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Gold Sinks to 5.5-Year Low Amid Bearish Outside Markets, More Technical Selling

(Kitco News) - Gold prices are solidly lower and hit a fresh 5.5-year low in early U.S. trading Friday. Gold and silver prices are once again pressured by bearish outside markets on this day-- the U.S. dollar index higher and trading near this week’s seven-month high. Nymex crude oil prices are lower and hovering not far above this week’s three-month low. The very bearish technical postures for gold and silver continue to give the chart-based sellers confidence to continue their downside assaults. February Comex gold was last $14.80 at $1,054.80 an ounce. March Comex silver was last down $0.18 at $13.995 an ounce.

It’s likely that the thin trading conditions on this day after the U.S. Thanksgiving holiday are exacerbating the price moves in gold and silver markets. Some U.S. markets close early and Friday is typically one of the quietest trading days of the year.

In overnight news, China’s stock market was slammed on reports China regulators are investigating domestic brokerages for fraud. The Shanghai stock index saw the biggest downside move in three months, losing over 5% in value on the day Friday. Other Asian stock markets were also lower, following China’s lead. European and U.S. stock markets were not significantly impacted on the China news, however.

In other news, the Euro zone saw more downbeat economic data Friday, when its consumer confidence index was reported at -5.9 in November from -7.5 in October. A reading of -6.0 was expected.

There are no major U.S. economic reports due for release Friday.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated today.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).

Technically, gold bears still have the solid near-term technical advantage and gained still more power today. Prices are in a six-week-old downtrend on the daily bar chart. Bulls’ next upside near-term rice breakout objective is to produce a close above solid technical resistance at this week’s high of $1,080.50. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,050.00. First resistance is seen at $1,062.40 and then at $1,070.00. First support is seen at today’s contract low of $1,053.30 and then at $1,050.00. Wyckoff’s Market Rating: 1.0

Silver bears have the solid near-term technical advantage as prices hit a six-year low earlier this week. Bulls’ next upside price breakout objective is closing December futures prices above solid technical resistance at $14.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.50. First resistance is $14.30 and then at last week’s high of $14.44. Next support is seen at the overnight low of $13.945 and then at Monday’s contract low of $13.89. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff, contributing to Kitco News;
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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