(Kitco News) - Gold and silver markets are strongly lower near midday Monday and are suffering one of their largest-ever daily price losses. Heavy profit-taking and weak long liquidation from the shorter-term futures traders are featured today. Silver hit a record high of $82.67 overnight, basis March Comex futures. February gold futures on Friday hit an all-time high of $4,584.00. February gold was last down $70.40 at $4,482.60. March silver prices were down $2.331 at $74.80.
So far today’s losses are corrective pullbacks in price uptrends that remain in place. While some near-term chart damage did occur in both metals today, it’s not serious. However, strong follow-through selling pressure on Tuesday or Wednesday would likely produce more serious chart damage that would better suggest near-term market tops are in place. And if gold and silver prices bounce back strongly in the next couple days, then today’s price lows would be the latest “reaction lows” in the present price uptrends. In other words, trading action the next two days in gold and silver will likely be extra, extra important in determining price direction for the coming weeks.
The key outside markets today see the U.S. dollar index slightly up. Crude oil prices are higher and trading around $59.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.118%.
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, February gold futures bulls’ next upside price objective is to produce a close above solid resistance at the contract/record high of $4,584.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,200.00. First resistance is seen at $4,400.00 and then at $4,433.00. First support is seen at today’s low of $4,316.00 and then at $4,300.00. Wyckoff's Market Rating: 7.5.
March silver futures see today’s price action appears to have produced a big and bearish buying exhaustion tail, whereby the bulls run out of gas at the high and prices back way off to close near the daily low. Price action today also produced a big and bearish “key reversal” down on the daily bar chart. The bulls’ next upside price objective is closing prices above solid technical resistance at today’s record high of $82.67. The next downside price objective for the bears is closing prices below solid support at $67.50. First resistance is seen at $72.50 and then at $73.00. Next support is seen at $70.00 and then at $69.00. Wyckoff's Market Rating: 7.5.
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