This post was originally published on this site
Gold on Wednesday traded below $1,900 an ounce, a psychologically important round number, as some positive momentum for stocks and a strengthening dollar undercut appetite for bullion, risking a further break in a bullish trend line in the precious commodity.
“A rallying U.S. dollar index recently and a rebound in global stock markets at midweek are bearish elements for the precious metals markets,” wrote Jim Wyckoff, senior analyst at Kitco.com.
“Silver has seen its near-term price uptrend…negated this week and gold is in serious danger of seeing its near-term uptrend ending,” the Kitco analyst wrote.
December gold GCZ20, -2.01% GC00, -2.01% traded $31, or 1.6%, lower at $1,876.60, deepening its march to its late-July lows after posting losses in the previous two sessions.
December silver SIZ20, -5.51% SI00, -5.51% tumbled $1.22, or 5%, to trade at $23.295 an ounce, following a 0.6% gain on Tuesday.
Precious-metal prices have been under selling pressure since the start of the week as rising cases of COVID-19 in Europe and in the U.S., helped to fuel an unwind of profitable bets on gold and silver, and into dollars—a shift that further weighed on gold buying.
The U.S. dollar was up 0.2% on Wednesday, looking at a weekly gain of 1.3%, as measured by the ICE U.S. Dollar Index DXY, +0.30%, a measure of the buck against a half-dozen currencies.
“The stronger dollar is pressuring gold, as is the lack of any stimulus package coming out of Washington, but we think the complex is oversold both fundamentally and technically and we would not go short here,” Edward Meir, analyst at ED&F Man Capital Markets, wrote in a note Wednesday.
Chicago Federal Reserve President Charles Evans on Tuesday implied in the a speech that the Fed could lift benchmark interest rates, which currently stand at a range between 0% and 0.25%, sooner than the market expects. Higher rates may boost the dollar and make gold less competitive against interest-bearing investments.
“We could start raising rates before we start averaging 2%, we need to discuss that,” said Evans, during a discussion sponsored by OMFIF, an international forum for economic policy.
However, Fed Vice Chairman Richard Clarida, in an interview on Bloomberg Television Wednesday, said that even when inflation hits the 2% target, the central bank won’t automatically raise rates.
A number of other Fed speakers were expected on Wednesday, including Chairman Jerome Powell, who was set appear before the House Select Subcommittee on the Coronavirus Crisis at 10 a.m. Eastern after providing Congressional testimony on Tuesday.
Gold prices Wednesday fell further following the release of the latest U.S. economic data Wednesday. The IHS Markit flash services PMI slipped to 54.6 in September from 55 the prior month, while the IHS Markit flash U.S. manufacturing PMI climbed to 53.5 in September from 53.1 in August.
Meanwhile, global stocks were rising on Wednesday but equities have choppy, with the S&P SPX, -0.28% on Monday narrowly avoiding a close in correction territory—defined as a retreat of 10% from a recent high. U.S. benchmark stock indexes saw mixed trading Wednesday.
“Gold and silver bulls are confounded this week,” Wyckoff said. “Their markets sold off, along with the global stock markets, on Monday, but then also see selling pressure at mid-week when the world stock indexes are rebounding.”
“It appears the safe-haven metals need a new fundamental spark to jumpstart upside price action. Don’t be surprised if such occurs sooner rather than later,” the analyst said.
Among other metals traded on Comex, December copper HGZ20, -2.46% fell 2.1% to $2.996 a pound. October platinum PLV20, -1.28% lost 1.7% to $843.10 an ounce, but December PAZ20, +1.28% tacked on 0.6% to $2,242.70 an ounce.
