Gold's Downslide Continues As Prices Hit 5.5 Mo. Low

(Kitco News) - Gold prices ended the U.S. day session modestly lower and hit a 5.5-month low Monday. Follow-through selling pressure was featured after the strong losses late last week that produced serious near-term technical damage. Gold prices are now down over $115.00 from last week’s spike high of $1,338.30, basis December Comex futures. December Comex gold was last down $2.70 an ounce at $1,221.40. December Comex silver was last down $0.537 at $16.845 an ounce.

The key “outside markets” on Monday saw the U.S. dollar index solidly higher and hitting a 10-month high. Meantime, Nymex crude oil prices were lower and hit a 3.5-month low. Recent reports have cast doubt on OPEC’s ability to cut its crude oil production, despite its stated intention to do so in September. These two markets were in a bearish daily posture for the raw commodity sector Monday, including the precious metals.

World stock markets were mostly firmer Monday on a continuation of the “Trump rally” that began after last week’s U.S. presidential election. Investor and trader risk appetite remains upbeat at present, and that’s also bearish for safe-haven gold. U.S. stock indexes were narrowly mixed in afternoon New York trading.

The U.S. Treasury bond and note markets continued to see their yields rise (prices fall) early this week. Yields are at 10-month highs following a Trump U.S. presidential win that has raised concerns about rising inflationary price pressures. World government bond yields are also on the rise. More U.S. spending on infrastructure and less restraints on businesses are main reasons for the expectations for rising inflation.

This week there will be several speeches from U.S. Federal Reserve officials, which will be especially closely monitored by the marketplace after the U.S. election of a new president last week. A Wall Street Journal survey just released showed most economists expect the Fed to raise rates at its December meeting.

There were no major U.S. economic reports released Monday.

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Technically, December gold futures prices closed near mid-range today. The gold bears have the overall near-term technical advantage. Prices have been trending lower for four months. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,265.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00. First resistance is seen at today’s high of $1,230.90 and then at $1,243.20. First support is seen at today’s low of $1,211.00 and then at $1,207.00. Wyckoff's Market Rating: 3.5

December silver futures prices closed nearer the session low today and hit a five-month low. The silver market bears now have the overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $18.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at $17.00 and then at $17.50. Next support is seen at today’s low of $16.62 and then at $16.50. Wyckoff's Market Rating: 4.0.

December N.Y. copper closed up 120 points at 252.10 cents today. Prices closed near mid-range. Prices Friday hit a 16-month high. The copper bulls have the solid overall near-term technical advantage. Ideas of better demand for copper in the coming months, including from U.S. infrastructure needs under the new Trump administration, have pushed copper prices sharply higher. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 275.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 238.00 cents. First resistance is 260.00 cents and then at 265.00 cents. First support is seen at 250.00 cents and then at today’s low of 247.10 cents. Wyckoff's Market Rating: 8.5.

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