(Kitco News) - Gold prices are solidly lower in midday U.S. trading Wednesday, on follow-through selling pressure from Tuesday’s huge losses. Silver prices have stabilized after Tuesday’s mammoth losses but the silver bulls are not out of the woods yet, either. Improved risk appetite in the general marketplace this week is bearish for the safe-haven metals. December gold was last down $56.00 at $4,052.00. December silver prices were up $0.191 at $47.88.
Last week, I told you in my weekly Front Burner report that from a time perspective, I believed the major bull runs in gold and silver were in the eighth or ninth inning. This week, I’ll change that to the ninth inning with two outs.
Here’s what I also said last week: “Probably the most important factor that I think will determine where gold and silver prices are headed: Silver above $50.00. Reason: Price history over the past 50 years shows that when silver prices reach $50, or get close to it, which has occurred three times now, the first two times saw silver trade above $50 for only a short period of time. Two weeks from now, if silver prices are above $50 an ounce, then the marketplace can start to believe both gold and silver are entering new, longer-term price ranges that will continue well above what price history of the past 50 years has shown. And if silver drops back below $50 in the next couple weeks, history will again repeat itself--and that would suggest gold and silver are due for extended downside price corrections and even bear markets farther down the road, to continue the historical cycle of boom and bust seen in all raw commodity markets.”
Right now, it appears silver prices are going to have a difficult trek to get back above that key $50.00 level. I think daily trading action the rest of this week will be extra important for both gold and silver prices’ trajectories in the coming weeks/months.
The key outside market today see the U.S. dollar index firmer. Crude oil prices are higher and trading around $58.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 3.9%.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
Technically, December gold futures bulls are fading fast. Bulls’ next upside price objective is to produce a close above solid resistance at $4,200.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,900.00. First resistance is seen at $4,100.00 and then at the overnight high of $4,175.00. First support is seen at the overnight low of $4,021.20 and then at $4,000.00. Wyckoff's Market Rating: 6.0.
The silver market bulls are also fading fast. A bearish “key reversal” down occurred last Friday, which is one chart clue that a market top is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $50.00. The next downside price objective for the bears is closing prices below solid support at $45.00. First resistance is seen at the overnight high of $48.65 and then at $49.00. Next support is seen at the overnight low of $46.82 and then at $46.00. Wyckoff's Market Rating: 6.0.
(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, Gold prices are sharply up in early U.S. trading Monday and hit another record high. Silver prices are also up and notched another 14-year high. The powerful but mature bull market runs in gold and silver are accelerating. That’s one early clue that from a time perspective, major market tops could come sooner rather than later. However, from a price perspective, there still could be much more room on the upside for gold and silver prices during this acceleration phase of the mature bull markets, before they peter out for a while. December gold was last up $40.80 at $3,815.90. December silver prices were up $0.361 at $44.575.
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