Slight price recoveries in gold and silver with short covering

(Kitco News) – Gold and silver prices are slightly firmer in early U.S. trading on Thursday after solid selling pressure this week pushed December gold futures to a 6.5-month low on Wednesday. There is tepid short coverage in futures markets for both metals today. A lower US Dollar Index is also a friendly daily over-the-counter element for metals markets today. December gold prices were last up $2.40 at $1,893.30 and December silver prices were up $0.081 at $22.805.

Asian and European stocks were mixed overnight. The US stock indices are likely to open rather mixed at the start of the New York session. Risk appetite remains subdued as the US government shutdown looms this weekend. The Associated Press reports: “As the Senate pursues a bipartisan approach to prevent a government shutdown, House Speaker Kevin McCarthy is back to square one — urging his far-right Republicans to do what they promised , they would never do it: give their consent to the House of Representatives’ own temporary measure to keep the government open. Goldman Sachs reportedly estimates the shutdown will likely last three weeks.

Today’s headline from A Barron’s is: “Forget the shutdown. Why Stocks Have Even More to Worry about.” The story goes on to say that the main reason for the recent stock market declines is changing perceptions about interest rates. Now much of the market is expected to trend higher for longer, perhaps even longer, including possible stagflation, as JP Morgan CEO Jamie Dimon recently highlighted in the press.

Striking union workers in the US, led by the United Auto Workers, are also starting to weigh more heavily on dealer and investor sentiment.

Major external markets are seeing a weaker US dollar index today after hitting a 10-month high on Wednesday. Crude oil prices on Nymex are weaker, trading at around $93.25 a barrel. A Dow Jones Newswires headline today reads: “Saudi Arabia, Russia Win Race to Cut Oil Production.”

Meanwhile, the benchmark 10-year U.S. Treasury yield is at a 16-year high this week and is currently at 4.647%.

U.S. economic data scheduled for release on Thursday includes the weekly jobless claims report, the third estimate of second-quarter GDP, revised corporate earnings, upcoming home sales and the Kansas City Federal Reserve manufacturing survey.

Technically speaking, gold futures bears overall have a solid short-term technical advantage. On the daily bar chart, prices are in a four-month-old downtrend. Bulls’ next price objective is to close December futures above solid resistance at $1,950.00. The bears’ next short-term downside price objective is to push futures prices below solid technical support at $1,850.00. First resistance lies at $1,900.00 and then at $1,913.60. First support is seen at this week’s low of $1,890.30 and then at this year’s low of $1,883.80. Wyckoff’s market rating: 2.0

Overall, the silver bears have the short-term technical advantage. However, there are stable technical support layers just below the market that could halt the decline. Silver bulls’ next upside price objective is for December futures prices to close above solid technical resistance at the weekly high $24.05. The next downside price objective for the bears is to close below solid support at $22.00. First resistance is seen at Wednesday’s high of $23.12 and then at $23.39. The next support is seen at the weekly low of $22.64 and then at the September low of $22.555. Wyckoff’s market rating: 3.0.

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