Gold and Silver Plunge Amid Global Demand Fears

Gold and silver prices are trading sharply lower in midday U.S. trading Thursday, on worries about lessening global demand for metals. Gold prices hit a more-than-two-week low and silver dropped to a 2.5-month low. Heavy profit taking and weak long liquidation from futures traders are featured today. August gold was last down $53.60 at $2,362.30. September silver was down $1.231 at $28.09.

China’s central bank Thursday unexpectedly cut its one-year lending facility rate by 0.2% to 2.30%, days after reducing another key short-term rate. There are growing worries the world’s second-largest economy is seriously listing. That’s weighing on marketplace sentiment, including the metals, from a weakening demand perspective.

Thursday’s release of the advance second-quarter U.S. GDP report showed a rise of 2.8%, year-on-year, which is better than the rise of 2.1% in the consensus forecast. This stronger report likely eliminates the talk in the marketplace that the Federal Reserve could cut U.S. interest rates at next week’s FOMC meeting. Today’s report did add a bit more selling pressure to the gold and silver markets.

Traders now await Friday’s U.S. personal income and outlays report, including its inflation indicators.

The key outside markets today see the U.S. dollar index slightly weaker. Nymex crude oil prices are firmer after hitting a six-week low early on today, and are trading around $78.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently 4.235%.

Technically, August gold bulls still have the overall near-term technical advantage but are fading. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,488.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at $2,385.00 and then at $2,400.00. First support is seen at $2,350.00 and then at the July low of $2,327.40. Wyckoff's Market Rating: 6.0.

September silver futures bears have gained the overall near-term technical advantage. Prices are now trending down on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $29.63. The next downside price objective for the bears is closing prices below solid support at the May low of $26.55. First resistance is seen at $28.50 and then at $29.00. Next support is seen at today’s low of $27.555 and then at $27.00. Wyckoff's Market Rating: 4.0.

This article originally appeared on Kitco News.