.

Oxford Economics says 4% to 6% allocation in silver will be optimal over the next five years

Once again, it appears when the heat in the marketplace gets turned up significantly hotter and trader/investor anxiety rises above what could be considered normal or even a bit elevated levels, demand for the safe-haven metals kicks in more aggressively. If a major global investment bank may be on the verge of collapsing and the dictator of the nation with the most nuclear warheads in the world has his back against the wall, while at the same time major global economies are battling inflation and teetering on recession, it appears increasing numbers of the public are now opting to possess gold and silver. It will be important for the gold and silver bulls to show follow-through price strength this week, which would then begin to suggest sustained price uptrends could develop in both metals.

In other news, the U.K. government has scrapped a major part of its tax-cut plan after U.K. and European financial markets became roiled when it was announced. The markets were somewhat assuaged by pivot from the U.K. government.

The key outside markets today see the U.S. dollar index lower on a corrective pullback from recent gains. Nymex crude oil prices are sharply higher and trading around $83.00 a barrel. Traders are awaiting an OPEC cartel meeting on Wednesday and may cut production by 1 million barrels a day, reports said. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.593%. U.S. Treasury markets are also catching a safe-haven bid Monday.

Technically, December gold futures prices hit a three-week high today. The gold futures bears still have the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,750.00. 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 today’s high of $1,703.20 and then at $1,725.00. First support is seen at $1,675.00 and then at today’s low of $1,666.50.

December silver futures prices hit a six-week high today. The silver bulls and bears are back on a level overall near-term technical playing field but the bulls have momentum on their side. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $22.00. The next downside price objective for the bears is closing prices below solid support at the September low of $19.00. First resistance is seen at $21.00 and then at $21.50. Next support is seen at $20.00 and then at $19.50.

December N.Y. copper closed down 30 points at 340.95 cents today. Prices closed near the session high today. The copper bears have the overall near-term technical advantage. Prices are in a five-week-old downtrend on the daily bar chart. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at the September high of 369.25 cents. The next downside price objective for the bears is closing prices below solid technical support at the July low of 315.55 cents. First resistance is seen at last week’s high of 347.45 cents and then at 350.00 cents. First support is seen at today’s low of 335.20 cents and then at 330.00 cents.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com