P.M. Kitco Metals Roundup: Comex Gold Hammered Lower on Strong U.S. Dollar, Lower Crude Oil, Margin-Call Selling
(Kitco News) - Comex December gold futures prices Thursday sold off sharply and hit a fresh five-week low. A sharply higher U.S. dollar index and sharply lower crude oil prices put strong selling pressure on the precious metals markets. Margin-call and "when in doubt, get out" selling pressure hit the precious metals along with many other markets Thursday. December gold last traded down $70.70 an ounce at $1,737.10 an ounce. Spot gold last traded down $46.00 an ounce at $1,735.00. December Comex silver last traded down $4.33 at $36.14 an ounce.
The world stock markets saw strong selling pressure Thursday, following the unimpressive FOMC statement from the U.S. Fed, and amid more weak economic data coming out of Europe and China. All of the above are feeding notions that the world's major economies are on the verge of another recession and may even be already there.
Traders and investors in many markets, including precious metals, just bailed out and headed for the sidelines Thursday, amid the strong downdraft in the stock markets. If the U.S. stock indexes push and close below very strong technical support levels at their August lows, then that would produce serious chart damage to the stock indexes and suggest more downside pressure for them in the near term. Importantly, that would also be bearish for many commodity markets. However, given recent price action in gold, it's not clear whether gold would be supported by safe-haven buying or be pressured by panic selling as other commodity markets decline along with the stock markets. My bias is that in such a scenario gold would be sought out once again as a safe-haven asset purchase and also be snapped up on bargain hunting at lower price levels.
A major feature in the market place Thursday was the emerging-country currencies of the world being hammered down sharply as investors sought out the U.S. dollar. The U.S. dollar index traded sharply higher and hit a fresh seven-month high Thursday. Ironically, worldwide investors' disappointment with the FOMC meeting results helped to prompt a safe-haven move into the greenback. The dollar index bulls have the solid near-term technical advantage. At the moment, the stronger U.S. dollar index is a significantly bearish factor for the gold market.
Crude oil futures prices traded sharply lower Thursday and hit a fresh five-week low and fell below $80.00 a barrel. Crude oil bulls have faded and technical damage has been inflicted in crude. That's also a bearish underlying factor for the precious metals markets. Crude oil will remain an important "outside market" that will have an influence on the precious metals markets.
The European Union sovereign debt situation has simmered down just a bit the past couple days. Talks on the matter are ongoing among EU and IMF officials. The EU debt situation remains a bullish underlying factor for gold, even though it's likely that the present problems regarding EU debt have likely been mostly factored into present market prices.
The London P.M. gold fixing was $1,722.00 versus the previous P.M. fixing of $1,793.00.
Technically, December gold futures prices closed nearer the session low and hit a fresh five-week low Thursday. Some near-term technical damage was inflicted in gold Thursday. Prices are now in a three-week-old downtrend on the daily bar chart and the specter of a bearish double-top reversal pattern on the daily chart has resurfaced. Bulls' next upside technical objective is to produce a close above solid technical resistance at $1,800.00. Bears' next near-term downside price objective is closing prices below strong technical support at the August spike low of $1,705.40. First resistance is seen at $1,750.00 and then at $1,765.40. First support is seen at Thursday's low of $1,723.20 and then at $1,705.40. Wyckoff's Market Rating: 5.5.
December silver futures prices closed near the session low and hit a fresh nine-week low Thursday. The key "outside markets" were strongly bearish for silver, as the U.S. dollar index was sharply higher and crude oil prices were sharply lower. Serious near-term chart damage was inflicted Thursday. Prices are in a five-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is producing a close above strong technical resistance at $39.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $35.00. First resistance is seen at $37.00 and then at $37.50. Next support is seen at $36.00 and then at $35.50. Wyckoff's Market Rating: 4.0.
December N.Y. copper closed down 3,180 points 344.50 cents Thursday. Prices closed near the session low again today and hit a fresh 12-month low. Serious near-term chart damage has occurred recently, including more Thursday. Copper bears have the strong overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at today's high of 372.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 335.00 cents. First resistance is seen at 347.50 cents and then at 350.00 cents. First support is seen at Thursday's low of 344.15 cents and then at 342.50 cents. Wyckoff's Market Rating: 1.0.
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By Jim Wyckoff, contributing to Kitco News; firstname.lastname@example.org