(Kitco News) - Gold prices ended the U.S. day session solidly lower and near their daily lows Tuesday. Early selling pressure intensified following U.S. economic data that was better than expected. Strong gains in the U.S. stock market also pulled investor interest away from safe-haven gold. However, the higher volatility in much of the market place, which is likely to continue at least the rest of this week, is an underlying bullish element for gold and will likely limit its downside potential in the near term. December Comex gold was last down $16.90 at $1,136.70 an ounce. September Comex silver was last down $0.157 at $14.60 an ounce.

U.S. new home sales were up over 5% in July and the consumer confidence index rose in August to the highest level in months. The U.S. dollar index added on to its early gains following the upbeat data and is traded sharply higher on the day, which was also a negative for the precious metals markets.

The European and U.S. stock index rallies occurred even before China announced new monetary policy stimulus measures Tuesday, including cutting its benchmark interest rate by 0.25% and lowering China banks’ reserve requirement ratios by 0.5%. However, China’s Shanghai stock index was down another 7% Tuesday, while Japan’s Nikkei stock index lost another 4% on the day. Indian and Australian stock markets were also lower. The Asian markets were closed when China’s central bank announced its monetary policy easing moves. China’s stock market is down more than 20% in less than a week.

Emerging currency markets are still in turmoil early this week, which is by itself a very worrisome development for the world market place.

Adding to the uncertainty in the market place at present is whether or not the U.S. Federal Reserve will raise interest rates at its September FOMC meeting. After this week’s extremely volatile price action in many markets, there are growing doubts the Fed will be able to make a rate hike in September, or even this year. However, Tuesday’s upbeat U.S. economic data falls into the U.S. monetary policy hawks’ camp, who want a U.S. rate hike sooner rather than later.

Later this week U.S. Federal Reserve officials meet in Jackson Hole, Wyoming for their annual meeting to discuss monetary policy and other economic issues. Past meetings have produced news that moved the markets.

The London P.M. gold fix is $1,137.50 versus the previous A.M. fix of $1,154.25.

Technically, December gold futures bears regained the slight near-term technical advantage today. Prices are still in a fledgling three-week-old uptrend on the daily bar chart but the bulls need to show fresh power very soon to keep it in tact. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,169.80. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,126.30. First resistance is seen at $1,150.00 and then at today’s high of $1,156.30. First support is seen at today’s low of $1,134.00 and then at $1,126.30. Wyckoff’s Market Rating: 4.5

September silver futures bears have the solid near-term technical advantage and the bears have gained fresh downside momentum this week. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the August high of $15.715 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the July low of $14.33. First resistance is seen at $15.00 and then at $15.25. Next support is seen at today’s low of $14.52 and then at $14.33. Wyckoff's Market Rating: 1.5.

By Jim Wyckoff
Tuesday August 25, 2015 13:34

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