Gold and silver prices are experiencing significant gains in midday U.S. trading on Thursday, with gold hovering just below Wednesday’s record high and silver reaching a two-month peak. December gold is currently up $18.40, trading at $2,617.10, while December silver has increased by $0.738 to $31.42.
The bullish sentiment surrounding precious metals can be attributed to the Federal Reserve’s recent decision to cut its main interest rate by 0.5%, which has weakened the U.S. dollar and invigorated global markets. A headline from the Wall Street Journal encapsulates the mood: “The Fed’s bold move ripples through global markets.”
Tensions in the Middle East are adding a layer of complexity to the market environment. Recent attacks involving exploding communication devices used by Hezbollah in Lebanon have resulted in several fatalities and thousands of injuries. Hezbollah has promised retaliation against Israel, yet surprisingly, market reactions to this geopolitical crisis have been muted. Analysts suggest that should the situation escalate, safe-haven demand for gold and silver is likely to rise significantly.
In terms of outside market influences, the U.S. dollar index has seen a slight uptick after hitting a contract low on Wednesday, following the Fed’s rate cut. Nymex crude oil is also trading higher, currently at around $72.25 per barrel. Meanwhile, the yield on the benchmark 10-year U.S. Treasury note is declining, sitting at approximately 3.75%.
From a technical standpoint, December gold bulls are enjoying a strong near-term advantage. The next key price target for bulls is to close above solid resistance at $2,750. Conversely, bears aim to push prices below robust support at $2,500. Immediate resistance levels are identified at the record high of $2,627.20 and $2,650. First support is established at $2,600, followed by this week’s low of $2,572.50. Wyckoff’s Market Rating stands at 9.5.
For December silver futures, the bulls are also in a favorable position. The immediate target for silver bulls is to close above the July high of $32.46, while bears aim to push prices below $29. First resistance for silver is seen at $32.00, with further resistance at $32.46. Support levels are identified at $31.00 and $30.50, with Wyckoff’s Market Rating at 7.0.
