Gold Sees Modest Gains On Short Covering, Bargain Hunting

(Kitco News) - Gold prices ended the U.S. day session modestly higher on mild short covering in the futures market and some bargain hunting in the cash market, after prices fell to a 5.5-month low Monday. December Comex gold was last up $2.20 an ounce at $1,224.00. December Comex silver was last up $0.142 at $17.035 an ounce.

The outside markets on Tuesday saw the U.S. dollar index trade near steady on some profit taking after hitting a 10-month high Monday. The Bank of International Settlements warned Tuesday that the stronger greenback is not good for the global economy, as the smaller currencies of the world see their values depreciate significantly. Meantime, Nymex crude oil prices were sharply higher on a corrective bounce after hitting a 3.5-month low Monday. There are now reports OPEC is working hard to get an oil-production-cut agreement put in place, despite growing doubts about the cartel’s ability to do so. The rally in oil today also helped out the precious metals bulls.

U.S. retail sales in October rose by 0.8% from a month earlier, it was reported today. September retail sales were also revised higher. The upbeat data beat market expectations and falls into the camp of the U.S. monetary policy hawks, who want to see interest rates rise sooner rather than later.

The U.S. Treasury bond and note markets stabilized Tuesday on some short covering after their yields hit 10-month highs Monday. The Trump U.S. presidential win has raised concerns about rising inflationary price pressures. World government bond yields have also been on the rise.

This week there are 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. The Boston Fed president said this morning that it’s “plausible” the Fed will raise interest rates at its December FOMC meeting. A Wall Street Journal survey released Monday showed most economists expect the Fed to raise rates at its December meeting.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Technically, December gold futures prices closed near mid-range today and saw short covering. 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 $1,231.40 and then at $1,243.20. First support is seen at today’s low of $1,218.60 and then at this week’s low of $1,211.00. Wyckoff's Market Rating: 3.5

December silver futures prices closed nearer the session high today on short covering as prices hit a five-month low Monday. The silver market bears 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 $17.25 and then at this week’s high of $17.49. Next support is seen at today’s low of $16.82 and then at this week’s low of $16.62. Wyckoff's Market Rating: 4.0.

December N.Y. copper closed down 140 points at 250.60 cents today. Prices closed near mid-range. The copper bulls still have the solid overall near-term technical advantage. 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 today’s high of 257.00 cents and then at this week’s high of 259.90 cents. First support is seen at today’s low of 242.60 cents and then at 240.00 cents. Wyckoff's Market Rating: 8.0.

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