Gold Weakens Late as Key "Outside Markets" Turn Bearish
New York (Nov 12) Gold prices eroded late in the U.S. trading session Wednesday and ended moderately lower and near the daily low. A rally in the U.S. dollar index and weaker crude oil prices were bearish daily “outside market” elements working against the precious metals. Gold and silver market bears have tight technical grips at present. December Comex gold was last down $4.80 at $1,158.20 an ounce. Spot gold was last quoted down $4.90 at $1,158.50. December Comex silver last traded down $0.053 at $15.625 an ounce.
The recently red-hot U.S. dollar index had cooled off a bit this week on some profit taking. But the greenback rallied as the day progressed Wednesday. Last week the dollar index hit a four-year high. Nymex crude oil prices are trading not far above a three-year low scored last week. These two key “outside markets” will continue to have a daily influence on many other markets, including the precious metals.
The gold market may have gotten a slight boost in late-morning trading on news reports that a big Russian military convoy was headed for the Russia-Ukraine border. If that was the case the safe-haven demand did not last long. However, this situation will be closely monitored and could prompt significant safe-haven demand for gold should that situation deteriorate.
In overnight news, the German government auctioned a two-year note (the Schatz) for a negative yield Wednesday, which fetched -0.05%. Investors are paying the German government to hold their cash. This is yet another sign of the very low confidence in the European economy’s health and its financial system.
Meantime, the Bank of England said Wednesday that an interest rate hike from the BOE will come later rather than sooner due to low inflation and lower U.K. economic growth expectations. Still, the BOE expects to make a rate hike in late 2015.
On Nov. 30 the Swiss public will vote on a measure to force the Swiss National Bank to hold 20% of its assets in gold within five years. Reports said the SNB currently has total assets of around $550 billion. A recent Swiss poll showed the vote will be close. The SNB chief on Wednesday warned the passage of the referendum would destabilize prices.
The London P.M. gold fix was $1,164.50 versus the previous London A.M. fixing of $1,163.25.
Technically, December gold futures prices closed nearer the session low. The gold bears have the solid near-term technical advantage. A bearish pennant pattern has now formed on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,179.00. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,130.40. First resistance is seen at today’s high of $1,169.40 and then at $1,175.00. First support is seen at $1,150.00 and then at $1,137.00. Wyckoff’s Market Rating: 2.0
December silver futures prices closed near mid-range. The silver bears have the solid 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 last 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 this week’s high of $15.88 and then at $16.00. Next support is seen at this week’s low of $15.445 and then at $15.20. Wyckoff’s Market Rating: 1.5.
Source: FORBES
