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(Kitco News) – Gold and silver prices are down again at the start of US trading on Monday. Gold prices hit another nearly 2.5-year low overnight. Rising government bond yields and surging US dollar index are the main bearish elements pushing precious metals markets south. October gold was last down $6.60 at $1,638.70 and December silver was down $0.195 at $18.71.
The global market is in choppy waters on Monday, continuing riskier trading attitudes seen at the end of last week. Fears of economic recession in the United States and/or around the world are growing rapidly. Global stock markets were mostly down overnight. U.S. stock indices are pointing to lower openings near last week’s three-month lows when the day’s session in New York begins. The Wall Street Journal reported today that this year has been the worst year since 1930 for a “buy the dip” strategy in US stock trading and investing. FOREX volatility and rising government bond yields are in the spotlight on Monday.
The UK’s grand plan to sell more government bonds in a bid to fund better economic growth has helped cause a rout in global government bond markets. “The bond vigilantes are back and the pound is the target,” read a Barron’s headline today.
Broker SP Angel in an email this morning said gold experienced a “minor crash” overnight. “The metal continues to get hammered” by the US dollar. Currency volatility is on the rise, with the pound sterling hitting its all-time low in 1984 and currently trading around $1.04 to the dollar. The Chinese yuan is nearing 2008 lows. “Traders are increasing short positions in gold as fund managers are more bearish on the metal than at any time in the past four years, according to a report by Bloomberg. Rising US Treasury yields have been a major headwind for gold and silver markets. “Gold ETF outflows continue, with holdings near their 2 years,” the broker said.
Major outside markets are seeing Nymex crude oil prices weaken today, hitting a seven-month low and trading around $78.25 a barrel. The US Dollar Index is higher and pushed to another 20-year high at the start of US trading. Meanwhile, the yield on the 10-year U.S. Treasury has been rising and is currently at 3.673%. The yield on 2-year Treasury bills is 4.285%.
US economic data due out Monday includes the Chicago Fed National Activity Index and the Texas Manufacturing Outlook Survey.
Technically, October gold futures have the strong overall short-term technical advantage. Prices are in a downtrend on the daily bar chart. The Bulls’ next upside price objective is to produce a close above the strong resistance at $1,700.00. Bears next short-term downside price objective is to push futures prices below strong technical support at $1,600.00. First resistance is seen at the overnight high of $1,646.40 and then at $1,652.00. First support is seen at today’s low of $1,624.40 and then at $1,615.00. Wyckoff Market Rating: 1.0
September silver futures have the overall short-term technical advantage. The next upside price objective for silver bulls is to close prices above the strong technical resistance at $20.00. The next downside price objective for the bears is to close prices below strong support at the September low of $17.40. The first resistance is seen at $19.00 and then at $19.40. The next support is seen at the overnight low of $18.435 and then at $18.00. Wyckoff Market Rating: 2.0.
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