Gold Rebounds From Friday's Swift Downdraft
(Kitco News) - Gold prices are modestly higher in early U.S. trading Monday, on a rebound after a rapid decline in late-morning action Friday that seemingly had no fundamental reason behind it. December Comex goldwas last up $3.80 an ounce at $1,278.00. December Comex silver was up $0.004 at $16.875 an ounce.
Friday’s quick drop in gold prices began in the futures market, when a likely very large sell order blindsided what was a lackadaisical trading affair up to that point, ahead of the weekend. Some blamed a quick move higher in the U.S. dollar index Friday morning as the culprit for the selling pressure in gold. Such inexplicable, rapid price moves are not common in the markets, but they seem to occur more often in gold than in most other markets, and are usually touched off by big moves in the futures markets.
World stock markets were mostly weaker overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Stock market traders are worried about progress bogging down on the U.S. tax-reform legislation working its way through Congress. Lower closes in the U.S. stock indexes last Friday produced some technical damage, to begin to suggest near-term market tops are in place. Bearish key reversals down on the daily bar charts were confirmed in the S&P and Nasdaq stock index futures. If the stock indexes have indeed put in near-term tops, such would be a bullish development for the precious metals markets.
In overnight news, the British pound is under selling pressure against world currencies as U.K. Prime Minister Theresa May is losing support among members of Parliament.
Reports said the value of the cryptocurrency bitcoin has plunged by around 25% in just a few days’ time. This development is likely lending some support to the safe-haven gold market.
The key outside markets on Monday find U.S. dollar index higher in early U.S. trading. The greenback bulls have the slight overall near-term technical advantage.
Meantime, Nymex crude oil futures prices are near steady and are trading just below $57.00 a barrel. It is still my bias that Nymex crude won’t be able to sustain prices at or above $60.00 a barrel.
There is no major U.S. economic data due for release Monday.
Technically, December gold futures bulls and bears are back on a level overall near-term technical playing field. Bulls’ next upside technical objective is pushing and closing prices above chart resistance at $1,300.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the October low of $1,262.80. First support is seen at Friday’s low of 1,273.60 and then at $1,265.90. First resistance is seen at 1,280.00 and then at $1,285.00. Wyckoff’s Market Rating: 5.0
December silver bulls and bears are on a level overall near-term technical playing field. The 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 the October low of $16.345. First resistance is seen at $17.00 and then at Friday’s high of $17.095. Next support is seen at last week’s low of $16.785 and then at $16.60. Wyckoff's Market Rating: 5.0.