Gold Sinks to 5.5-Year Low Amid Rallying Stock Markets, Strong U.S. Dollar
Tuesday November 17, 2015 14:25
Gold prices dropped to a 5.5-year low Tuesday, pressured in part by rallying U.S. and world stock markets early this week. Traders and investors have reckoned the terror attacks in Paris are not going to influence their trading decisions--at least not at this time. The "risk-on" mentality in the market place Tuesday was bearish for the safe-haven gold market, as monies flowed into the competing asset class: equities. The other bearish element working against the precious metals recently is the rally in the U.S. dollar index, which on Tuesday hit a seven-month high. February Comex gold was last down $14.30 at $1,069.80 an ounce. March Comex silver was last down $0.072 at $14.18 an ounce.
Importantly, the drop to a new multi-year low in the gold market Tuesday has produced significant longer-term technical damage. Now the door is opened to a challenge of major psychological support at $1,000.00 an ounce in the coming weeks or few months.
A major theme in the marketplace continues to be the slumping raw commodity sector. Copper prices hit another six-year low Tuesday. The red industrial metal’s price is a good gauge of the pace of overall world construction. Many other raw commodity prices are at or near multi-year lows. Sector leader Nymex crude oil prices are hovering just above $40.00 a barrel, with many oil market watchers now saying crude will likely slip back below the $40.00 mark. Crude oil will very likely have to lead a recovery in the raw commodity sector’s bust cycle.
Technically, February gold futures prices closed nearer the session low today. The gold bears have the solid overall near-term technical advantage and gained more power today. With new longer-term chart damage produced today, the door is now opened to a challenge of major psychological resistance at $1,000.00. Gold prices are in a steep four-week-old downtrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,100.00. Bears' next near-term downside price breakout objective is pushing prices below solid longer-term technical support at 1,050.00. First resistance is seen at $1,073.70 and then at $1,080.00. First support is seen at today’s contract low of $1,064.70 and then at $1,060.00. Wyckoff’s Market Rating: 1.0
March silver futures prices closed near mid-range and hit an 11-week low today. The silver market bears have the solid overall near-term technical advantage. Prices are in a steep three-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the August low of $14.005. First resistance is seen at today’s high of $14.28 and then at this week’s high of $14.44. Next support is seen at last today’s low of $14.11 and then at $14.005. Wyckoff's Market Rating: 1.0.
