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Gold Lower on More Chart-Based Selling, Higher U.S. Dollar

(Kitco News) - Gold prices ended the U.S. day session lower and hit a two-week low Wednesday. The path of least resistance for prices this week is sideways to lower as the near-term technical postures for both gold and silver markets have become more bearish this week. A higher U.S. dollar index on this day also worked against the precious metals market bulls. December Comex gold was last down $11.80 at $1,115.00 an ounce. December Comex silver was last down $0.078 at $14.49 an ounce.

China’s gold reserves were reported by its government at 54.45 million ounces as of August, which is up 60% from 2009 levels, but not nearly as much as analysts expected. The Chinese government agency overseeing its gold reserves said gold’s price volatility does not make the metal conducive for holding larger stockpiles. This news also did not sit well with the buy-and-hold private gold investors worldwide.

The U.S. ADP national employment report released Wednesday morning came in at up 200,000 in September, which was right in line with market expectations. However, the report was upbeat, which was another negative for gold.

Traders are looking ahead to Friday’s U.S. jobs report for September from the Labor Department. The key non-farm employment figure is expected to be up 200,000 in September, versus a miss to the downside of up 173,000 in the August report.

World stock markets were stable Wednesday. U.S. stock indexes were posting decent gains in afternoon U.S. trading. Today is the last trading day of the month and of the quarter, which makes it an extra important trading day, technically. A monthly (or quarterly) high or low close in a market today would be very significant for chart watchers.

In overnight news, Euro zone consumer inflation in September fell 0.1% from a year ago. An unchanged reading was expected. This report only adds to the deflation fears that are presently gripping the Euro zone, and which could spread to major economies worldwide. The unemployment rate in the Euro zone was reported at 11.0% in August.

The IMF managing director said Wednesday she sees a prolonged period of low raw commodity prices. She also said likely rising U.S. interest rates and a weakening Chinese economy are elements that are undermining investor confidence worldwide.

A report from the World Bank Wednesday said Russia’s economy will contract by 3.8% in 2015 and by another 0.6% in 2016. A deteriorating economy for a nuclear-tipped nation with a KGB-era leader is not a good scenario.

The London P.M. gold fix today was $1,114.00 versus the previous London A.M. fixing of $1,122.50.

Technically, December gold futures prices closed nearer the session low again today and hit a two-week low. Gold bears have the firm overall near-term technical advantage and have gained momentum this week. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,141.50. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the September low of $1,097.70. First resistance is seen at today’s high of $1,127.70 and then at $1,133.40. First support is seen at today’s low of $1,110.80 and then at $1,110.00. Wyckoff’s Market Rating: 2.0

December silver futures prices closed nearer the session low and hit a two-week low today. Silver bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the September high of $15.435 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the August low of $13.95. First resistance is seen at $14.75 and then at $15.00. Next support is seen at today’s low of $14.435 and then at the September low of $14.245. Wyckoff's Market Rating: 2.0.

December N.Y. copper closed up 880 points at 233.85 cents today. Prices closed nearer the session high on heavy short covering after hitting a four-week low Tuesday. Copper bears still have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the September high of 249.30 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the August low of 220.25 cents. First resistance is seen at today’s high of 235.75 cents and then at 238.00 cents. First support is seen at 230.00 cents and then at 227.50 cents. Wyckoff's Market Rating: 2.5.

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

 

 

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