(Kitco News) – Gold futures prices are sharply down and hit a four-month low in midday U.S. trading Monday. Gold and silver are seeing strong pressure from better risk appetite in the marketplace to start the trading week. The yellow metal suffered significant near-term technical damage today. December gold futures were last down $36.70 at $1,835.40 and December Comex silver was last down $0.758 at $23.605 an ounce.
Gold prices were moderately lower overnight but selling accelerated when the U.S. flash Markit composite purchasing managers index (PMI) for November was reported, coming in at a better-than-expected 57.9 versus 56.3 in October. A reading above 50.0 suggests expansion. The business and manufacturing PMI’s also beat market expectations. Said a Markit economist on today’s U.S. PMI data: “Expectations for the year ahead have surged to the most optimistic in over six years, reflecting the combination of post-election lift to confidence and encouraging news that vaccines may allow a return to more normal conditions in the not-too-distant future.” The upbeat PMI data rallied the U.S. dollar index from its daily low, further denting the precious metals markets.
Gold futures prices Monday took out key technical support at the recent low of $1,848.00, basis December futures, to produce significant near-term technical damage. Following are the next downside price targets for the empowered gold bears to challenge in the near term—and for the bulls to try to firmly defend to avoid more serious near-term chart damage being inflicted:
200-day moving average, presently located at $1,808.00; $1,800.00; $1,750.00; $1,700.00. For the wounded gold bulls to begin to heal on a near-term technical basis, they would have to push December futures prices back above solid chart resistance at Monday’s high of $1,870.00. Very importantly, the longer-term weekly and monthly charts are still bullish for gold. And it’s those charts that should be most important to the longer-term traders/investors, also called the “buy-and-hold” group.
Global stock markets were mostly higher overnight. U.S. stock indexes are mixed at midday. Risk sentiment is more upbeat to start the trading week, as another vaccine trial, this time from the U.K.’s Oxford University and AstraZeneca, was shown to be 90% effective. There is a 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. Still, there were more than 142,000 new U.S. Covid-19 infections reported Sunday and record hospitalizations for the 13th straight day, suggesting the pandemic is still raging out of control. Europe is also reeling from the impact of the virus.
The Euro zone flash purchasing managers index (PMI) showed the region heading toward a possible double-dip recession, with November’s data the first since severe lockdown measures were re-introduced in many areas. The flash composite PMI fell to 45.1 in November vs 50.0 in October. The Euro zone manufacturing PMI fell to 53.6 vs 54.8 last month and 53.1 expected. The services PMI fell to 41.3 vs 46.9 in October and 42.5 expected.
The U.S. dollar index rebounded today after hitting hit a seven-week low overnight. The other important outside market sees January Nymex crude oil futures prices firmer and trading around $43.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.85%.
Technically, December gold futures dropped below key support to produce significant near-term chart damage. The gold bulls have the slight overall near-term technical advantage but are fading fast. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at today’s high of $1,875.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at $1,848.00 and then at $1,860.00. First support is seen at today’s low of $1,828.00 and then at $1,820.00. Wyckoff’s Market Rating: 5.5
December silver futures prices hit a three-week low today. Silver futures bulls have the overall near-term technical advantage but are fading. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the November high of $26.135 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.81. First resistance is seen at $24.00 and then at today’s high of $24.455. Next support is seen at today’s low of $23.46 and then at $23.25. Wyckoff’s Market Rating: 6.0.
December N.Y. copper closed down 420 points at 324.90 cents today. Prices closed nearer the session low today on profit taking after hitting a 2.5-year high on Friday. The copper bulls still have the solid overall near-term technical advantage. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at 350.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the November low of 302.85 cents. First resistance is seen at last Friday’s high of 330.15 cents and then at 332.50 cents. First support is seen at today’s low of 323.50 cents and then at 320.00 cents. Wyckoff’s Market Rating: 8.0.
