Gold Weakens As U.S. Dollar Rebounds

(Kitco News) - Gold prices were ending the U.S. day session moderately lower and near the daily low Wednesday. Some more profit-taking pressure from recent gains was featured. Also, a solid bounce in the U.S. dollar index today pressured the precious metals markets. December Comex gold was last down $7.10 an ounce at $1,325.60. December Comex silver prices were last down $0.125 at $17.765 an ounce.

The key U.S. report of the day was the producer price index for August, which came in at up just 0.2%. That was slightly below market expectations of up 0.3%. The report fell into the camp of the U.S. monetary policy doves, who believe the Fed should not raise interest rates any time soon. 

The other key U.S. economic data point of the week is Thursday’s consumer price index report for August. That report is expected to show a rise of 0.4%. Notions are growing that low inflation in the U.S. and the Euro zone will keep the Federal Reserve and European Central Bank from tightening their monetary policies as soon as they would like. That’s an underlying bullish element for the precious metals markets.

The key outside markets on Wednesday morning saw the U.S. dollar index trade solidly higher, on a short-covering bounce after prices hit a 2.5-year low last week. The dollar index is still in a price downtrend and the bears still have the firm overall near-term technical advantage.

Meantime, Nymex crude oil futures were higher. Trading in crude has been choppy and sideways in a range, and will likely continue to be so.

Technically, December gold futures prices closed nearer the session low and scored a bearish “outside day” down on the daily bar chart today. The gold bulls still have the firm overall near-term technical advantage, but need to show some fresh power soon to avoid near-term technical damage. Prices are still in a nine-week-old uptrend on the daily bar chart, but now just barely. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the September high of $1,362.40. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at today’s high of $1,340.50 and then at this week’s high of $1,344.60. First support is seen at today’s low of $1,324.50 and then at $1,320.00. Wyckoff's Market Rating: 7.0

December silver futures prices closed nearer the session low and scored a bearish “outside day” down on the daily bar chart. More profit taking was featured. The silver bulls still have the overall near-term technical advantage. Prices are in a nine-week-old uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $19.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $18.00 and then at today’s high of $18.125. Next support is seen at today’s low of $17.725 and then at $17.50. Wyckoff's Market Rating: 6.5.

December N.Y. copper closed down 535 points at 298.25 cents today. Prices closed nearer the session low and hit another three-week low today. The copper bulls still have the overall near-term technical advantage, but are fading fast. More selling pressure this week would suggest a near-term market top is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 317.85 cents. The next downside price objective for the bears is closing prices below solid technical support at 290.00 cents. First resistance is seen at 300.00 cents and then at today’s high of 304.50 cents. First support is seen at today’s low of 297.10 cents and then at 295.00 cents. Wyckoff's Market Rating: 6.5.