Gold, Silver Slump To 4-Mo. Lows As Selling Onslaught Continues

(Kitco News) - Gold and silver futures prices ended the U.S. day session solidly lower Thursday, with both markets hitting four-month lows. A rallying U.S. dollar index and upbeat U.S. economic data this week continue to produce selling in the precious metals markets. December Comex gold was last down $13.90 an ounce at $1,254.70. December Comex silver was last down $0.032 at $17.375 an ounce.

The weekly U.S. jobless claims report Thursday showed a sharp drop in claims in the latest week and added to a batch of generally better U.S. data released this week and helped to push gold and silver prices to new for-the-move lows.

Technical-based sellers are also aggressive late this week, as December gold futures prices dropped below the key 200-day moving average for the first time since February.

Traders and investors are now awaiting Friday’s U.S. jobs report from the Labor Department, which is arguably the most important economic report of the month. The key non-farm payrolls number is expected to be up by 170,000 in September. Look for active markets in the aftermath of the jobs report, especially if it is a miss from market expectations. An upbeat U.S. jobs report Friday would strongly bolster the case for the Federal Reserve raising interest rates yet this year. However, a miss to the downside on non-farm payrolls would be just what the precious metals bulls need to stop their bleeding.

Some analysts think gold prices will bounce back on bargain-hunting physical demand, as holidays in India are just around the corner. India and China are the world’s largest gold buyers.

World market watchers are keeping an extra close eye on crude oil prices this week. Nymex crude oil futures were trading above the key $50-a-barrel level in afternoon action Thursday. A daily close above that mark would be technically bullish and suggest more upside price action in the near term. However, recent trading history shows that oil rallies fizzle when prices reach the $50 level. While the rallying oil market has not done much at all to help the precious metals bulls this week, a continued uptrend in oil prices would be a significantly bullish overall element for metals markets.

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Technically, December gold futures prices closed nearer the session low and hit a four-month low today. Serious near-term technical damage has been inflicted with this week’s big downdraft, to suggest sideways-to-lower price action for at least the near term. The gold bears have the overall near-term technical advantage. Prices have been trending lower for three months. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,280.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,230.00. First resistance is seen at $1,265.00 and then at today’s high of $1,271.60. First support is seen at today’s low of $1,252.50 and then at $1,250.00. Wyckoff’s Market Rating: 3.5

December silver futures prices closed nearer the session low and hit a four-month low today. The silver market bears have the overall near-term technical advantage. Prices have been trending lower for three months. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.46 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $17.585 and then at $18.04. Next support is seen at today’s low of $17.14 and then at $17.00. Wyckoff's Market Rating: 3.5.

December N.Y. copper closed down 75 points at 215.70 cents today. Prices closed near mid-range and hit a three-week low today. The copper bulls have lost the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the September high of 221.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 210.00 cents. First resistance is seen at today’s high of 217.15 cents and then at 219.60 cents. First support is seen at today’s low of $2.1455 and then at 213.90 cents. Wyckoff's Market Rating: 5.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com