Gold price rises on short covering, bargain hunting, crypto rumours

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(Kitco News) – Gold and silver prices are up sharply, with gold hitting a four-week high and trading back above $1,700.00 in the US late Tuesday morning. Silver hit a more than four-month high today. The precious metals are benefiting from heavy short covering in the futures markets, perceived bargain hunting in the cash markets, and even some demand for the cryptocurrency markets to sell off. December gold was last up $34.00 at $1,714.40 and December silver was up $0.601 at $21.53.

Rumors are swirling in the crypto markets about an exchange halting withdrawals, and that has apparently spooked all the crypto markets and helped increase safe havens for gold and silver.

Gold prices have risen 62% of the time in the six months following the US midterm elections, with a median return of 2%, according to a World Gold Council report using data going back to 1970.

Global stock markets were mostly higher overnight. US stock indexes are higher as midday approaches. The US midterm elections on Tuesday are a focus for the marketplace this week. Pollsters predict Democrats will lose the House and could lose the Senate.

Traders and investors are increasingly worried about rising Covid cases in China, the world’s second largest economy. Reports said the number of new cases rose above 7,500 on Monday – the highest since May. Guangzhou, the capital of Guangdong province and the country’s manufacturing hub, accounted for a third of the total cases. Broker SP Angel reports that China is probably two years behind the West in its war on Covid infections. “While Chinese manufacturers gained market share in global markets as the West locked down, the nation now risks losing many foreign companies as risk of ongoing shutdowns. Locking in workers risks their human rights.”

The main outside markets today see the US dollar index fall after losing overnight gains. Nymex crude oil prices are weaker and are trading around $91.25 a barrel. The 10-year US Treasury bond yields around 4.0%.

The US gets its next report on the inflation battle on Thursday, with the release of the consumer price index report for October, which is up 7.9% year-on-year, compared with an 8.2% increase in the September report.

Technically, the gold futures bears have a slight overall technical advantage in the short term, but the bulls are gaining momentum. The recent choppy and sideways price action suggests that a market bottom is in place. Bull’s next upside price target is to produce a close above solid resistance at $1,800.00. Bears’ next short-term downside price objective is to push futures prices below solid technical support at the November low of $1,618.20. First resistance is seen at the October peak at $1,728.70 and then at $1,750.00. First support is seen at $1,700.00 and then at the overnight low of $1,667.10. Wyckoff’s market rating: 4.5

The silver bulls have the overall technical advantage in the short term and gained more power today. A choppy, nine-week-old uptrend is in place on the daily bar chart. The Silver Bulls’ next upside price objective is to close prices above solid technical resistance at the June top of $22.80. The next downside price objective for the bears is to close prices below solid support at $20.00. First resistance is seen at $22.00 and then at $22.50. Next support is $21.00 and then at this week’s low of $20.435 and then at $20.00. Wyckoff’s market rating: 6.5.