Gold, silver down as USDX rebounds, U.S. GDP upbeat

(Kitco News) -The near-term fates of the gold and silver markets continue to lie with the daily price action in the U.S. dollar index. Today, the USDX was solidly up, and in turn gold and silver prices were down. Some added price pressure came from a better-than-expected U.S. GDP report. December gold was last down $4.90 at $1,664.30 and December silver was down $0.041 at $19.445.

The U.S. data point of the day saw the first estimate for third-quarter gross domestic product come in at up 2.6%, year-on-year. GDP was forecast to come in up 2.3%, year-on-year. The personal consumption expenditures (PCE) price index came in at up 4.2% and was lower than expected. The PCE index is said to be closely watched by the Federal Reserve as a gauge of inflation. The U.S. dollar index was further boosted on the GDP data, after posting overnight gains.

The latest monetary policy meeting of the European Central Bank Thursday saw the ECB raise its main interest rate by another 0.75%--the same as at the last meeting. The rate now stands at 1.50%. The Euro currency sold off on the news. U.S. interest rates are still well above those of the Euro zone.

Global stock markets were mixed overnight. U.S. stock indexes are mixed at midday. The U.S. indexes have seen solid rebounds from their October lows. Stock traders are closely watching corporate earnings reports. The technology sector results have been generally disappointing. Meta was also big miss today, which sent that stock tumbling.

In other news, the troubled Credit Suisse bank announced a major overhaul that includes cost reductions and raising cash from outside investors.

The key outside markets today see the U.S. dollar index higher. However, there are still early technical clues that begin to suggest the USDX has put in a major top. Nymex crude oil prices are up and trading around $89.50 a barrel. The 10-year U.S. Treasury note is yielding around 3.943%.

Technically, the gold futures bears have the firm overall near-term technical advantage. However, more price gains in the near term would form a bullish double-bottom reversal pattern on the daily bar chart, to suggest a market bottom is in place. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at this week’s high of $1,679.40 and then at $1,690.00. First support is seen at Wednesday’s low of $1,653.80 and then at this week’s low of $1,641.20. Wyckoff's Market Rating: 2.5.

The silver bears have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at the October high of $21.31. The next downside price objective for the bears is closing prices below solid support at $17.40. First resistance is seen at this week’s high of $19.765 and then at $20.00. Next support is seen at Wednesday’s low of $19.18 and then at $19.00. Wyckoff's Market Rating: 3.0.

December N.Y. copper closed down 305 points at 351.45 cents today. Prices closed nearer the session low today and hit a three-week high early on. The copper bears have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 369.25 cents. The next downside price objective for the bears is closing prices below solid technical support at the September low of 324.30 cents. First resistance is seen at the October high of 359.30 cents and then at 369.25 cents. First support is seen at this week’s low of 336.25 cents and then at the October low of 330.30 cents. Wyckoff's Market Rating: 3.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com