Modest gains for gold on short covering, mild safe-haven demand

Gold prices are slightly up at midday Monday, on some short covering in the futures market and some tepid safe-haven demand in cash and futures, after hitting a four-week low overnight. However, bearish elements that include negative charts, a strong U.S. dollar, rising U.S. Treasury bond yields and a hawkish Federal Reserve still have the bears firmly controlling the precious metals markets. October gold futures were last up $3.20 at $1,743.70. September Comex silver futures were last down $0.07 at $18.755 an ounce.

U.S. stock indexes are lower at midday, on follow-through selling pressure after Friday’s big losses. Risk aversion is keener early this week, in the aftermath of the Federal Reserve’s highly anticipated Jackson Hole annual symposium that ended late last week. Fed Chairman Powell in a speech at the confab on Friday kept on script for an aggressively hawkish U.S. monetary policy, which ended some previous market talk of a more dovish “Fed pivot.” The CME’s FedWatch tool shows there is a 70% chance the Fed raises its Fed funds rate by 0.75% at its Sept. 20-21 FOMC meeting.

The U.S. data point of the week on this unofficial last week of summer is the August U.S. employment situation report from the Labor Department on Friday. The key non-farm payrolls growth number is forecast to come it up 325,000 in August versus the July report showing a gain of 528,000 non-farm jobs.

The key outside markets today see Nymex crude oil prices solidly higher and trading around $95.80 a barrel. The U.S. dollar index is a bit weaker in midday U.S. trading. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.121%. The 2-year U.S. T-Note is yielding 3.47%, keeping the yield curve inverted and hinting of an impending U.S. and or global economic recession.

Technically, October gold futures prices hit a four-week low early on today. The gold futures bears still have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the July low of $1,686.30. First resistance is seen at $1,750.00 and then at last Friday’s high of 1,762.30. First support is seen at $1,730.00 and then at today’s low of $1,722.50. Wyckoff's Market Rating: 2.5.

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 the August high of $21.02. The next downside price objective for the bears is closing prices below solid support at the July low of $18.175. First resistance is seen at $19.00 and then at last week’s high of $19.385. Next support is seen at today’s low of $18.40 and then at $18.175. Wyckoff's Market Rating: 2.0.

December N.Y. copper closed down 800 points at 361.80 cents today. Prices closed nearer the session low today. The copper bulls have the slight overall near-term technical advantage. Prices are in a six-week-old uptrend on the daily bar chart but now just barely. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 400.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 335.00 cents. First resistance is seen at today’s high of 370.10 cents and then at the August high of 378.35 cents. First support is seen at today’s low of 356.30 cents and then at 350.00 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips