(Kitco News) - Gold prices ended the U.S. day session lower Monday, as crude oil dropped to a nearly seven-year low below $35.00 a barrel in early trading, before rebounding. Silver prices dropped to a six-year low. The charts for gold and silver remain firmly bearish, which is keeping the sellers very comfortable. February Comex gold was last down $11.40 at $1,064.30 an ounce. March Comex silver was last down $0.194 at $13.69 an ounce.
Crude oil prices Monday and hit $34.53 a barrel, basis January Nymex futures, before seeing a short-covering bounce. It appears this market is headed for the 2009 low of $33.20, basis nearby futures. If that level is hit, then it would not be surprising to see a bit more selling pressure, but not much, before that market puts in at least a near-term bottom. That’s when gold, silver and many other beaten-down raw commodity market bulls can start to think about their markets bottoming out, too.
There is another worry for the marketplace as 2015 winds down: high-yield (junk) bond markets are coming under serious strains recently—especially those bonds related to energy markets. The concern is that the strains in the junk bond sector could spill over into safer debt markets to create a panic or contagion. If this situation deteriorates it could give the safe-haven gold market a boost.
Many market watchers have thrown in the towel on calling gold a safe-haven asset, given the extreme bearish sentiment in the precious metals at present. However, that’s an incorrect notion and the coming months and years will show gold continuing to exhibit its status as a store of value during uncertain and anxious times.
On Tuesday begins the highly anticipated two-day meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC). The marketplace generally expects this week’s FOMC meeting to see the Fed raise the U.S. fed funds level from the present rate of zero to 0.25%. What will be closely watched is the Fed’s language that could provide clues on the pace of future interest rate increases. Fed Chair Janet Yellen holds a press conference right after this meeting’s conclusion Wednesday afternoon.
In overnight news, Euro zone industrial production in October rose a better-than-expected 0.6% month-on-month, and was up 1.9% year-on-year. In other news, the Chinese currency, the yuan, fell to a four-year low against the U.S. dollar Monday, as China monetary officials work to keep the world’s second-largest economy afloat. There was no major U.S. economic released Monday.
Technically, February gold futures prices closed nearer the session low today. Gold bears have the solid overall near-term technical advantage. There are no early clues of a market bottom being close at hand. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the December high of $1,088.30. Bears' next near-term downside price breakout objective is pushing prices below solid longer-term technical support at the contract low of 1,045.40. First resistance is seen at $1,070.00 and then at today’s high of $1,077.30. First support is seen at last week’s low of $1,061.70 and then at $1,060.00. Wyckoff’s Market Rating: 1.5
March silver futures prices closed nearer the session low and hit a contract and six-year low today. The silver market bears have the solid overall near-term technical advantage and gained more power today. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $14.64 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.00. First resistance is seen at $14.00 and then at $14.25. Next support is seen at today’s contract low of $13.62 and then at $13.50. Wyckoff's Market Rating: 1.0.
March N.Y. copper closed down 50 points at 211.15 cents today. Prices closed near mid-range. Copper bears still have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 220.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 200.00 cents. First resistance is seen at last week’s high of 213.85 cents and then at 215.00 cents. First support is seen at today’s low of 209.10 cents and then at Friday’s low of 206.30 cents. Wyckoff's Market Rating: 2.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
