More solid price losses in gold, silver as charts damage mounts

(Kitco News) – Gold and silver prices are again sharply lower in early U.S. trading Tuesday, on follow-through selling pressure from Monday’s steep losses. Both gold and silver hit three-week lows overnight. As the U.S. and China are close to a major trade agreement, keener risk appetite is now in the marketplace. The U.S. stock indexes hit record highs overnight. Technical selling is also ramping up in both metals as serious near-term chart damage has been inflicted to suggest near-term market tops are in place. December gold was last down $82.30 at $3,937.10. December silver prices were down $0.449 at $46.325.

Global stock markets were mixed to lower overnight, while U.S. stock indexes are pointed to steady to slightly higher openings when the New York day session begins. The S&P and Nasdaq stock indexes poked to record highs overnight.

The Federal Reserve’s Open Market Committee meeting begins this morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. The FOMC is widely expected to deliver a second straight 0.25% interest-rate cut to boost the U.S. job market. Fed policymakers are divided, however, with some worrying that cutting rates will go too far and others supporting even further reductions, all amid the lack of U.S. government economic data releases during the federal government shutdown.

Amazon.com Inc. said it is cutting about 14,000 jobs in a major restructuring, according to Bloomberg. The positions will be eliminated across the corporate workforce, Beth Galetti, senior vice president of people experience and technology at Amazon said today in a blog post. “The reductions we’re sharing today are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs.” The terminations could affect as many as 30,000 jobs, Reuters reported on Monday, citing people familiar with the matter. The online retailer and cloud computing provider, which employed 1.55 million people globally as of June 30, on Thursday is scheduled to report its third-quarter earnings.

President Trump visited Japan today, touting the U.S.’s alliance with the Asian nation and praised new Prime Minister Sanae Takaichi on her plans to increase defense spending. Trump and Takaichi signed documents on trade and critical minerals, but the agreements remained non-specific, with the trade document noting “swift and continued efforts” and the critical minerals pact pledging to coordinate on permitting, financing, and mapping. Trump and China President Xi Jinping are scheduled for a highly anticipated summit meeting in South Korea on Thursday.

U.S. stock indexes at record highs; bulls see more upside. ”Equity bulls are lining up to wager the S&P 500 will surge past 7,000 now that it looks as if a seasonal bout of volatility has passed,” said a Bloomberg report today. The index powered to a record 6,875.00 Monday, buoyed by positive signs on trade, expectations for a U.S. interest rate cut and strong corporate earnings. “With that macro backdrop in place, bulls are pointing to other factors that can take the index past the psychologically important 7,000 level. Fund flows show retail and institutional investors pouring into the market, while technical analyses show little resistance ahead of the round-number milestone. In a seasonal quirk, the current week stands out as the best for stocks over the past 75 years,” said Bloomberg.

China has pledged to significantly boost the share of consumption in its economy in the next five years, as it looks to build an economy less reliant on trade, said a report from Bloomberg. The Communist Party made the pledge today in a detailed communique that followed its fourth plenum held last week in Beijing. China will “form an economic development model driven more by domestic demand and powered by consumption,” it said in the document that lays out basic principles for the next five-year plan, which starts in 2026. To achieve that, the world’s second-largest economy will make use of policies including those related to industry, prices, employment, consumption, investment and environment and trade, according to the readout. At the same time, China pledged to “maintain reasonable growth” in investment, another driver of domestic demand. The document adds details to a brief communique released last week, which underlined a continuing focus by China on technological self-reliance. It also reiterated a pledge to bolster the domestic market, as officials look to insulate the Chinese economy from foreign pressures.

The key outside markets today see the U.S. dollar index weaker. Crude oil prices are down and trading around $60.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 3.97%.

Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.

Technically, December gold futures bulls’ next upside price objective is to produce a close above solid resistance at $4,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $3,800.00. First resistance is seen at $4,000 and then at the overnight high of $4,034.20. First support is seen at $3,900.00 and then at $3,850.00. Wyckoff’s Market Rating: 5.5.

December silver futures bulls’ next upside price objective is closing prices above solid technical resistance at $50.00. The next downside price objective for the bears is closing prices below solid support at $45.00. First resistance is seen at the overnight high of $47.22 and then at $48.00. Next support is seen at the overnight low of $45.51 and then at $45.00. Wyckoff’s Market Rating: 5.5