Solid price gains for gold on better safe-haven demand

(Kitco News, Wed. Oct. 18th, 2023) – Gold and silver prices are higher in early U.S. trading Wednesday, with gold sharply up and hitting a four-week high. Silver scored a three-week high today. Keener risk aversion in the marketplace as the Middle East violence is flaring up has traders and investors seeking out safe-haven assets like gold and silver. December gold was last up $24.40 at $1,960.10 and December silver was up $0.371 at $23.40.

Risk aversion has up-ticked at mid-week after a bombing at a hospital in Gaza has reportedly killed over 500 people. Hamas blamed an Israel air strike, while Israel blamed an errant Hamas missile. Reads a Barrons headline today: “Rate fears, bond yields, war; market concern grows.”

Asian and European stocks were mixed to weaker overnight. U.S. stock indexes are pointed to weaker openings when the New York day session begins.

In overnight news, China got some mixed economic data today. China’s third-quarter GDP came in at up 4.9%, year-on-year, helped by resilient consumer spending. However, China’s third-quarter GDP came in below the second quarter’s reading of up 6.3%, year-on-year. That puts the world’s second-largest economy on course to hit an annual GDP target of around 5% for 2023, Bloomberg reported. GDP got a boost from strong retail sales in September that posted the biggest increase since May. On the downside, China property investment contraction accelerated during September. Home sales continued to decline and construction of new homes dropped almost 24% in the first nine months of the year. Funding for property development dropped 13.5%, year-on-year.

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In other overnight news, the Euro zone September consumer price index rose 4.3%, year-on-year, which was right in line with market expectations.

The key outside markets today see the U.S. dollar index slightly down. Nymex crude oil prices are solidly higher and trading around $89.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note yield is presently fetching 4.82%.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, new residential construction and the monthly Treasury budget statement.

Gold Price in US Dollars

Technically, the gold futures bears still have the slight overall near-term technical advantage. However, bulls have momentum and recent price action suggests a market bottom is in place. A four-month-old downtrend on the daily bar chart is on the verge of being negated. 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 $1,875.00. First resistance is seen at $1,968.90 and then at $1,980.20. First support is seen at the overnight low of $1,935.90 and then at this week’s low of $1,921.20. Wyckoff’s Market Rating: 4.5

The silver bulls have gained the slight overall near-term technical advantage. A downtrend on the daily bar chart has been negated and prices are now trending higher. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $23.50 and then at $23.80. Next support is seen at $23.00 and then at this week’s low of $22.535.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com