Gold Ends Weaker on Corrective Pullback and Strong U.S. Dollar
New York (Nov 17) Gold prices ended the U.S. day session steady to slightly lower Monday, on a corrective pullback from good gains posted last Friday. A stronger U.S. dollar index Monday also squelched the gold and silver market bulls. Still, the solid upside price action in gold and silver markets Friday, including technically bullish weekly high closes, give the gold and silver bulls some momentum to begin to suggest near-term market bottoms are in place. February Comex gold was last down $0.20 at $1,186.10 an ounce. Spot gold was last down $2.60 at $1,186.40. March Comex silver last traded down $0.214 at $16.15 an ounce.
The key “outside markets” were in a bearish posture for most markets Monday, especially the raw commodity markets. January Nymex WTI crude oil prices were lower and are hovering near last Friday’s four-year low. I look for crude oil to bottom out somewhere in the $60s-per-barrel range at some point in the not-too-distant future. Meantime, the U.S. dollar index is higher and is hovering near last week’s four-year high.
In overnight news, Japan reported its gross domestic product declined by 1.6% in the third quarter, year-on-year, versus expectations of a 2.2% increase in growth. Thus, Japan is now in recession. This somewhat surprising news sunk Japan’s Nikkei stock index by 3% Monday, which in turn put downside pressure on most other major world stock markets. Japan’s downbeat GDP data is yet another indication that most of the major world economies are struggling and that tougher times may lie ahead. The outlier in this scenario is the U.S. economy, which is experiencing modest growth, as evidenced by mostly upbeat U.S. economic data released in recent months.
The gold and silver markets paid little attention to reports European Central Bank chief Mario Draghi said the ECB purchasing government bonds cannot be ruled out. Draghi has stated in the past he will do “whatever it takes” to keep the EU economy afloat.
U.S. economic data due for released Monday included the Empire State manufacturing survey, and industrial production and capacity utilization. That data had little impact on the market place.
The London P.M. gold fix was $1,182.50 versus the previous London A.M. fixing of $1,187.00.
Technically, February gold futures prices closed nearer the session low on a corrective pullback following good gains scored Friday. Friday’s solid gains and bullish weekly high close do hint that a near-term market bottom is in place. The gold bears still have the overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,200.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,132.00. First resistance is seen at today’s high of $1,194.30 and then at $1,200.00. First support is seen at today’s low of $1,181.80 and then at $1,175.00. Wyckoff’s Market Rating: 2.5
March silver futures prices closed nearer the session low on a corrective pullback from good gains posted Friday. Friday’s solid gains and bullish weekly high close do hint that a near-term market bottom is in place for silver. The silver bears still have the 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 $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $15.085. First resistance is seen at today’s high of $16.50 and then at $16.715. Next support is seen at $16.00 and then at $15.75. Wyckoff's Market Rating: 2.5.
March N.Y. copper closed down 55 points at 303.30 cents today. Prices closed near mid-range today and did hit a two-week high. The key “outside markets” were bearish for copper today as the U.S. dollar index was solidly higher and crude oil prices were lower. The bears have the near-term technical advantage and gained fresh downside momentum today. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 310.35 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of 295.00 cents. First resistance is seen at today’s high of 305.05 cents and then at the November high of 306.80 cents. First support is seen at today’s low of 301.30 cents and then at 300.00 cents. Wyckoff's Market Rating: 2.5.