Gold Sees Corrective Pullback Amid Bearish Outside Markets

P.M. Kitco Roundup: Gold Sees Corrective Pullback Amid Bearish Outside Markets

Gold prices ended the U.S. day session solidly lower Tuesday and gave back about half of Monday’s strong gains. Lower crude oil prices and a sharply higher U.S. dollar index were bearish “outside market” forces working against the precious metals markets on this day. February Comex gold was last down $20.00 at $1,198.10 an ounce. Spot gold was last down $13.70 at $1,199.50. March Comex silver last traded down $0.257 at $16.43 an ounce.

The eyes of the market place remain on crude oil prices. After posting a strong rebound Monday, crude was under selling pressure again Tuesday. Nymex crude on Monday hit a five-year low of $63.72 a barrel. Volatility in crude oil and gold has been extremely high in recent sessions, much to the consternation of both bulls and bears. It is days like the past two sessions that brutalize traders with wild price swings that force them to liquidate their positions—only to see prices then turn around and move in the favor of their originally placed trades.

The U.S. dollar index was sharply higher Tuesday and hit a fresh contract and four-year high.

In other overnight news, the European Union producer price index was down 0.4% in October and down 1.3% year-on-year. This adds to a string of EU economic data that suggests deflationary price pressures are at work in the world’s third-largest economy. The report falls into the camp of those market watchers wanting the European Central Bank to further stimulate its monetary policy sooner rather than later. The ECB holds its regular monthly meeting on Thursday.

The Russian Economy Ministry said Tuesday the Russian economy will fall into recession in 2015, with inflation being problematic due to the slumping value of the ruble against the other major world currencies.

The London P.M. gold fix was $1,195.00 versus the previous London A.M. fixing of $1,197.00.

Technically, February gold futures prices closed nearer the session low today. Bears have the overall near-term technical advantage. Still, Monday’s price action hints of a near-term market low being in place. But the bulls need to show fresh power soon to better suggest such. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at Monday’s high of $1,221.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,163.90. First resistance is seen at $1,200.00 and then at today’s high of $1,212.60. First support is seen at today’s low of $1,191.40 and then at $1,184.80. Wyckoff’s Market Rating: 2.5

March silver futures prices closed nearer the session high and saw a corrective pullback from Monday’s big gains. Price action Monday scored a big and bullish “key reversal” up on the daily bar chart, which suggests the bears have become exhausted and a market bottom is in place. The silver bears still have the overall near-term technical advantage. 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 last week’s low of $15.41. First resistance is seen at Monday’s high of $16.81 and then at $17.00. Next support is seen at today’s low of $16.07 and then at $15.93. Wyckoff's Market Rating: 2.5.

March N.Y. copper closed down 85 points at 288.95 cents today. Prices closed nearer the session high. Prices Monday hit a contract and multi-year low. Monday’s price action suggests the bears became exhausted at the lower price levels. Good follow-through buying early this week would suggest a market bottom is in place. But right now the bears have the solid near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at Monday’s contract low of 277.75 cents. First resistance is seen at Monday’s high of 290.55 cents and then at 292.50 cents. First support is seen at today’s low of 2.8440 cents and then at 282.50 cents. Wyckoff's Market Rating: 1.5.