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Gold Weaker, Hits 4-Week Low, as Bears Back in Near-Term Technical Control

(Kitco News) - Gold futures prices ended the U.S. day session moderately lower and scored a four-week low Monday. Perceived higher odds of a U.S. Federal Reserve interest rate hike in December are bearish for the precious metals. The gold and silver markets have been reeling since last week’s hawkish FOMC statement. Technical selling pressure has also increased the past few sessions as the near-term chart postures for both gold and silver are again favoring the bears. December Comex gold was last down $5.50 at $1,135.90 an ounce. December Comex silver was last down $0.127 at $15.44 an ounce.

More downside economic data coming out of China Monday also worked in favor of the precious metals and raw commodity market bears. The Caixin China manufacturing purchasing managers’ index (PMI) rose to 48.3 in October from 47.2 in September. A reading below 50.0 suggests contraction in the sector. China’s other PMI report from the government came in at 49.8 in October, which was unchanged from the September figure. China is the world’s largest raw commodity importer and its weakening economy likely means less raw commodity imports.

Meantime, the Euro zone PMI was a bit upbeat and came in at 52.3 in October versus 52.0 in September. A number of 52.0 was the consensus forecast.

The U.S. manufacturing PMI for October came in at 50.1 versus 50.2 in September. That number was the lowest in over two years. The major economies’ PMI reports today also suggest there are still valid concerns about worldwide price deflation. That’s also a negative for the precious metals markets.

Technically, December gold futures prices closed near mid-range and hit a four-week low today. The gold bears have the overall near-term technical advantage and still have momentum on their side. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the September high of $1,156.40. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,100.00. First resistance is seen at today’s high of $1,142.70 and then at $1,150.00. First support is seen at today’s low of $1,132.50 and then at $1,125.00. Wyckoff’s Market Rating: 4.0

December silver futures prices closed near mid-range and hit a four-week low today. This market has made a dramatic reversal the past few sessions. The silver market bears now have the firm near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $16.37 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at today’s high of $15.55 and then at $15.75. Next support is seen at today’s low of $15.25 and then at $15.00. Wyckoff's Market Rating: 3.0.

December N.Y. copper closed steady at 231.75 cents today. Prices closed nearer the session high and hit a four-week low today. Copper bears have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 243.75 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 235.00 cents and then at last week’s high of 238.10 cents. First support is seen at 230.00 cents and then at today’s low of 228.85 cents. Wyckoff's Market Rating: 2.0.

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

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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