Gold Gives Up Big Overnight Gains As Risk-On Attitudes Quickly Return

(Kitco News) - Gold prices were ending the U.S. day session slightly lower and have given up all the big overnight gains that pushed December futures prices to a six-week high of $1,338.30. Risk appetite quickly returned to the marketplace Wednesday, following keen risk aversion overnight in the immediate aftermath of a surprise victory by now U.S. President-Elect Donald Trump. December Comex gold was last down $4.20 an ounce at $1,270.40. December Comex silver was last up $0.019 at $18.38 an ounce.

The U.S. stock market led other markets today, including the gold market. After absorbing steep losses overnight, the U.S. stock indexes rebounded by late-morning Wednesday and were holding solid gains in afternoon trading. When the stock market turned, other markets started turning, too. For gold, it was to the downside. Don’t be surprised to see world stock markets rebound Thursday, if the U.S. stock indexes can hold their gains into today’s close.

While there is still keen uncertainty about Trump and his Republican-controlled Congress and their upcoming policies, it appears most of the anxiety among traders and investors about his election win has been digested by the marketplace. My sense is now that the dust of the U.S. election is settling, traders and investors worldwide are realizing the world is not coming to an end and that they will now need get down to more normal business—including once again focusing on supply and demand fundamentals in their own markets. But make no mistake, a Trump U.S. administration will make for some changing supply and demand fundamentals in many markets.

Once again, one needs to look at the surprise U.K. Brexit vote in June. That surprising turnout shocked the marketplace amid immediate anxiety and hand-wringing, But it was not long until the matter was put aside and markets returned to normal—and even the U.K. economy seemed little damaged.

Another longer-term bearish element for the precious metals and the raw commodity sector from the Trump victory are some ideas that while Federal Reserve may not hike interest rates in December, the Fed in a Trump administration will be more hawkish and will likely raise interest rates back to more normal levels, historically. The U.S. Treasury bond and note markets saw steep losses in prices and hit multi-month lows Wednesday, in a sign of higher U.S. interest rates expected down the road.

The key “outside markets” on Wednesday saw the U.S. dollar index trade higher on the day, after overnight losses. Nymex crude oil futures prices were trading higher after also absorbing solid losses overnight.

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Technically, December gold futures prices closed nearer the session low today after spiking to a six-week high of $1,338.30 overnight. The gold bulls and bears are back on a level overall near-term technical playing field. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,250.00. First resistance is seen at $1,285.00 and then at $1,296.50. First support is seen at today’s low of $1,268.10 and then at $1,262.00. Wyckoff's Market Rating: 5.0

December silver futures prices closed nearer the session low after hitting a five-week high early on today. The silver market bulls have the slight overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $19.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.50. First resistance is seen at $18.75 and then at $19.00. Next support is seen at today’s low of $18.275 and then at $18.00. Wyckoff's Market Rating: 5.5.

December N.Y. copper closed up 800 points at 246.00 cents today. Prices closed near the session high and hit a 14-month high today. The copper bulls have the solid overall near-term technical advantage and gained more power today. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 260.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 230.00 cents. First resistance is seen at today's high of 246.55 cents and then at 250.00 cents. First support is seen at 240.00 cents and then at 238.00 cents. Wyckoff's Market Rating: 8.5.

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