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Strong Sell-Off in Gold, Silver, As U.S. Dollar Index Surges

(Kitco News) - Gold and silver prices ended the U.S. day session sharply lower Thursday. A very strong rally in the U.S. dollar index on this day put sharp downside price pressure on the precious metals markets. The other key “outside market” was also in a bearish posture for the metals today, as crude oil prices were lower and are back down near their recent contract and multi-year lows. February Comex gold was last down $27.20 at $1,049.50 an ounce. March Comex silver was last down $0.548 at $13.70 an ounce.

The marketplace on Thursday was still digesting the U.S. Federal Reserve’s first interest rate hike in nine years. The Fed on Wednesday raised its funds rate by 0.25%, which was fully expected. However, most market watchers deemed the FOMC statement and Fed Chair Yellen’s press conference as favoring the dovish monetary policy camp.

U.S. and world stock markets initially rallied in the wake of the Fed rate hike, on notions the U.S. economy can lead the other major world economies out of their malaise. That was also bearish for safe-haven gold. However, the U.S. stock market did see a corrective pullback today, following solid gains posted this week.

With the uncertainty of the Federal Reserve’s interest rate increase out of the way, the marketplace will now seek out a fresh source of concern. Such could well be the present strains in the high-yield bond market, also called junk bonds. Or, it could be China’s slowing economic growth. Or it may be Russia’s geopolitical and economic matters.

Technically, February gold futures prices closed near the session low and are right back down near the contract and multi-year low. Gold bears have the solid overall near-term technical advantage. There are no early clues of a market bottom being close at hand. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,077.90. Bears' next near-term downside price breakout objective is pushing prices below solid longer-term technical support at the contract low of 1,045.40. First resistance is seen at $1,060.00 and then at today’s high of $1,072.70. First support is seen at the contract low of $1,045.40 and then at $1,040.00. Wyckoff’s Market Rating: 1.0

March silver futures prices closed nearer the session low and are back near the recent contract and multi-year low. The silver market bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $14.31 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.00. First resistance is seen at $13.80 and then at $14.00. Next support is seen at the contract low of $13.62 and then at $13.50. Wyckoff's Market Rating: 1.0.

March N.Y. copper closed down 275 points at 204.40 cents today. Prices closed nearer the session low today. Copper bears have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 220.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 200.00 cents. First resistance is seen at today’s high of 207.85 cents and then at 210.00 cents. First support is seen at today’s low of 203.40 cents and then at the December low of 202.55 cents. Wyckoff's Market Rating: 1.5.

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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