Gold Solidly Up, But Down From Overnight High, On Trump Win

(Kitco News) - Gold prices are solidly higher and have hit a six-week high in early U.S. trading Wednesday, in the wake of a stunning U.S. presidency win by Donald Trump. His unexpected victory has roiled the world marketplace and that’s bullish for safe-haven gold. December Comex gold was last up $25.70 an ounce at $1,300.00. December Comex silver was last up $0.379 at $18.735 an ounce.

The polls were wrong and the world marketplace was “wrong-footed” as  Trump won the U.S. presidential election over Hillary Clinton. Global financial markets and gold started sensing trouble with their previous thinking when early election results starting rolling in Tuesday evening. It’s not often that the general sense of the marketplace is wrong, but it happened overnight. And those who were wondering about a repeat of the U.K. Brexit vote in June were spot on. The U.K. voted to exit the European Union despite polls showing otherwise.

Gold prices pushed above $1,300.00 an ounce and hit a high of $1,338.30 in December futures overnight, but have backed well down from that level. World stock markets sold off sharply and U.S. stock indexes are pointing toward solidly lower openings when the New York day session begins. U.S. stock indexes are trading well off their lows seen overnight, however.

The U.S. Treasury bond and note markets are trading with steep losses in prices and have hit multi-month lows, after trading sharply higher late Tuesday evening. The key “outside markets” find the U.S. dollar index now trading slightly higher and Nymex crude oil futures prices trading near steady.

The Mexican peso hit a record low against the U.S. dollar Wednesday.

Asian market participants and big businesses in Asia were spooked by the Trump victory, as the president-elect has said U.S. trade deals with Asian countries are not good for the U.S. Asian stock markets were lower Wednesday, with Japan’s Nikkei stock index sharply lower.

How long will the increased markets volatility last? Likely not long. Markets are quick to factor in unexpected events and it won’t be long until they return to more normal price action, including the precious metals.

Many are now speculating the Federal Reserve now will not raise interest rates in December, due to wanting to wait to see what Trump and the Republican-controlled Congress do regarding their new policies.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, monthly wholesale trade and the weekly DOE liquid energy stocks report.

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Technically, December gold futures bulls have the overall near-term technical advantage and have gained momentum at mid-week. Prices are in a four-week-old uptrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the overnight high of $1,338.30. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the overnight low of $1,268.10. First resistance is seen at $1,309.30 and then at $1,320.00. First support is seen at $1,290.00 and then at 1,280.00. Wyckoff’s Market Rating: 6.0

December silver bulls have the near-term technical advantage as prices hit a five-week high overnight. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $19.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.50. First resistance is at the overnight high of $19.005 and then at $19.25. Next support is seen at $18.50 and then at the overnight low of $18.275. Wyckoff's Market Rating: 6.0.

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