Gold and silver continue to be punished by risk-on attitudes

NewYork (Nov 27)  Gold futures prices are solidly down again at midday Tuesday and hit a nearly five-month low. Silver is also suffering sharp losses this week and hit a three-week low today. Both safe-haven metals are being hit by much better risk appetite in the marketplace. Near-term chart damage has been inflicted on both metals this week. December gold futures were last down $36.40 at $1,801.50 and December Comex silver was last down $0.388 at $23.25 an ounce.

Risk sentiment remains upbeat this U.S. holiday-shortened trading week, evidenced by rallying global stock markets that saw the Dow Jones Industrial Average hit a record high above 30,000 today. There will be at least three very successful Covid-19 vaccines coming to market in the coming weeks or few months, including a powerful drug cocktail being released to help those who have the virus defeat it. Monday there was a surprisingly upbeat U.S. purchasing managers survey and President Trump agreed to President-Elect Joe Biden’s request for government assistance that is normally given presidents-elect. Also, Biden on Monday tabbed former Fed Chair Janet Yellen, a monetary policy dove, as his Treasury Secretary. All of the above have traders and investors in a risk-on state of mind. There is a growing general consensus in the marketplace that by the second half of 2021 the pandemic will be tamped down and economies will be well on the road to returning to normal.

Attitudes are generally upbeat despite the pandemic epidemic that is presently getting worse and once again crimping businesses and the general public in the U.S. and in Europe. Recent economic data from the Euro zone has been downbeat, suggesting a double-dip recession.

A feature in the entire marketplace this week is plummeting gold prices. A few are proclaiming the recent big gains in Bitcoin, at the same time gold’s price drops, as making the digital currency the “new gold.” Most veteran market watchers reckon that notion is hogwash, as a main reason for gold being a safe-haven store of value is that an investor can store physical gold in a safe place—even at home. Gold’s value and sustainability do not depend on the viability of “the grid.” Those digital currency owners who consider their asset to be the new safe-haven replacement for gold might get this question from a veteran gold bug: “When the grid goes down, will you show me your digital currency?” One final note on gold’s descent this week: Many smart-money traders will be viewing gold as a value-buying opportunity, figuring that when global economies are back to firing on all cylinders in the coming months, and with those economies already awash in cash from central banks’ stimulus programs, very strong consumer demand will occur, resulting in price inflation being ignited--and maybe with a vengeance. Tell me what you think. I always enjoy hearing from my valued Kitco readers. (jwyckoff@kitco.com)

The U.S. dollar index is lower early today. Prices Monday hit a seven-week low. The other important outside market sees January Nymex crude oil futures prices solidly up, hitting a five-month high and trading around $45.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.87%.

Technically, December gold futures dropped below key support at the 200-day moving average and $1,800.00 to produce some more near-term chart damage. The gold bulls have lost their overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at this week’s high of $1,875.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at today’s high of $1,836.90 and then at $1,848.00. First support is seen at today’s low of $1,797.10 and then at $1,775.00.

By 08:18 am EST Friday, spot gold plunged $15 to $1794, while spot silver dopprd moree than 2% percent to $22.74.

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