Introduction
Gold and silver prices are weaker again in early U.S. trading on Thursday, with gold hitting a three-week low. Technical selling is featured this week as the near-term chart postures for both metals have turned more bearish. Precious metals traders are also looking to the key outside markets for direction.
Market Analysis
Today, a firmer U.S. dollar index and a rise in U.S. Treasury yields are negatives for gold and silver. December gold was last down $5.40 at $1,952.40, while December silver was last down $0.113 at $22.615.
Asian and European markets were mostly firmer in overnight trading, while U.S. stock indexes are pointed toward narrowly mixed openings. Risk appetite has crept back into the general marketplace recently amid no recent major escalation of violence in the Israel-Hamas war. However, there is a possibility that this Middle East situation will deteriorate again to the point of roiling markets.
China’s Deflationary Territory
In overnight news, China’s consumer and producer inflation slipped into deflationary territory last month, heightening expectations that the world’s second-largest economy needs more government stimulus. China’s October consumer price index fell 0.2% year-on-year, while the producer price index was down 2.6% in the same period. This latest China data is also a bearish element for the metals markets, as China is a major metals consumer.
Key Outside Markets
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are a bit higher and trading around $75.75 a barrel, while the yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.533%. U.S. economic data due for release Thursday includes the weekly jobless claims report. Several Federal Reserve officials are also slated to speak today.
Technical Analysis
Technically, the gold futures bulls have slight the near-term technical advantage but are fading. The price uptrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00, while bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at the overnight high of $1,959.80 and then at $1,970.00. First support is seen at the overnight low of $1,948.30 and then at $1,935.00. Wyckoff’s Market Rating: 5.5.
The silver bears have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at the October high of $23.88. The next downside price objective for the bears is closing prices below solid support at $21.50. First resistance is seen at the overnight high of $22.72 and then at $23.00. Next support is seen at this week’s low of $22.375 and then at $22.00. Wyckoff’s Market Rating: 4.0.
Conclusion
Gold and silver prices are facing further weakness as technical selling prevails in the market. The rise in the U.S. dollar index and U.S. Treasury yields, along with the deflationary territory in China, are adding to the bearish sentiment. Traders are closely watching the key outside markets for further direction. Despite the recent calm in the Israel-Hamas war, there is a possibility of the situation deteriorating again and causing market turmoil. In light of these factors, the market is closely monitoring the price levels and support/resistance areas for both gold and silver futures.
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