Moderate price gains for gold with strong risk aversion on Monday
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(Kitco News) – Gold prices rose slightly in early U.S. trading on Monday due to some demand for safe havens amid a rough start to the trading week. December silver futures hit a 14-month low overnight. Should selling pressures build up in global equity markets earlier this week, the two metals should see better safe haven demand. October gold futures last rose $ 6.20 to $ 1,755.60. Comex silver last fell $ 0.012 to $ 22.325 an ounce in December.
The global equity markets fell sharply in overnight trading. The US stock indices also point to heavy losses and four-week lows at the start of the New York daily session. It’s a great risk-free trading day in historically turbulent September for the equity and financial markets. Major Chinese real estate developer Evergrande is in dire financial straits and traders and investors are very concerned about contagion. Broker SP Angel said in a morning message that the editor of an official Chinese newspaper had previously commented that Evergrande “is not too big to fail, suggesting that policymakers and other lenders, suppliers and others may let it go under.” collapse all kinds of affiliated construction companies working on Evergrande’s 1.4 million unfinished properties. “Financial, real estate and insurance stocks have been hit hard in Asia and Europe overnight. Black Rock, UBS and HSBC are reportedly big ones Evergrande bond holders. Monday’s Chinese holiday added volatility in Hong Kong stock markets.
The Evergrande crisis comes as the Federal Reserve begins its two-day monetary policy meeting, which begins Tuesday morning and ends on Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. The market is wondering if a big sell-off in global equity and financial markets earlier this week would affect the Fed’s discussion of when to taper its bond-buying program.
Major foreign markets see the US dollar index higher today and hit a four-week high. Nymex crude oil futures prices are solidly lower, trading at around $ 70.50 a barrel. Meanwhile, the benchmark 10-year US Treasury bond yield is 1.333%.
Cryptocurrencies will also be more strictly regulated on Monday, given risk aversion and recent speculation in large countries like the US and China. In the meantime, gold prices are given a safe-haven bid and are trading slightly higher that day. Interestingly, those who touted cryptos as a safe-haven store of value and even a substitute for the safe-haven status of gold seem to be bogus on this day when risk aversion is very high. Many gold bugs have long advocated that the true colors of gold and cryptos will show when the $ # really hits it.
The US economic data due to be released on Monday is light and includes the NAHB real estate market index.
Technically, the October Gold Futures have the overall short-term technical advantage. The prices are on the daily bar chart in a still young downtrend. The bulls’ next target price is to hit a close above the solid resistance at $ 1,800.00. Bears’ next short-term target price is to push futures prices below solid technical support of $ 1,700.00. Initial resistance is seen at Friday’s high of $ 1,765.40 and then $ 1,775.00. Initial support is found at today’s low of $ 1,740.50 and then at $ 1,725.00. Wyckoff’s market rating: 4.0
The silver bears have solid overall short term technical advantage. The silver bulls’ next price target is the December futures closing price above solid technical resistance at $ 23.50 an ounce. The next downside target for the bears is to close below the solid support at $ 21.00. Initial resistance is seen at the overnight high of $ 22.50 and then $ 22.75. The next support is seen at today’s low of $ 22.025 and then $ 21.75. Wyckoff’s market valuation: 1.0.
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