Gold Continues Backslide Amid Rallying Stock Markets, Bearish Charts

(Kitco News) - Gold prices were moderately lower in early-afternoon U.S. trading Tuesday. Follow-through selling pressure was seen after prices notched a 10-month low Monday. With the U.S. Dow Jones Industrial Average at a record high this week and other world stock markets being pulled along for the ride, traders and investors remain in upbeat moods heading into the holidays. That’s a big, bearish element for the safe-haven gold market. The daily price charts for gold and silver are also in firmly in bearish territory. February Comex gold was last down $6.10 an ounce at $1,170.40. March Comex silver was last down $0.074 at $16.825 an ounce.

The key "outside markets" on Tuesday saw the crude oil market solidly lower on a corrective pullback from recent strong gains that took prices to a six-week high on Monday. Also, there is a bit of doubt surfacing on OPEC actually cutting its collective production, following recent reports the cartel continues to pump oil nearly flat-out.
The U.S. dollar index was higher today on a rebound from solid losses posted Monday, which do begin to suggest the index has put in a near-term top. These two markets were in a bearish daily posture for the precious metals markets Tuesday.

Focus is now shifting to Thursday’s monetary policy meeting of the European Central Bank and next week’s FOMC meeting of the Federal Reserve. Both meetings are arguably the most important markets events of this month.

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Technically, February gold futures bears have the solid overall near-term technical advantage. Prices have been trending lower for over five months. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,200.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,150.00. First resistance is seen at $1,180.00 and then at Monday’s high of $1,190.20. First support is seen at last week’s low of 1,162.20 and then at Monday’s low of $1,158.60. Wyckoff’s Market Rating: 2.0

March silver bears have the firm near-term technical advantage. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $17.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is at Monday’s high of $17.05 and then at $17.25. Next support is seen at Monday’s low of $16.545 and then at last week’s low of $16.245. Wyckoff's Market Rating: 2.5.

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