Gold Careens To 10-Mo. Low On U.S. Dollar Strength

(Kitco News) - Gold prices were ending the U.S. day session sharply lower and fell to another 10-month low Thursday. Silver prices also got hit very hard to the downside and hit an eight-month low. A powerful rally in the U.S. dollar index and a more hawkish Federal Reserve worked to pummel both metals. February Comex gold was last down $32.90 an ounce at $1,130.50. March Comex silver was last down $1.191 at $16.03 an ounce.

The feature in the world marketplace Thursday was a surging U.S. dollar index that soared to a 13-year high. The greenback is the beneficiary of a U.S. interest rate hike on Wednesday that was accompanied by a surprisingly hawkish tone on monetary policy from the Federal Reserve. There is now talk the Fed could raise interest rates up to three times in 2017.

Victims of the sharp appreciation of the U.S. dollar are raw commodity markets that are priced in U.S. dollars on the world markets, including gold and silver. The rising value of the dollar against the other world currencies makes those commodities priced in dollars more expensive to purchase in non-U.S. currency.

The other key outside market on Thursday saw crude oil prices trading near steady in afternoon dealings. The oil bulls appear to be tired after spiking prices to a 16-month high earlier this week. In fact, Monday’s spike high and then prices backing way off are technical clues the crude oil market has put in a near-term top.

U.S. economic data released Thursday was a mixed bag and had little impact on the marketplace, as attention was still on Wednesday’s rate hike and the implications of rising interest rates in 2017.

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Technically, February gold futures prices closed nearer the session low today. The gold bears have the solid overall near-term technical advantage and gained more power today. There are still no early clues of a market bottom. Prices are in a six-month-old downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,168.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,100.00. First resistance is seen at today’s high of $1,146.00 and then at $1,150.00. First support is seen at today’s low of $1,124.30 and then at $1,115.00. Wyckoff's Market Rating: 1.5

March silver futures prices closed near the session low and hit an eight-month low today. The silver market bears have the solid overall near-term technical advantage and gained fresh power today, to suggest still more downside pressure is coming in the near term. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.30 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.50. First resistance is seen at $16.25 and then at $16.50. Next support is seen at today’s low of $15.925 and then at $15.75. Wyckoff's Market Rating: 2.0.

March N.Y. copper closed down 30 points at 260.15 cents today. Prices closed near mid-range again today. More mild profit taking was featured. The copper bulls still have the firm overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 275.30 cents. The next downside price objective for the bears is closing prices below solid technical support at 250.00 cents. First resistance is seen at 264.50 cents and then at this week’s high of 268.50 cents. First support is seen at this week’s low of 256.65 cents and then at 255.00 cents. Wyckoff's Market Rating: 6.5.

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