Gold price sharply down on bearish outside market forces

(Kitco News) Gold and silver prices are solidly lower in early U.S. trading Monday, pressured by a higher U.S. dollar index, rising U.S. Treasury yields and weaker crude oil prices. The specter of an aggressively tight monetary policy from the U.S. Federal Reserve continues to hang over the precious metals markets. December gold was last down $25.20 at $1,684.10 and December silver was down $0.40 at $19.86.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed to slightly lower openings when the New York day session begins. U.S. government offices and many banks are closed Monday for the Columbus Day national holiday. Stock market traders will focus on a barrage of corporate earnings reports out this week.

Risk aversion is still elevated to start the trading week. The Russia-Ukraine war has escalated as Russia launched missiles into several Ukrainian cities after a strategic bridge for Russia in the Crimea region suffered major damage from explosions, with Ukraine’s military likely the culprit. Meantime, North Korea has test-fired ballistic missiles to provoke the West in an already-tense global geopolitical environment.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are higher and trading around $92.00 a barrel. The U.S. Treasury cash market is closed Monday for the holiday.

U.S. economic data due for release Monday is light and includes the employment trends index. Traders are looking ahead to a key U.S. inflation report on Thursday morning, the consumer price index report for September, which is expected to come in at up 8.1%, year-on-year, following a rise of 8.3% in August.

Technically, the December gold futures bears have the firm overall near-term technical advantage and have regained power. Bulls’ next upside price objective is to produce a close above solid resistance at the October high of $1,738.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,622.20. First resistance is seen at $1,700.00 and then at the overnight high of $1,707.40. First support is seen at $1,675.00 and then at the October low of $1,666.50. Wyckoff's Market Rating: 2.5

September silver futures bulls have lost their slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the October high of $21.31. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at $20.00 and then at today’s high of $20.21. Next support is seen at today’s low of $19.62 and then at $19.25. Wyckoff's Market Rating: 4.5.