Gold Sharply Lower On Improved Risk Appetite, Bearish Outside Mkts, Technical Selling
Wednesday March 23, 2016 08:30
(Kitco News) - Gold prices are seeing strong selling pressure and hit a three-week low in morning U.S. trading Wednesday, as worldwide investor and trader risk appetite has up-ticked on this day. Also, the key “outside markets” are in a bearish posture for the precious metals today, as the U.S. dollar index is higher and crude oil prices are weaker. April Comex gold was last down $27.20 at $1,221.40 an ounce. May Comex silver was last down $0.515 at $15.37 an ounce.
There has also been some near-term technical damage inflicted in gold Wednesday, as the price uptrend on the daily bar chart has been negated, which has set off some chart-based selling pressure, including sell stop orders being triggered in the gold futures market.
World stock markets stabilized Wednesday, with European stock markets recovering after selling off in the immediate aftermath of the Brussels terror attacks Tuesday. U.S. stock indexes were pointed toward slightly higher openings when the day session begins.
In overnight news, the German government auctioned a 30-year bond Wednesday that fetched a record low average yield of 0.94%. That’s an indication of the keener risk aversion that European investors are exhibiting at present. German government debt is considered to be the safest asset among most European bond investors.
The U.S. dollar index trading higher Wednesday as the greenback bulls are having a good week, after prices hit a multi-month low last week. Meantime, Nymex crude oil futures prices are weaker in pre-U.S. trading, but still trading above the key $40.00-a-barrel level. There are early technical signals that crude oil prices have at least put in a near-term bottom, if not a major market low.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential sales, and the weekly DOE liquid energy stocks report.
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Wyckoff’s Daily Risk Rating: 3.0 (Trader and investor market risk aversion is not significantly 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, April gold futures bulls still have the overall near-term technical advantage, but have faded recently amid choppy trading that has negated a price uptrend 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 $1,260.90. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,200.00. First resistance is seen at $1,226.00 and then at $1,230.00. First support is seen at $1,210.00 and then at $1,200.00. Wyckoff’s Market Rating: 6.5
May silver bulls and bears are back on a level overall near-term technical playing field amid choppy trading. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at last week’s high of $16.17 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is at the overnight high of $15.935 and then at this week’s high of $16.04. Next support is seen at the overnight low of $15.275 and then at $15.165. Wyckoff's Market Rating: 5.0.