Gold modestly up in choppy trading, supported by big drop in USDX

Date: 29/10/2021

Jim Wyckoff Thursday October 28, 2021 12:58

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(Kitco News) – Gold prices are mildly higher in midday trading Thursday, on a choppy and two-sided trading day. Solid losses in the U.S. dollar index today are prompting some buying interest in the precious metals markets. A U.S. GDP report that was downbeat and which fell into the camp of the U.S. monetary policy doves, who want the Federal Reserve to hold off on tapering its monetary policy stimulus, was also friendly for the metals markets today. December gold was last up $4.40 at $1,803.00 and December Comex silver was last down $0.046 at $24.15 an ounce.

The U.S. data point of the day saw the advance estimate for third-quarter gross domestic product come in at up 2.0%, compared to expectations of up 2.8%, year-on-year and a 6.7% growth reading in the second quarter. The closely watched PCE price index was reported at up 5.3%, compared to a rise of 6.5% in the second quarter. The weaker GDP data was somewhat offset by the weekly U.S. jobless claims report that showed a decline.

Global stock markets were mostly weaker in overnight trading. The U.S. stock indexes are solidly higher at midday, and that is limiting the upside in the safe-haven metals. Trader and investor attitudes are upbeat this week, as they choose to focus on positive corporate earnings reports. For the moment the marketplace is brushing aside slowing economic growth in China, supply chain bottlenecks and rising inflation prospects.

The European Central Bank held its regular monetary policy meeting Thursday. No changes in ECB monetary policy were implemented and not were expected. The ECB did say that its bond-buying program would continue until at least March of 2022. In her press conference ECB President Christine Lagarde was expected to say the Euro zone remains too weak for policy makers to pull back stimulus. Meantime, Canada’s central bank on Wednesday ended its quantitative easing program.

The World Gold Council reported gold demand in the third quarter declined 7% compared to Q3 2020. Outflows from gold-backed ETFs were the primary factor. Increasing jewelry demand did mitigate the slide in demand, said the WGC. Gold jewelry demand grew 33%, year-on-year. Meantime, central banks purchased 69 metric tons for reserves vs 10 MT in same period in 2020.

The key outside markets today see the U.S. dollar index sharply down and hitting a four-week low. Crude oil prices are lower and trading around $81.75 a barrel. Meantime, the 10-year U.S. Treasury note yield is presently fetching 1.556%.

Technically, December gold futures bulls have the overall near-term technical advantage amid a four-week-old price uptrend in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the September high of $1,836.90. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at today’s high of $1,812.70 and then at the October high of $1,815.50. First support is seen at today’s low of $1,793.10 and then at this week’s low of $1,783.00. Wyckoff’s Market Rating: 6.5

December silver futures bulls have the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at Wednesday’s high of $24.33 and then at this week’s high of $24.695. Next support is seen at this week’s low of $23.905 and then at $23.615. Wyckoff’s Market Rating: 6.0.

December N.Y. copper closed up 540 points at 444.30 cents today. Prices closed nearer the session high today and hit a three-week low early on. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at 465.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 420.00 cents. First resistance is seen at 450.00 cents and then at this week’s high of 456.85 cents. First support is seen at today’s low of 435.25 cents and then at 430.00 cents. Wyckoff’s Market Rating: 5.0.

By Jim Wyckoff

For Kitco News