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Gold, silver getting hammered this week; bulls need to step up

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(Kitco News) - Gold and silver prices are again solidly lower in midday U.S. trading Tuesday. Follow-through selling is featured after strong losses posted Monday. The bulls are fading fast and need to step up and show fresh power very soon to avoid serious near-term technical damage being inflicted and to revive their price uptrends on the daily bar charts. December gold was last down $21.90 at $1,784.40 and December Comex silver was last down $0.902 at $23.395 an ounce.

Working against the precious metals market bulls early this week are a generally strong U.S. dollar index, recently wilting crude oil prices and rising U.S. Treasury bond yields—all amid no major geopolitical flare-ups that might support the safe-haven metals.

Global stock markets were mostly down in overnight trading. The U.S. stock indexes are lower at midday. The S$P 500 and Nasdaq stock indexes Monday hit new record highs and then backed off to close lower, nearer their daily lows and scored bearish “key reversals” down on the daily bar charts. Follow-through selling pressure and lower closes on Tuesday would better confirm the bearish key reversals, which are one technical clue that market tops are in place for those indexes. If the U.S. stock indexes start to erode, such would likely be bullish for the safe-haven gold and silver markets.

Rising Covid-19 cases in Europe and Asia have dented risk sentiment in those regions recently. Austria is on lockdown at present and German officials are warning the public the same could soon be the case for Germany. There was some upbeat economic data coming out of the Euro zone today as the flash composite purchasing managers index (PMI) rose to 55.8 in November from 54.2 in October.

There are growing ideas the U.S. Federal Reserve will raise interest rates sooner than many had reckoned just a few weeks ago. During his speech on Monday, after being renominated for Fed chair by President Biden, Powell said the Fed will focus on fighting inflation. Many market watchers believed the Fed and Powell got behind the curve on the inflation front, and now may need to play catch-up--possibly after some prodding of Powell by Biden. U.S. Treasury yields have spiked up this week, due in part to Powell’s renomination and his and Biden’s statements on inflation. The 10-year U.S. Treasury note yield is presently fetching 1.653%. The yield on the two-year U.S. T-Note rose to the highest since March of 2020, at 0.638%.  

Traders are also watching trading in the Turkish currency, the lira, which has dropped to a record low versus the U.S. dollar this week. Turkey recently lowered its main interest rate despite rising inflation concerns. The strong U.S. dollar is hurting many secondary currencies. A currency market “contagion” would also be bullish for the gold and silver markets.

It may be a quieter rest of the trading week in the U.S. as the Thanksgiving holiday is on Thursday, with an abbreviated trading session Friday being historically one of the lowest-volume days of the year.

The key outside markets today see the U.S. dollar index weaker and hitting a 15-month high overnight. Nymex crude oil prices are higher and trading around $78.25 a barrel. Oil prices hit a six-week low Monday as the U.S. will tap its strategic oil reserves in order to lower the price of gasoline. The Biden administration made the announcement Tuesday morning.

Live 24 hours gold chart [Kitco Inc.]

Technically, December gold futures prices hit a three-week low today. Bulls still have the slight overall near-term technical advantage but have faded badly this week. A seven-week-old uptrend on the daily bar chart is now in serious jeopardy. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $1,850.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,758.50. First resistance is seen at $1,800.00 and then at today’s high of $1,812.50. First support is seen at today’s low of $1,781.70 and then at $1,775.00. Wyckoff's Market Rating: 5.5.

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bears have gained the overall near-term technical advantage. A seven-week-old uptrend on the daily bar chart has quickly stalled out. Silver bulls' next upside price objective is closing prices above solid technical resistance at the November high of $25.49 an ounce. The next downside price objective for the bears is closing prices below solid support at the November low of $23.045. First resistance is seen at $24.00 and then at today’s high of $24.34. Next support is seen at today’s low of $23.28 and then at $23.045. Wyckoff's Market Rating: 4.0.

December N.Y. copper closed up 300 points at 442.60 cents today. Prices closed nearer the session high today. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 460.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the November low of 419.15 cents. First resistance is seen at today’s high of 445.20 cents and then at last week’s high of 448.90 cents. First support is seen at this week’s low of 435.20 cents and then at 430.00 cents. Wyckoff's Market Rating: 5.0.
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