Rising bond yields and strengthening USDX put pressure on gold prices
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(Kitco News) – Gold prices are significantly lower and hit a six-week low at the start of US trading on Tuesday. Silver prices are also falling sharply. Rising government bond yields and a stronger US dollar index early in the week are bearish elements for metals markets. Safe haven bulls are once again frustrated that risk attitudes in the market today are not providing price support to their markets. December gold futures were last down $ 18.60 to $ 1,733.50. December’s Comex Silver last lost $ 0.504 to $ 22.19 an ounce.
Global stock markets were mostly down in overnight trading. The US stock indices are also showing lower openings when the New York day session begins. Risk aversion is more acute in the market at the start of the week. The rise in bond yields has caught the attention of traders and investors. The yield on 10-year US Treasuries is currently 1.529% and a three-month high. The world’s major central banks are gearing up to end their easy money policies of the past few years and bond prices are bearish.
Federal Reserve Chairman Powell and U.S. Treasury Secretary Yellen will appear before a Senate committee Tuesday morning to discuss the U.S. economy and monetary policy.
Also of concern, European countries and China are experiencing severe energy shortages that should not be addressed anytime soon. Nymex crude oil futures prices are higher again today and are trading around $ 76.25 per barrel. Meanwhile, natural gas futures prices are at their highest level in seven years. Rising energy prices as winter approaches are undermining the enthusiasm of traders and investors, especially in Europe, where panic buying of gasoline is already happening.
This week, the focus is also on US government spending. President Biden’s infrastructure package is slated for a vote in the House of Representatives on Thursday, while U.S. government funding expires at midnight Thursday, which, if not extended, would result in the closure of a government party Friday. Some market anxiety is already surfacing as Republicans rejected a plan to keep the government running. Democrats have said they are working on another plan.
The other key foreign market is now seeing the US dollar index rise.
US economic data due for release on Tuesday includes Johnson Redbook and chain store weekly retail sales reports, the monthly house price index, the S&P Core-Logic house price indexes, the survey from the Richmond Fed Business and Consumer Confidence Index.
Technically, December’s gold futures have the overall short-term technical advantage. Prices are in a three week downtrend on the daily bar chart. The Bulls’ next bullish price target is to produce a close above solid resistance at last week’s high of $ 1,788.40. Bears’ next short-term bearish price target is to push futures prices below strong technical support at $ 1,700.00. First resistance is seen at $ 1,750.00 and then this week’s high of $ 1,760.90. First support is seen at the overnight low of $ 1,731.50 and then at $ 1,725.00. Wyckoff Market Score: 3.0
Silver bears have a strong overall technical advantage in the short term. The next bullish price target for Silver Bulls is to close December futures prices above strong technical resistance at $ 23.50 an ounce. The next bearish price target for bears is to close price below strong support at $ 21.00. First resistance is seen at the overnight high of $ 22.68 and then at this week’s high of $ 22.865. Next support is seen at the day’s low at $ 22.14, then last week’s low at $ 22.025. Wyckoff Market Score: 1.5.
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