P.M. Kitco Metals Roundup: Gold Sharply Lower on Technically Related Selling, Led by Mysterious Asian Drop

(Kitco News) - Comex gold futures prices ended the U.S. day session sharply lower, hit a fresh four-week low and closed below what was psychological support at the $1,700.00 level. Fresh technical selling pressure that started in thin overnight Asian trading was featured Tuesday. February gold last traded down $24.60 at $1,696.60 an ounce. Spot gold was last quoted down $21.20 at $1,695.25. March Comex silver last traded down $0.799 at $32.97 an ounce.

There was speculation in the gold arena Tuesday that the swift drop in prices in early Asian trade was somehow tied to last week’s sharp drop in gold prices. However, that speculation could not be confirmed even though Tuesday’s drop was also a bit mysterious, just like last week’s. It was curious that heavy sell orders hit the gold market Tuesday when New York and London markets were closed and at a time when Asian trading was light.

Trading in both gold and silver markets has become choppy and sideways on the daily charts as the end of the year approaches. It would not be surprising to see this type of back-and-forth trading action continue until the start of the new year—barring an economic or geopolitical surprise to jolt the market place in the coming four weeks.

In overnight news, the Euro currency hit a fresh six-month high against the U.S. dollar and European stocks gained amid ideas the European Union sovereign debt crisis has at least stabilized at present. Traders and investors in Europe welcomed the move by Greece Monday to buy back up to 10 billion Euros of its outstanding bonds at a price from 30 to 40 cents on the dollar. Spanish and Italian bond yields have declined this week, which also suggests a stabilizing overall EU debt crisis.

In the U.S., the focus of the market place remains on the “fiscal cliff” tax increases and spending cuts that is fast approaching. A fresh Republican offer put on the table Monday was not deemed by the Democrats as sufficient. U.S. lawmakers are still jousting on the matter, with the market place now paying less attention to the politicians’ rhetoric. While the market place presently perceives there will be a last-minute agreement among U.S. lawmakers to avoid the fiscal cliff, the overall situation has been a bearish drag on many markets, including the raw commodities and stock markets.

The market place is starting to look ahead to next week’s last Federal Reserve FOMC meeting of the year, on December 10 and 11. The “Operation Twist” program ends and the FOMC members must decide whether to extend the bond-buying program. Many believe the Fed will continue to purchase U.S. Treasuries and implement “QE4” at next week’s meeting. That would be raw-commodity market bullish, including bullish for the precious metals markets.

The U.S. dollar index was lower again Tuesday and hit a fresh six-week low. The greenback bears have downside technical momentum. Nymex crude oil prices were weaker Tuesday. Trading in crude has been choppy recently. The crude oil bears still have the slight overall near-term technical advantage.

The London P.M. gold fixing is $1,697.75 versus the previous London P.M. fixing of $1,720.00.

Technically, February gold futures prices closed nearer the session low Tuesday and hit a fresh four-week low. Gold bulls still have the slight overall near-term technical advantage but did fade Tuesday and need to show fresh power soon. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the November high of $1,757.10. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the November low of $1,674.70. First resistance is seen at $1,700.00 and then at $1,708.00. First support is seen at Tuesday’s low of $1,692.60 and then at $1,685.00. Wyckoff’s Market Rating: 5.5

March silver futures prices closed nearer the session low Tuesday on profit taking. No serious chart damage occurred. However, the bulls have faded as a four-week-old uptrend on the daily bar chart was negated Tuesday. Bulls do have the slight overall near-term technical advantage but need to show fresh power soon to keep it. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the November high of $34.49 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $32.50. First resistance is seen at $33.50 and then at Tuesday’s high of $33.75. Next support is seen at Tuesday’s low of $32.745 and then at $32.50. Wyckoff's Market Rating: 5.5.

March N.Y. copper closed up 20 points at 366.05 cents Tuesday. Prices closed near mid-range and hit a fresh six-week high. Bulls have gained good upside near-term technical momentum recently and have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 370.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 350.00 cents. First resistance is seen at Tuesday’s high of 367.85 cents and then at 370.00 cents. First support is seen at Tuesday’s low of 363.35 cents and then at 360.00 cents. Wyckoff's Market Rating: 6.0.