Gold Careens To 4.5-Year Low, Hit Again By Surging U.S. Dollar And Equities
New York (Nov 5) Gold prices ended the U.S. day session sharply lower and slumped to a 4.5-year low Wednesday. A powerful rally in the U.S. dollar index and rallying U.S. stock indexes continue to pull money away from the safe-haven gold market. December Comex gold was last down $22.60 at $1,145.10 an ounce. Spot gold was last quoted down $23.00 at $1,145.75. December Comex silver last traded down $0.503 at $15.45 an ounce.
It was a “risk-on” trading day in the market place Wednesday, following U.S. midterm elections that strongly favored the Republican party. The majority of traders and investors reckon the Republicans, which will soon control the House of Representatives and the Senate, will be better for U.S. economic growth and businesses. The U.S. dollar index pushed sharply higher and hit a four-year high today, while U.S. stock indexes were higher and at or near record or multi-year highs.
A batch of generally upbeat U.S. economic data released Wednesday also boosted the U.S. dollar and stock indexes, while being another bearish element for the gold market.
In overnight news, the HSBC China services purchasing managers’ index (PMI) came in at 52.9 in October and was deemed disappointing. And in the European Union, the Markit composite PMI was reported at 52.1 in October from 52.0 in September. European traders deemed the PMI number as downbeat. A PMI reading above 50.0 suggests expansion. Also, the EU’s retail sales fell 1.3% in September from August—the largest monthly decline in over two years. To underscore the worry about the European Union’s economy and financial system, a five-year German bond auction Wednesday fetched a record-low average yield of just 0.12%.
(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)
There are two big economic data points late this week: the monthly meeting of the European Central Bank on Thursday and the U.S. employment situation report on Friday. Recent dour economic data coming out of the EU, and Japan’s fresh monetary stimulus last week, suggest the European Central Bank will move to enact more monetary stimulus sooner rather than later. Some market watchers believe the ECB might make a move as soon as Thursday.
The London P.M. gold fix was $1,142.00 versus the previous London A.M. fixing of $1,145.25.
Technically, December gold futures prices closed nearer the session low and hit a 4.5-year low today. The gold bears have the strong near-term technical advantage. However, this market is well overdone on the downside, on a short-term technical basis. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,160.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,100.00. First resistance is seen at $1,150.00 and then at $1,155.00. First support is seen at today’s low of $1,137.10 and then at $1,130.00. Wyckoff’s Market Rating: 1.0
December silver futures prices closed nearer the session low and hit a contract and four-year low today. The silver bears have the strong overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $16.22 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $15.635 and then at $16.00. Next support is seen at today’s contract low of $15.12 and then at $15.00. Wyckoff's Market Rating: 1.0.
December N.Y. copper closed down 95 points at 300.90 cents today. Prices closed nearer the session high today after hitting a two-week low early on. The bears have the near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 311.40 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of 295.15 cents. First resistance is seen at today’s high of 302.05 cents and then at 305.00 cents. First support is seen at 298.00 cents and then at today’s low of 296.40 cents. Wyckoff's Market Rating: 3.0.