(Kitco News) - Comex December gold futures prices are trading sharply lower again Friday and hit a fresh six-week low. Strong follow-through selling pressure from big losses suffered Thursday is featured. Significant near-term technical damage has now been inflicted in gold, while silver has absorbed more serious chart damage. Strong gains in the U.S. dollar index recently, along with a large drop in crude oil prices, have worked to put solid downside price pressure on the precious metals markets. December gold last traded down $45.00 an ounce at $1,697.00 an ounce. Spot gold last traded down $43.10 an ounce at $1,693.50. December Comex silver last traded down $3.95 at $32.63 an ounce.
Many traders and investors in many markets are scared. They are wondering what will happen during the session Friday, during the weekend and come next Monday morning. Many traders have adopted a "when in doubt, get out" mentality due to the keener uncertainty in the market place at present. Margin calls to traders from their brokers are also forcing liquidation in the market place. There's an old trading adage that says when there is "blood in the street," that's the time to be a buyer. It can be argued the market place is seeing, or is close to seeing, blood in the street for many individual markets, including the precious metals.
The world stock markets are seeing more selling pressure Friday, following strong losses Thursday, and in the wake of the unimpressive FOMC statement from the U.S. Fed on Wednesday, and amid weak economic data coming out of Europe and China. All of the above are feeding notions that the world's major economies are on the verge of another recession, or may be already there.
The U.S. dollar index is trading firmer Friday morning after hitting a fresh seven-month high Thursday. Perceived safe-haven moves into the greenback from investors worldwide has been featured the past couple days. The dollar index bulls have the solid near-term technical advantage. At the moment, the stronger U.S. dollar index is a major bearish factor for the gold market.
Crude oil futures prices are trading solidly lower again early Friday and hit a fresh six-week low of $77.80 a barrel overnight. Crude oil bears have downside momentum and that's also a significantly bearish factor for the precious metals markets.
The European Union sovereign debt situation remains not far from the front burner of the market place. There is now increasing talk in the market place that Greece will default on its debt sooner rather than later. While talks on the matter are ongoing among EU and IMF officials, no concrete, viable plan for Greece has been produced. The EU debt situation remains an underlying bullish underlying factor for gold, but it's likely that the present problems regarding EU debt have likely been mostly factored into present market prices.
There is no major U.S. economic data due for release Friday.
The London A.M. gold fixing was $1,730.00 versus the previous P.M. fixing of $1,722.00.
Technically, December gold futures bears have quickly gained downside momentum as prices Friday fell to a fresh six-week low. Importantly, the gold market bulls were unable to defend what was strong technical support at the August spike low of $1,705.40. That has produced significant near-term technical damage to also suggest a bearish double-top reversal pattern has formed on the daily bar chart. Gold prices are also now in a three-week-old downtrend on the daily bar chart. This week has seen the near-term technical picture turn bleaker for the bulls, but the longer-term technical posture of the gold market has been little affected. Bulls' next upside technical objective is to produce a close above solid technical resistance at $1,800.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,600.00. First resistance is seen at $1,705.40 and then at $1,725.00. First support is seen at the overnight low of $1,687.20 and then at $1,675.00.
December silver prices hit a fresh seven-month low of $32.305 overnight and very serious near-term technical damage has been inflicted. Prices are in a steep five-week-old downtrend on the daily bar chart. Bulls' next upside price objective is producing a close above strong technical resistance at $37.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $30.00. First resistance is seen at $33.00 and then at $34.00. Next support is seen at the overnight low of $32.305 and then at $32.00.
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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
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