(Kitco News) - Gold and silver prices are posting strong losses in early U.S. trading Monday, following the weekend news that the U.S. and China are close to a major trade agreement. That put much keener risk appetite into the marketplace, as global stock markets rallied and the U.S. stock indexes are set to open at record highs. Technical selling is also featured in both metals as December gold and silver markets have seen bear flag patterns form on their daily bar charts. December gold was last down $100.40 at $4,037.20. December silver prices were down $1.356 at $47.22.
Reports said the cost of borrowing silver in London has retreated from a record high, a sign that greater liquidity has returned to the silver market, said a Bloomberg report. Silver lease rates fell to 5.6% on Monday after surging to an all-time peak of 34.9% on Oct. 9, data compiled by Bloomberg show. The London Bullion Market Association is considering the weekly publication of silver inventory levels, with Chief Executive Officer Ruth Crowell saying the white metal would be prioritized over gold.
In other overnight news: U.S.-China come to agreement on several trade issues. Top trade negotiators for the U.S. and China over the weekend said they have come to terms on a range of contentious points, setting the stage for Presidents Trump and Xi Jinping to finalize a trade deal later this week when they are scheduled to meet. U.S. Treasury Secretary Bessent, speaking in an interview with CBS News, said Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table” and he expected China to make “substantial” soybean purchases as well as offer a deferral on sweeping rare earth controls. “So, I would expect that the threat of the 100% has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime,” Bessent said, as reported by Bloomberg. Bessent said a wide-ranging agreement between Trump and Xi would extend a tariff truce, resolve differences over the sale of TikTok and keep up the flow of rare earth magnets. The two leaders are also planning to discuss a global peace plan, he said, after Trump said publicly he hoped to enlist Xi’s help in resolving Russia’s war in Ukraine. “They (China) want to make a deal, and we want to make a deal,” Trump said. Global stock markets rallied overnight on the U.S-China trade deal hopes. U.S. stock indexes are pointed solidly higher and to new record highs when the New York day session begins. Safe-haven gold and silver prices were sharply down overnight, on the better risk appetite in the general marketplace.
U.S. trade deals with other Asian countries also in the works. President Trump also said over the weekend other trade deals with several countries in Southeast Asia are close to fruition, with the aim of increasing access to critical minerals and markets for U.S. agricultural goods. The agreements include exemptions from tariffs on key exports from countries such as Thailand, Cambodia, Vietnam, and Malaysia, and framework trade pacts that will be enacted in the coming weeks. The deals are seen as an attempt to bolster Trump's position ahead of his meeting with Chinese President Xi Jinping later this week.
Fed expected to trim U.S. interest rates this week. The Federal Reserve on Wednesday afternoon is expected to deliver a second straight 0.25% interest-rate cut to support a shaky job market but may face some opposition from officials anxious over inflation. Fresh data on Friday showed U.S. consumer prices rose in September at the slowest pace in three months, supporting the Federal Open Market Committee’s plan to cut rates this week. Fed policymakers are divided, however, with some worrying that cutting rates will go too far and others supporting even further reductions, all amid the lack of U.S. government economic data releases during the federal government shutdown. Meantime, Treasury Secretary Bessent confirmed the names of five finalists to succeed Fed Chair Jerome Powell. The finalists are current Fed board members Christopher Waller and Michelle Bowman, former Fed governor Kevin Warsh, White House National Economic Council Director Kevin Hassett and BlackRock Inc. executive Rick Rieder. President Trump said he expects to make a decision on the nominee before the end of the year.
One important sign the U.S. government shutdown could come to an end sooner… With the U.S. government shutdown in its fourth week, the effects of the standoff between Republican and Democratic lawmakers were being felt by U.S. air travelers, as flights began to back up. U.S. Transportation Secretary Sean Duffy over the weekend warned that U.S. travelers will face more flight delays and cancellations in the coming weeks as the continuing shutdown exacerbates the air-traffic controller staffing crunch. “What I see coming forward, as we get to Monday, Tuesday and Wednesday, that you’re going to see more staffing shortages in towers, which means you’re going to see more delays, more cancellations,” Duffy told Fox News on Sunday and as reported by Bloomberg. Air traffic controllers were notified last week that they will not be paid because of the government shutdown, which began on Oct. 1. Duffy said more air traffic workers are calling in sick and not showing up for work, with some employees looking for second jobs and other sources of income to help make ends meet. There’s one thing both Democrats and Republicans can agree on, and for which neither can run for cover: They don’t want to face the blame, fury and potential election day consequences of tens of thousands of angry American voters stuck in airports and on the tarmac. That situation could prompt a compromise among U.S. lawmakers to reopen the government.
The key outside markets today see the U.S. dollar index weaker. Crude oil prices are slightly down and trading around $61.28 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.028%.
Technically, December gold futures bulls have the overall near-term technical advantage but have faded badly. A minor bear flag pattern has formed on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $4,200.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,900.00. First resistance is seen at $4,100.00 and then at the overnight high of $4,123.80. First support is seen at last week’s low of $4,021.10 and then at $4,000.00. Wyckoff's Market Rating: 6.0.
The silver market bulls have the overall near-term technical advantage but have faded badly. A minor bear flag pattern has formed on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $50.00. The next downside price objective for the bears is closing prices below solid support at $45.00. First resistance is seen at the overnight high of $48.595 and then at $49.00. Next support is seen at last week’s low of $46.82 and then at $46.00. Wyckoff's Market Rating: 6.0.
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