Gold prices are higher in early U.S. trading Thursday and scored yet another record high of $2,708.70, basis December Comex futures. Silver prices are sharply higher and hit a nearly four-month high today. More economic stimulus from China and safe-haven demand are supporting buying interest in the two precious metals. Technical charts also remain firmly bullish for gold and silver. December gold was last up $17.60 at $2,702.30 and December silver was up $0.717 at $32.735.
Gold bulls are indeed on a roll but, importantly, I want to repeat to my valued Kitco readers something I wrote in Wednesday’s weekly “Front Burner” email report that I produce. I wrote: “You know I’ve said it many times: If you are a commodity market trader/investor, keep a very close eye on the crude oil market. Price appreciation in any major commodity, including precious metals, will be very hard to sustain if crude oil prices reverse course and start to trend lower. To put it another way, weakening crude oil prices may be the leading indicator for when the gold and silver markets put in their price tops.” That’s what I wrote Wednesday and late this week crude oil prices are now starting to break down. This is not good news for the heretofore strong precious metals bulls.
In overnight news, China’s Politburo pledged to stabilize China’s property sector and add more fiscal stimulus after The People’s Bank of China earlier this week announced the largest monetary stimulus since the pandemic. The latest announcement also comes amid speculation China is set to miss its 5% GDP growth target for this year. Chinese authorities vowed to issue and use government bonds to support investment.
The Israel-Hezbollah military conflict has escalated, with the Israel now telling its military to prepare for a possible ground invasion of Lebanon, after recent heavy air bombardments. This situation is keeping safe-haven bids in gold and silver and will likely get worse before it gets better.
Asian and European stock indexes were mixed to firmer overnight. U.S. stock indexes are pointed to solidly higher openings when the New York day session begins. The S&P 500 hit a record high overnight, while the Nasdaq stock index scored a nine-week high.
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are solidly lower and trading around $68.00 a barrel. Reports said Saudi Arabia is thinking about pumping more oil. Reads a DowJones Newswires headline: “OPEC-plus output increase will lead to oversupplied market.” The benchmark 10-year U.S. Treasury note yield is on the decline and is presently fetching 3.779%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the third estimate for second-quarter GDP, durable goods orders, pending home sales, and the Kansas City Fed manufacturing survey.
Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,800.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,600.00. First resistance is seen at the overnight contract high of $2,708.70 and then at $2,725.00. First support is seen at the overnight low of $2,678.50 and then at Wednesday’s low of $2,673.40. Wyckoff’s Market Rating: 9.5.
December silver futures bulls have the solid overall near-term technical advantage. Prices are in a six-week-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the May high of $33.50. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at the overnight high of $33.02 and then at $33.50. Next support is seen at $32.00 and then at $31.50.
Source: Kitco
