Strong U.S. dollar continues to punish gold and silver

NEW YORK (Aug 22)  Gold and silver prices are lower again and hit three-week lows in early U.S. trading Monday. A powerful U.S. dollar index that hit a five-week high overnight and is back near its 20-year high scored in July is keeping the precious metals market bulls standing on the sidelines. October gold futures were last down $20.70 at $1,732.40. Silver futures were last down $0.369 at $18.69 an ounce.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Traders and investors are concerned and a bit risk averse amid what is perceived to be a still-aggressive Federal Reserve that is hell-bent on lowering inflation even if it causes a U.S. economic recession. The marketplace is eagerly awaiting the late-week Jackson Hole, Wyoming Federal Reserve annual symposium, including a speech from Fed Chairman Jerome Powell Friday morning. Past Jackson Hole Fed confabs have produced significant monetary policy statements from the U.S. central bank.   

In overnight news, China cut its one- and five-year prime loan rates Monday, a move that was expected following the rate cuts last week.

The key outside markets today see Nymex crude oil prices slightly down and trading around $90.00 a barrel. The U.S. dollar index is firmer and hit a five-week high in early U.S. trading. The USDX is back the 20-year high scored in July. The yield on the 10-year U.S. Treasury note is fetching 2.981%.

U.S. economic data due for release Monday includes the Chicago Fed national activity index.    

Technically, the October gold futures bears have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,750.00 and then at Friday’s high of  $1,762.70. First support is seen at $1,717.00 and then at $1,700.00. Wyckoff's Market Rating: 2.5

September silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $20.00. The next downside price objective for the bears is closing prices below solid support at the July low of $18.01. First resistance is seen at the overnight high of $19.065 and then at $19.48. Next support is seen at $18.50 and then at $18.00.

KITCO