Gold Weakens in Wake of Stronger U.S. GDP Report

New York (Dec 23)  Gold prices ended the U.S. day session modestly lower and closed at a three-week low close Tuesday. The precious metal saw selling pressure following a U.S. GDP report that was hotter than expected and which in turn boosted the U.S. dollar index to a four-year high. Some more technically related selling pressure was also featured in gold, following Monday’s losses. Thin trading conditions this week are exacerbating price moves in many markets, including gold and silver. February Comex gold was last down $4.30 at $1,175.50 an ounce. Spot gold was last down $1.60 at $1,175.50. March Comex silver last traded up $0.022 at $15.71 an ounce.

The main U.S. economic report for this week showed the third-quarter gross domestic product report come much stronger than expected, at up 5.0%, year-on-year. The GDP figure was expected to be up 4.3%, versus the previous reading of up 3.9%. The U.S. dollar index rallied to a four-year high in the immediate aftermath of the GDP report, and gold prices sold off.

Trading activity faded as the day wore on Tuesday, ahead of the Christmas holiday Thursday. Look for trading volumes in most markets to remain light until the new year begins.

The Russian ruble has stabilized this week, following last week’s serious erosion against the U.S. dollar and other major currencies. Reports Tuesday said the Russian central bank sold $420 million of its foreign currency reserves last week to support the beleaguered ruble.

The London P.M. gold fixing is $1,175.75 versus the previous A.M. fixing of $1,179.50.

Technically, gold bears possess the overall near-term technical advantage. The gold bulls’ next upside ear-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,225.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,150.00. First resistance is seen at today’s high of $1,184.90 and then at $1,190.00. First support is seen at Monday’s low of $1,170.70 and then at $1,160.00.

March silver futures bears have the firm overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 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 $16.00 and then at Monday’s high of $16.175. Next support is seen at Monday’s low of $15.53 and then at last week’s low of $15.25.

Source: KitcoNews