Gold took profits, and the dollar index rose sharply to weigh on gold prices

Gold and silver prices fell slightly in early US trading on Wednesday, in part due to a midweek surge in the dollar index and some profit-taking by short-term futures traders. Gold futures for December delivery, which are now about $50 above spot gold, were up $6 at $3,444.00 at the latest price, while silver futures for September delivery were down $0.236 at $38.37.

Global stock markets were mixed overnight, with overall weakness. U.S. stock indexes are expected to open slightly higher when trading opens in New York.

Veteran market watchers are well aware that historical data show that September and October tend to be particularly volatile trading months for stocks and financial marekts. As that period approaches, Hong Kong markets may have sent early warning signals this week that financial liquidity conditions have tightened again in the city this week, with a key money market rate climbing to a level that some analysts believe could hamper the city's economic recovery. On Wednesday, the benchmark one-month rate for Hong Kong's interbank offered rate (Hibor) breached a closely watched threshold of 3%, reaching its highest level since May. According to Bloomberg, Morgan Stanley analysts pointed out in a report last week that if the interest rate continues to exceed this level, it could have a negative impact on the Hong Kong economy - investors will become more cautious and borrowing demand will decrease.

The US imposed a 50 per cent tariff on Indian imports to penalise India for buying Russian oil, according to Bloomberg, "breaking a decades-long push by Washington to forge closer ties with New Delhi". The new tariffs will cover more than 55 per cent of Indian exports to the US, hitting labour-intensive sectors such as textiles and jewellery the hardest, while key exports such as electronics and pharmaceuticals will be exempt. The tariffs not only threaten India's export competitiveness, Bloomberg noted, but also raise questions about Prime Minister Narendra Modi's vision of turning the South Asian country into a major manufacturing hub at a time when Indian exporters are under pressure for fewer orders and possible job cuts.

According to Bloomberg, the European Union plans to speed up the legislative process by the end of this week to remove all tariffs on US industrial products - a requirement put forward by President Trump, and only if this condition is met will the United States reduce tariffs on European Union car exports. The European Union Commission, which is responsible for European Union trade affairs, will also grant preferential tariffs on some seafood and agricultural products, according to people familiar with the matter. The European Union acknowledges that this trade arrangement is more beneficial to the United States, but emphasizes that the agreement is essential to guarantee the stability and certainty of European Union companies. Von der Leyen, European Union president, has previously described it as "an imperfect but strong agreement".

Options traders believe Nvidia, the world's biggest chipmaker with an 8 per cent weighting in the S & P 500, is set to release quarterly earnings after the close of trading today. Trading activity in the stock options market suggests traders are bracing for big market swings as the world's biggest chipmaker is set to release new figures on sales and profits from its artificial intelligence products.

Today's key peripheral market developments revealed that the US dollar index rose sharply; crude oil prices fell slightly, trading around $63.00 per barrel.

The US economic data to be released on Wednesday include: the weekly MBA mortgage application survey, and the weekly US Energy Information Administration (DOE) liquid energy inventory report.

technical analysis

(Daily chart of spot gold, source: Internet)

December Gold Futures: The bulls have the upper hand in the near term on the overall technical front. The next upside goal for the bulls is to push the futures close above the key resistance level of $3500.00; the next short-term downside goal for the bears is to push the futures price below the key technical support level of the July low of $3319.20. The first resistance is seen at the overnight high of $3444.30 and further resistance is at $3450.00; the first support is seen at $3400.00 and further support is at the week low of $3396.10.

September Silver Futures: Bulls hold a solid advantage in the near term on the overall technical front. The next upside objective for the silver bulls is to push the closing price above the key technical resistance level at the July high of $39.91; the next downside objective for the bears is to push the closing price below the key support level at the July low of $36.28. The first resistance is seen at last week's high of $39.09, with further resistance at $39.91; the first support is seen at $38.00 and further support at $37.50.