Gold Price Weaker, Silver at 6-Yr. Low, As Nymex Crude Drops Below $35
New York(Dec 14) Gold prices are moderately lower in early U.S. trading Monday, once again pressured by the bearish outside markets led by slumping oil prices. Silver prices dropped to a six-year low overnight. February Comex gold was last down $4.40 at $1,071.30 an ounce. March Comex silver was last down $0.179 at $13.71 an ounce.
Crude oil prices Monday and hit another nearly seven-year low, at $34.53 a barrel, basis January Nymex futures. The slumping crude oil market is causing many other markets, including world stock markets, to become very jittery. The other key “outside markets” on Monday finds the U.S. dollar index firmer. The USDX has backed well down from the early-December high, however.
There is another worry for the marketplace as 2015 winds down: high-yield (junk) bond markets are coming under serious strains recently—especially those bonds related to energy markets. The concern is that the strains in the junk bond sector could spill over into safer debt markets to create a panic or contagion.
On Tuesday begins the highly anticipated two-day meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC). The marketplace generally expects this week’s FOMC meeting to see the Fed raise the U.S. fed funds level from the present rate of zero to 0.25%. What will be closely watched is the Fed’s language that could provide clues on the pace of future interest rate increases. Fed Chair Janet Yellen holds a press conference right after this meeting’s conclusion Wednesday afternoon.
In overnight news, Euro zone industrial production in October rose a better-than-expected 0.6% month-on-month, and was up 1.9% year-on-year. In other news, the Chinese currency, the yuan, fell to a four-year low against the U.S. dollar Monday, as China monetary officials work to keep the world’s second-largest economy afloat.
There is no major U.S. economic data due for release Monday.
Technically, gold bears have the solid overall near-term technical advantage. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the December high of $1,088.30. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the contract low of $1,045.40. First resistance is seen at the overnight high of $1,077.30 and then at $1,080.00. First support is seen at today’s low of $1,065.00 and then at last week’s low of $1,061.70. Wyckoff’s Market Rating: 1.5
Silver bears have the solid overall near-term technical advantage as prices hit a six-year low overnight. Bulls’ next upside price breakout objective is closing December futures prices above solid technical resistance at the December high of $14.64 an ounce.