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Gold, silver see follow-through price pressure; uptrends in jeopardy

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(Kitco News) - Gold and silver prices are solidly lower in early U.S. trading Tuesday, on follow-through selling pressure from 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 keep their price uptrends on the daily bar charts alive. December gold was last down $16.70 at $1,789.30 and December Comex silver was last down $0.79 at $23.51 an ounce.

Working against the precious metals market bulls this week are a strong U.S. dollar index, 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 pointed to slightly lower openings when the New York day session begins. 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.

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 1.643%. 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.

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 slightly higher and hitting a 15-month high overnight. Nymex crude oil prices are lower and trading around $76.30 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.

U.S. economic data due for release Tuesday includes the Johnson Redbook and weekly chain store sales indexes, the U.S. flash manufacturing PMI, the flash services PMI, and the Richmond Fed business survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, December gold futures bulls have the overall near-term technical advantage. However, a seven-week-old uptrend on the daily bar chart is now in some 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 the overnight high of $1,812.50. First support is seen at the overnight low of $1,789.10 and then at $1.775.00. Wyckoff's Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the slight overall near-term technical advantage but need to show fresh power soon to keep it. A seven-week-old uptrend on the daily bar chart is now in serious jeopardy. Silver bulls' next upside price objective is closing December futures 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 $22.50. First resistance is seen at $24.00 and then at today's high of $24.34. Next support is seen at $23.50 and then at $23.25. Wyckoff's Market Rating: 5.5.

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 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.