Gold sees slight downward correction after recent gains

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(Kitco News) – Gold prices are down slightly at the start of the US trading session on Monday, following a routine corrective pullback after recent good gains. The bulls still have momentum on their side. A little more anxiety in the market this week could also support the precious metals markets, on a demand for a safe haven. October gold futures were down $ 3.50 to $ 1,772.50 and September Comex silver was down $ 0.309 to $ 23.475 an ounce.

Global equity markets were mixed to weaker overnight. US stock indices show lower openings when the New York day session begins. The marketplace is uncomfortable starting the trading week, amid a geopolitical push. Surprisingly quickly, the Taliban took control of Afghanistan following the recent US military withdrawal from the country. Reports indicate that there are still US citizens trapped in the country.

Meanwhile, the market is also focused on the prospect of Federal Reserve monetary policy tightening sooner than the central bank has suggested so far. Federal Reserve officials appear to be sounding the alarm bells in their comments. Some Fed watchers are now saying tightening could come as early as this fall. The stronger-than-expected US jobs report for July helped fuel these ideas.

Weaker than expected economic data from China on Monday also prompted traders and investors to start the trading week. China’s industrial production in July was up 6.4% year-on-year, but the market was expecting a 7.8% rise. The burgeoning delta variant of Covid-19 has likely crippled China’s economic growth and traders fear the same will happen to other major economies in the weeks / months to come.

Major foreign markets are now seeing the US dollar index a little firmer. Nymex crude oil futures prices are lower and trading around $ 67.25 per barrel. Meanwhile, the yield on the benchmark 10-year US Treasury bond is currently at 1.263%. The German 10-year bond (bund) is trading at minus 0.469% and the UK 10-year gilt at 0.563%.

U.S. economic data due for release Monday includes the Empire State’s manufacturing survey and international capital data from the Treasury.

Technically, the October gold futures declines still have a slight overall technical advantage in the short term, but the bulls now have momentum on their side. The Bulls’ next bullish price target is to produce a close above the solid resistance at $ 1,800.00. The bears’ next short-term bearish price target is pushing futures prices under strong technical support to the August low of $ 1,676.40. First resistance is seen at the overnight high of $ 1,782.20 and then at $ 1,800.00. First support is seen at $ 1,760.00, followed by Friday’s low at $ 1,751.60. Wyckoff Market Score: 4.5

Silver bears have a strong overall technical advantage in the short term. Prices are in a three month downtrend on the daily bar chart. The next bullish price target for Silver Bulls is to close September futures prices above strong technical resistance at $ 25.00 an ounce. The next bearish price target for bears is to close prices below solid support at this week’s low of $ 22.295. The first resistance is seen at last Friday’s high at $ 23.83 and then at $ 24.00. Next support is seen at Friday’s low at $ 23.13 and then at $ 22.97. Wyckoff Market Rating: 2.5.