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Gold Down As U.S. Dollar Index Hits 13-Year High

Tuesday December 20, 2016 13:24
(Kitco News) - Gold prices ended the U.S. day session moderately down but up from the daily low. Silver prices fell to an eight-month low in early trading but rebounded to finish the day around unchanged and near the daily high. A strong U.S. dollar index that scored another 13-year high Tuesday was a bearish anchor pulling down the precious metals markets. However, when the greenback fell well off its daily high, gold and silver prices rose from their daily lows. February Comex gold was last down $8.90 an ounce at $1,133.80. March Comex silver was last down $0.004 at $16.09 an ounce.

Barring unexpected major geopolitical events, look for the precious metals and most other markets to start to wind down the rest of this week, as the Christmas holiday is on Sunday.

The world marketplace and safe-haven gold did not show big reactions to violence in Europe Monday that included the assassination of Russia’s ambassador to Turkey and terror attacks in Berlin and Zurich that left over a dozen people dead. However, the European stock markets did see buying interest limited on the terror attacks, while the Euro currency dropped to a 13-year low overnight, due in part to the attacks.

Many world stock markets are trading near multi-year and/or record highs and it would not be surprising to see those stock indexes at least pause, if not see some profit-taking, into the end of the year. Any significant pullbacks in world stock markets would be a bullish development for the competing asset class, safe-haven gold.

The other key “outside market” on Tuesday saw Nymex crude oil prices trade modestly higher after hitting a 16-month high last week. However, the Nymex oil bulls continue to struggle when prices are above the $50-a-barrel level.

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

Technically, February gold futures prices closed near mid-range. The gold bears have the solid overall near-term technical advantage. There are no early clues of a market bottom. Prices are in a six-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 last week’s high of $1,168.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,100.00. First resistance is seen at this week’s high of $1,144.40 and then at $1,150.00. First support is seen at last week’s low of $1,124.30 and then at $1,120.00. Wyckoff's Market Rating: 1.5

March silver futures prices closed nearer the session high after hitting an eight-month low early on today. The silver market bears have the solid overall near-term technical advantage. However, today’s high-range close suggests the bears have become exhausted. 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 $15.50. First resistance is seen at this week’s high of $16.265 and then at $16.50. Next support is seen at today’s low of $15.675 and then at $15.50. Wyckoff's Market Rating: 1.5.

March N.Y. copper closed up 25 points at 250.20 cents today. Prices closed nearer the session high. The copper bulls have the overall near-term technical advantage but have faded to suggest a market top is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 265.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 228.00 cents. First resistance is seen at this week’s high of 256.00 cents and then at 260.00 cents. First support is seen at this week’s low of 247.75 cents and then at 245.00 cents. Wyckoff's Market Rating: 6.0.

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

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