(Kitco News) - Gold and silver prices are strongly lower and are at three-week lows in midday U.S. trading Wednesday. A surprisingly decisive win by Republican U.S. presidential candidate Donald Trump has produced several bearish elements that are impacting the precious metals markets today. December gold was last down $65.20 at $2,685.00 and December silver was down $1.32 at $31.43.
The U.S. presidential race was not as close as expected and the process was not disputed. No civil unrest has occurred because of the election results. This prompted the unwinding of safe-haven, long-gold trades. A stronger U.S. dollar index and higher U.S. Treasury yields today are also bearish for gold.
The U.S. dollar index soared to its highest level since July, while U.S. Treasury yields surged. The benchmark 10-year U.S. Treasury note yield is presently fetching around 4.4%. Reads a Barron’s headline today: “Trump’s win could stoke inflation, turning the Fed more hawkish.” The story said Trump’s promised trade tariffs “may lift inflation and create potential supply or demand shocks.”
U.S. stock indexes are sharply higher today, which is also bearish for the precious metals, from a competing asset class perspective. The S&P 500 hit a record high today.
Bitcoin prices soared by over $5,000 to a record high today on the Trump victory. Trump said during the campaign that he is an advocate of Bitcoin. This is also a bearish scenario for gold, from a competing asset class perspective.
Overshadowed but also on tap this week is the FOMC meeting of the Federal Reserve. The meeting started Wednesday morning and ends Thursday afternoon with the FOMC statement and press conference from Fed Chair Powell. Most believe the Fed will cut its main interest rate by 0.25%.
The other key outside market today sees Nymex crude oil futures prices firmer and trading around $72.50 a barrel.
Technically, December gold bulls still have the overall near-term technical advantage but faded badly today. They need to stop the bleeding fast to avoid serious near-term technical damage. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,801.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the October low of $2,618.80. First resistance is seen at $2,700.00 and then at $2,708.70. First support is seen at today’s low of $2,660.70 and then at $2,650.00. Wyckoff's Market Rating: 6.5.
December silver futures bulls still have the overall near-term technical advantage but have faded badly. A three-month-old uptrend on the daily bar chart is in serious jeopardy. Silver bulls' next upside price objective is closing prices above solid technical resistance at $33.50. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at $32.00 and then at $32.50. Next support is seen at today’s low of $3.94 and then at the October low of $30.345. Wyckoff's Market Rating: 6.0.
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