Price gains for gold continues; bullish streak on a record

Gold and silver prices are higher again in early U.S. trading Friday, with gold hitting another record high and silver a two-month high today. The precious metals bulls are reveling in the aftermath of an aggressive interest rate cut from the U.S. Federal Reserve. December gold was last up $28.50 at $2,643.10 and December silver was up $0.322 at $31.745.

Safe-haven demand and chart-based buying have been featured in the precious metals markets this week. Tensions remain high in the Middle East following the simultaneous exploding of thousands of pagers used by Hezbollah militia members in Lebanon on Tuesday, followed by hundreds of exploding walkie-talkies used by Hezbollah in Lebanon on Wednesday. Dozens of people were killed and thousands were wounded. Hezbollah, which has a massive battery of missiles, said Israel has “crossed the red line” and has vowed retaliation. It’s likely even better safe-haven demand would surface for gold and silver if the Middle East conflicts escalate.

Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed to weaker openings when the New York day session begins, on corrective pullbacks after this week’s solid gains.

In overnight news, the Bank of Japan left its main interest rate at 0.25%, as expected, while leaving a door open for rate hikes in the future. The BOJ highlighted benefits from appreciating yen on the inflation outlook. Markets not expecting a rate hike before year-end. Meantime, China left its main lending rates unchanged.

One interesting development in the marketplace after the Federal Reserve’s aggressive 0.5% interest rate cut on Wednesday: U.S. Treasury yields have up-ticked despite lower U.S. interest rates. Barrons reports the main reason is that the bold rate cut from the Fed, amid a U.S. economy that’s really not that weak, means traders/investors now believe fair yields on U.S. Treasuries need to be higher. That’s because of notions a stronger U.S. economy could rekindle problematic inflation.

The key outside markets today see the U.S. dollar index slightly higher after selling off and hitting a contract low Wednesday after the Fed rate cut. Nymex crude oil prices are a bit weaker and trading around $71.50 a barrel. The benchmark 10-year U.S. Treasury note yield is on the decline and is presently fetching 3.713%.

There is no major U.S. economic data due for release Friday.

Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,750.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,500.00. First resistance is seen at $2,650.00 and then at $2,675.00. First support is seen at $2,625.00 and then at today’s low of $2,608.70. Wyckoff’s Market Rating: 9.5.

December silver futures bulls have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the July high of $32.46. The next downside price objective for the bears is closing prices below solid support at $29.00. First resistance is seen at $32.00 and then at $32.46. Next support is seen at $31.00 and then at $30.50. Wyckoff’s Market Rating: 7.0.