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Price pressure on gold, silver as government bond yields, USDX soars

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(Kitco News) – Gold and silver prices were solidly lower in early US trading on Friday. Gold prices hit a near 2.5-year low. Soaring government bond yields and a strong US dollar index are bearish factors currently punishing the precious metals markets. October gold was down $24.80 at $1,646.50 and December silver was down $0.532 at $19.08.

Global stock markets fell almost overnight. US stock indexes opened sharply lower and were pointed to three-month lows as the New York day session began. Risk aversion was heightened later this week after Russian President Putin said earlier this week he would mobilize more troops to fight a war with Ukraine and suggested he could use his nuclear weapons if Russia’s integrity was threatened. Many pundits say that Putin has been pushed into a corner and has become an even more dangerous figure.

Don’t be surprised if gold prices make a solid rebound by the end of today, heading into an uncertain weekend that will see global markets in turmoil and a Russian president the world will watch lose a war with a small country. Gold has a recent history of showing great strength when the going is really rough in the market.

Worries of a US and/or global recession rose this week, following downbeat comments on US economic prospects from Federal Reserve Chairman Jerome Powell on Wednesday and major central banks tightening their monetary policies this week to curb rising inflation. In overnight news, the UK announced major tax cuts and deficit spending to try to jumpstart its economy. That news helped push global government bond yields higher. Meanwhile, euro zone manufacturing and services purchasing managers’ indices fell in September, suggesting both sectors are contracting.

Major outside markets Nymex crude oil prices fell solidly today, hitting a seven-month low and trading at $80.50 a barrel. The US dollar index rose solidly and pushed to another 20-year high in early US trade. A Barron’s headline this morning reads: “Dollar Crushes Its Rival Currencies.” It is important to note that price trends in currency markets tend to be stronger and last longer than price trends in other markets. Thus, the greenback’s surge may continue for some time. Meanwhile, the yield on the 10-year US Treasury note is rising and is currently at 3.771%, an 11-year high. The 2-year Treasury note yield is 4.205%.

US economic data to be released on Friday includes US flash manufacturing and services purchasing managers’ indices.

Live 24 hour gold chart [Kitco Inc.]

Technically, October gold futures bears have a solid overall near-term technical advantage. Prices are trending downward on the daily bar chart. The bulls’ next upside price objective is to produce above solid resistance at $1,700.00. The bears’ next near-term downside price objective sees futures prices below solid technical support at $1,600.00. The first resistance is seen at the overnight high of $1,674.50 and then this week’s high of $1,687.00. First support is seen at today’s low of $1,638.80 and then at $1,625.00. Wyckoff’s Market Rating: 1.0

Live 24 hour silver chart [ Kitco Inc. ]

September silver futures bears have an overall near-term technical advantage. The next upside price objective for silver bulls is closing prices above solid technical resistance at $20.00. The next downside price objective for bears is closing prices below solid support at $18.00. The first resistance is seen at the overnight high of $19.745 and then at $20.00. The next support is seen at $19.00 and then $18.77. Wyckoff’s Market Rating: 2.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. Nor does the author guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. And the author of this article accepts no liability for losses and/or damages caused by the use of this publication.

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