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Gold, silver bulls work to stabilize prices but jury still out

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(Kitco News) – Gold prices are slightly lower in midday trading Tuesday, while silver prices are up just a bit, in choppy trading. Bulls need to see prices stabilize this week in order to avoid serious chart damage, following Monday’s drubbing. Bulls made just a bit of headway today, regarding containing the price downdraft that occurred Monday. However, they still have heavy lifting to do in the coming days, to suggest prices can resume their sideways-to-higher trajectories seen in recent months. October gold futures were last down $1.70 at $1,900.40 and December Comex silver was last up $0.148 at $24.525 an ounce.

Monday’s mostly downside price action in raw commodity futures markets, led by the huge declines in gold and silver, rattled heretofore confident commodity bulls. If the raw commodity markets can show price stability the rest of this week, following Monday’s drubbing, most will escape with their near-term price uptrends still in place and with no technical damage. Tuesday’s price action in most raw commodity markets was modestly encouraging. However, more solid downside price pressure this week would end most commodity markets’ near-term price uptrends. Thus, trading action the rest of this week will be extra important for many raw commodity markets, including the metals.

Global stock markets were mixed overnight, with Asian shares mostly down and European shares mixed to firmer. U.S. stock indexes are mixed but mostly firmer at midday. Risk aversion is keener so far this week as Covid-19 infections are on the rise in Europe and in parts of the U.S., prompting new worries about businesses locking down again. The death of Supreme Court Justice Ruth Bader-Ginsburg has shifted focus away from Congress providing a new stimulus package for U.S. citizens and businesses. U.S.-China trade and political tensions continue to run hot. And many in the marketplace believe the U.S. presidential election results will be disputed and protracted. All of the above may well keep stock market traders in a dour buying mood right in the middle of a time of year that history shows stock markets can get very wobbly.

Fed Chairman Powell and U.S. Treasury Secretary Mnuchin testified to a House financial services committee Tuesday morning. Powell said the Congress needs to do more to keep the U.S. economy afloat. Markets showed little reaction to comments by the two.

The important outside markets today see the U.S. dollar index higher and extending Monday’s good gains by hitting another six-week high today. Nymex crude oil prices are modestly firmer and trading around $39.65. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.67% today.

Live 24 hours gold chart [Kitco Inc.]

Technically, October gold futures bulls still have the overall near-term technical advantage but have faded badly this week and need to step up and show fresh power very soon to avoid technical damage and to keep a five-month-old uptrend alive on the daily bar chart. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at this week’s high of $1,954.10. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,865.00. First resistance is seen at today’s high of $1,916.80 and then at $1,930.00. First support is seen at today’s low of $1,890.70 and then at this week’s low of $1,878.50. Wyckoff’s Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bulls have the overall near-term technical advantage but have faded badly this week as a five-month-old price uptrend that was in place on the daily bar chart has been at least temporarily negated. Silver bulls’ next upside price objective is closing prices above solid technical resistance at this week’s high of $27.13 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.50. First resistance is seen at $25.00 and then at today’s high of $25.30. Next support is seen at this week’s low of $23.78 and then at $23.50. Wyckoff’s Market Rating: 6.0.

December N.Y. copper closed up 415 points at 307.30 cents today. Prices closed nearer the session high today. The copper bulls have the firm overall near-term technical advantage as prices are in a six-month-old uptrend on the daily bar chart. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at 320.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 279.60 cents. First resistance is seen at 310.00 cents and then at this week’s high of 312.10 cents. First support is seen at 305.00 cents and then at this week’s low of 301.35 cents. Wyckoff’s Market Rating: 7.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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