The GraveYard Shift

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AM-Roundup-Gold, silver see price weakness and greenback rebounds, oil slides

Jim Wyckoff
Thursday September 03, 2020 08:34



(Kitco News) - Gold and silver prices are modestly down in early U.S. trading Wednesday, pressured a bit by a rebound in the U.S. dollar index after it hit a two-year low earlier this week, and by lower crude oil prices that dropped to a four-week low overnight. October gold futures were last down $2.60 at $1,934.30. December Comex silver prices were last down $0.11 at $27.28 an ounce.

The just-released weekly jobless claims report showed new claims of 881,000, which was below expectations for a rise of 950,000. Gold prices ticked down a bit after then better-than-expected jobless claims reading. Traders are now awaiting Friday’s employment situation report for August from the U.S. Labor Department, expected to show non-farm payrolls gains of around 1.3 million.

Global stock markets were mixed overnight. The U.S. stock indexes are pointed toward weaker openings when the New York day session begins. The Nasdaq and S&P 500 hit record highs Wednesday and are due for normal corrective pullbacks in their existing uptrends. There also may be a bit more risk aversion in the marketplace Thursday, on reports the U.S. will impose restrictions on its Chinese diplomats, in retaliation for China doing the same to its U.S. diplomats.

On the bright side, the London Financial Times reported the Covid-19 herd immunity may be closer than previously thought. The story said tests for antibodies may be dramatically underestimating the proportion of people who have been infected with the virus, according to scientists. Other reports also said U.S. health officials are saying a vaccine could be ready for distribution by November 1.

The important outside markets today see Nymex crude oil prices lower, hitting a four-week low and trading around $40.60 a barrel. The U.S. dollar index is higher again today on a corrective bounce after hitting a two-year low Tuesday. The yield on the U.S. Treasury 10-year note is trading around 0.65% today.

Other U.S. economic data due for release Thursday includes the Challenger job-cuts report, the international trade report, revised productivity and costs, the U.S. services PMI, the ISM report on business services, the global services PMI, and monthly retail chain store sales.



Technically, the gold bulls still have the firm overall near-term technical advantage, amid recent choppy trading. Prices are still in an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at this week’s high of $1,992.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at the overnight high of $1,948.40 and then at Wednesday’s high of $1,972.40. First support is seen at the overnight low of $1,924.60 and then at $1,915.00. Wyckoff's Market Rating: 7.0



December silver futures bulls have the firm overall near-term technical advantage. A bullish symmetrical triangle pattern has formed on the daily bar chart. Prices are still in an overall price uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the August high of $30.19 an ounce. The next downside price objective for the bears is closing prices below solid support at the August low of $23.80. First resistance is seen at the overnight high of $27.89 and then at $28.00. Next support is seen at the overnight low of $26.875 and then at $26.50. Wyckoff's Market Rating: 7.0.
By Jim Wyckoff

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Breaking


Gold price holding gains following in-line drop in ISM service sector PMI

Neils Christensen
Thursday September 03, 2020 10:04


(Kitco News) - Gold prices are just off session highs seeing some technical buying momentum even as data continues economic activity falling in in line with expectations.

Thursday, the Institute for Supply Management (ISM) said its nonmanufacturing index showed a reading of 56.9% for August down from July’ reading of 58.1%. The data was relatively in line with expected as consensus forecasts were calling for a reading of 57%.

Readings above 50% in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.

Ahead of the report, the gold market seeing renewed buying momentum with prices pushing to session highs. The latest economic data have had little impact on the market, in initial reaction. December gold futures last traded at $1,952.30 an ounce, up 0.39% on the day.

Looking at the components of the report, the business activity index dropped to a reading of 62.4%, down from the previous reading of 67.2%. Meanwhile new orders dropped sharply to 56.8%, down from July’s reading of 67.7%.

The service sector labor market also remains under pressure. The report said that the employment index rose to 47.9%, up from July’s reading of 42.1%.

Adam Button, chief currency strategist at Forexlive.com said that this is the sixth consecutive reading the employment index has remained under 50%.

“It's not a great sign for Friday's non-farm payrolls report,” he said.

Although the headline data was better than expected, Katherine Judge, senior economist at CIBC, said that this is adding to the list of data points highlighting slower growth.

“The service side of the US economy appears to have shifted into a lower gear in August according to the ISM's index,” she said. “Given still-elevated levels of the virus, the stalling seen in mobility indicators, the drop in consumer confidence, and uncertainty around further government income support, it appears that the US recovery is now on softer footing.”
By Neils Christensen

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“Smooth seas do not make skillful sailors.”

African Proverb

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