Gold Down, Closing In On Key Support at Monday’s 5-Year Low

(Kitco News) - Gold prices ended the U.S. day session lower Wednesday, as the sellers are very confident due to the serious chart damage inflicted just recently, and by the lack of bullish fundamental news to support the safe-haven metal. Prices are nearing Monday’s five-year low of $1,080.00 in August gold futures, which if breached would set off heavy sell stop orders to drive prices even lower. August Comex gold was last down $11.40 at $1,092.00 an ounce. September Comex silver was last down $0.05 at $14.735 an ounce.

The two key “outside markets” on Wednesday were also bearish for the precious metals. The U.S. dollar index was firmer. The USDX hit a three-month high on Monday. Worries about rising U.S. interest rates have supported the greenback recently, following generally hawkish remarks from Federal Reserve officials the past few weeks. Meantime, Nymex crude oil futures prices were lower and hit a four-month low below $50.00 a barrel. A feature in the market place this week has been a further deterioration in many raw commodity market prices, led by gold.

Reports are saying retail demand for gold jewelry in China and India—the two largest gold importers in the world—has jumped significantly this week as gold prices have dropped to a five-year low.

The London P.M. gold fix is $1,088.60 versus the previous A.M. fix of $1,096.80.

Technically, August gold futures prices closed near mid-range and closed at a fresh contract and five-year low close today. Serious near-term and longer-term technical damage has been inflicted in gold recently, to suggest still more downside price pressure to come. However, an upside near-term corrective technical bounce this week would not be surprising. Gold bears have the solid overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,132.50. Bears' next near-term downside price breakout objective is closing prices below solid technical support at this week’s low of $1,080.00. First resistance is seen at $1,100.00 and then at $1,108.80. First support is seen at today’s low of $1,085.60 and then at $1,080.00. Wyckoff’s Market Rating: 1.0

September silver futures prices closed nearer the session high. Silver bears have the solid overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.00. First resistance is seen at today’s high of $14.865 and then at $15.00. Next support is seen at today’s low of $14.585 and then at this week’s low of $14.49. Wyckoff's Market Rating: 1.0.

September N.Y. copper closed down 465 points at 242.80 cents today. Prices closed near the session low and closed at a fresh contract low close today. Copper bears have the solid near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 257.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 238.10 cents. First resistance is seen at 245.00 cents and then at today’s high of 248.15 cents. First support is seen at today’s low of 242.25 cents and then at 240.00 cents. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff