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Gold Hits 10-Mo. Low But Then Rebounds; Bears May Now Be Exhausted

Monday December 05, 2016 13:41
(Kitco News) - Gold prices ended the U.S. day session modestly lower and well up from the daily low Monday, after scoring a 10-month low in morning action. The late price rebound from today’s new for-the-move low is a clue that the bears may finally be exhausted on a near-term basis, after the recent strong selling pressure. February Comex gold was last down $2.70 an ounce at $1,175.10. March Comex silver was last up $0.013 at $16.845 an ounce.

The key "outside markets" on Monday favored the precious metals bulls, and that also accounted for the bounce in gold and silver prices as the trading session progressed.
The crude oil market was slightly higher, with Nymex futures hitting a six-week high, on follow-through strength after prices last week gained 12% in value. Meantime, the U.S. dollar index traded sharply lower today on another corrective pullback from recent gains. Today’s big losses in the greenback hint the dollar index could have put in a near-term market top with the recent push higher.

Early on, gold saw selling pressure following Sunday’s much-anticipated Italian referendum on constitutional reforms that produced a “no” vote by an overwhelming margin. Italy’s prime minister immediately resigned. Many markets initially were gyrated on the news, but quickly settled down and moved beyond the event. The government-backed no-vote was not unexpected by the market place. Still, this latest development is another sign of the insecurity of the European Union and the growing potential for continued fragmentation of the EU. The Italian vote was especially worrisome to the European banking and financial sector.

The Euro currency initially slumped to a 20-month low on the Italian no-vote, but quickly recovered those losses to trade higher on the day. European stock markets were mostly higher Monday. This was a classic “sell the rumor, buy the fact” scenario, as European stock markets had seen selling pressure heading into Sunday’s Italian vote.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Technically, February gold futures prices closed near mid-range today. The gold bears do still have the firm overall near-term technical advantage. Prices are in a more-than-five-month-old downtrend on the daily bar chart. 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 price breakout objective is pushing prices below solid technical support at $1,150.00. First resistance is seen at today’s high of $1,190.20 and then at $1,200.00. First support is seen at today’s low of $1,158.60 and then at $1,150.00. Wyckoff's Market Rating: 2.5

March silver futures prices closed nearer the session high today on short covering. The silver market bears still have the firm overall near-term technical advantage. Prices are in a five-month-old downtrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at today’s high of $17.05 and then at $17.25. Next support is seen at today’s low of $16.545 and then at the November low of $16.245. Wyckoff's Market Rating: 2.5.

March N.Y. copper closed up 700 points at 269.50 cents today. Prices closed nearer the session high today. The copper bulls have the solid overall near-term technical advantage and gained fresh power today. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at last week’s high of 275.30 cents. The next downside price objective for the bears is closing prices below solid technical support at 250.00 cents. First resistance is seen at today’s high of 271.30 cents and then at 275.30 cents. First support is seen at 265.00 cents and then at 260.00 cents. Wyckoff's Market Rating: 8.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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