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Gold prices are a bit higher and near daily highs in midday U.S. trading Thursday. The yellow metal has erased its early losses as is seeing some safe-haven buying the U.S. stock market is melting down again and risk aversion is on the rise, amid shaky currency and bond markets. Also, daily bullish elements for the precious metals include a slight drop in the U.S. dollar index and in Treasury yields at midday. December gold was last up $2.10 at $1,672.20 and December silver was down $0.08 at $18.80.
U.S. stock indexes are sharply lower and back near their recent lows at midday. The marketplace was only briefly assuaged by the Bank of England's surprise announcement Wednesday that it will begin purchases of U.K. government bonds in order to stabilize the rattled U.K. bond market. However, markets quickly brushed aside the move as being insufficient. Risk aversion remains significantly elevated late this week. The marketplace is spooked by rising inflation, the specter of global economic recession, and currency and financial markets instability.
The U.K. government has created a "loop of doom" that threatens the entire financial system and they must act urgently, said Nigel Green of the DeVere Group. "Markets now know where the weakness lies. Intervention paints a target on the back of the body that intervenes." If the U.K. government does not change its tax and spending plans, "they will have blown up the U.K. mortgage market, U.K. pensions, amongst others, and eventually (a contagion) could spread to the wider global financial markets which themselves are sitting on thin ice as liquidity disappears," said Green. His comments came after the Bank of England stepped in to buy U.K. bonds Wednesday. The BOE's announcement "is the right thing to do, of course, but it seems ludicrous that it has had to act in this way," said Green. The International Monetary Fund warned the U.K. government over its plan for tax cuts and spending, saying such is likely to increase inequality and add to pressures pushing up prices.
New Pacific Metals advances a project near 'one of the largest silver deposits in the world'
Read a Barron's headline today: "Things are starting to break. But the Fed and BOE aren't done hiking."
The key outside markets today see Nymex crude oil prices firmer and trading around $83.00 a barrel. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.729% after rising above 4.0% overnight. The 2-year Treasury note yield is 4.39%.
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Technically, December gold futures bears still have the solid overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at $1,685.00 and then at $1,700.00. First support is seen at today's low of $1,649.30 and then at this week's low of $1,622.20. Wyckoff's Market Rating: 1.5.
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December silver futures bears have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $20.00. The next downside price objective for the bears is closing prices below solid support at the September low of $17.40. First resistance is seen at this week's high of $19.045 and then at $19.40. Next support is seen at Tuesday's low of $18.295 and then at $18.00. Wyckoff's Market Rating: 2.5.
December N.Y. copper closed up 670 points at 342.55 cents today. Prices closed near the session high today. The copper bears have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 369.25 cents. The next downside price objective for the bears is closing prices below solid technical support at the July low of 315.55 cents. First resistance is seen at 350.00 cents and then at 355.00 cents. First support is seen at today's low of 330.55 cents and then at this week's low of 324.30 cents. Wyckoff's Market Rating: 2.5.
By Jim Wyckoff
For Kitco News
