Gold Prices Drop Below $1,200, Hit 4-Wk. Low, On Technical Selling, Strong Greenback

(Kitco News) – Gold prices are modestly down and hit another four-week low below $1,200.00 in early U.S. trading Tuesday. The silver market fell to a two-month low overnight. Chart-based selling pressure has kicked in this week as the technical postures for both gold and silver have deteriorated recently. Precious metals are also pressured by a very strong U.S. dollar on the foreign exchange market that saw the U.S. dollar index hit a 1.5-year high on Monday. December gold futures were last down $2.00 an ounce at $1,201.40. December Comex silver was last up $0.004 at $14.025 an ounce.

Global stock markets were mixed overnight. Asian shares were down and European stock indexes were mostly up. U.S. stock indexes are pointed toward higher openings when the New York day session begins, following steep losses suffered on Monday. Volatility in the U.S. stock market has heated up again early this week. Many traders and investors are spooked by the recent sharp drop in crude oil prices.

Nymex crude oil futures prices are lower again today, hit an eight-month low overnight and are trading around $58.50 a barrel. The steep slide in oil prices is a bearish element for most of the raw commodity sector, as oil is arguably the leader of that sector.

Meantime, the U.S. dollar index is trading weaker today on a mild corrective pullback after soaring to a 1.5-year high on Monday.

European investors are unsettled as Tuesday is the day Italy’s budget is supposed to fall into line with the constricts of the European Union budget process. Meantime, reports said U.K. Prime Minister Theresa May has rejected the latest European Union Brexit proposal. The Euro currency fell to a 16-month low against the U.S. dollar on Monday.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index and the monthly Treasury budget statement.

Technically, gold bears have the firm overall near-term technical advantage, to suggest a challenge of the recent lows. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $1,225.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at the September low of $1,184.30. First resistance is seen at the overnight high of $1,205.50 and then at Monday’s high of $1,212.00. First support is seen at the overnight low of $1,196.60 and then at $1,190.00. Wyckoff’s Market Rating: 2.5

December silver futures bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.50. First resistance is seen at Monday’s high of $14.18 and then at last Friday’s high of $14.425. Next support is seen at the overnight low of $13.92 and then at $13.75. Wyckoff’s Market Rating: 1.0.

By Jim Wyckoff
For Kitco News


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