Gold, Silver Prices Sees Some Pressure From Strong U.S. Dollar

(Kitco News) - Gold prices aremodestly lower in early-afternoon U.S. trading Wednesday, on a normalcorrective pullback after good gains Tuesday that pushed prices to a nearlythree-month high. A strong U.S. dollar on the foreign exchange market was abearish outside market element working against the precious metals bulls today.December gold futures were last down $2.90 an ounce at $1,233.90. December Comex silver was last down $0.088 at $14.71 an ounce.

Thejust-released beige book from the Federal Reserve showed the U.S. economy isgrowing modestly to moderately in the Fed’s 12 districts, and should continueto do so. However, the Fed is a bit worried about the tight U.S. labor marketand U.S. trade disputes that could contribute to rising inflationary pressures.Some Fed districts reported rising manufacturing and shipping costs. Wagegrowth was deemed to be modest to moderate, according to the beige book.Markets showed little to no reaction to the report, which contained no bigsurprises.

Globalstock markets were mixed to firmer today, rebounding from solid losses Tuesday.U.S. stock indexes were lower but off their daily lows in afternoon trading.

TheS&P 500 stock index on Tuesday dropped below what was strong chart supportat its October low. Such suggests a new leg down in prices is coming for theU.S. stock market. That’s bullish for hard assets such as gold and silver.

Thereare still geopolitical issues looming over the world marketplace, including theU.S.-China trade war, U.S.-Saudi Arabia tensions over the murdered Saudijournalist, and Italy’s recalcitrance over forming its budget to meet EuropeanUnion constricts. The EU Wednesday rejected the latest Italian draft budget.

Allof the above have pushed world stock markets and crude oil prices sharplylower, as well as rallied safe-haven assets like gold, U.S. Treasuries and theU.S. dollar.

Tradersand investors in Europe are awaiting Thursday’s European Central Bank regularmonetary policy meeting. No change in EU monetary policy is expected, but ECBchief Mario Draghi’s press conference could provide clues on future moves bythe central bank. Also, Draghi could comment on the rift between Italy’s newgovernment and the EU.

TheU.S. economic highlight this week will be the first estimate of third-quarterGDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on anannual basis.

Thekey outside markets today find the U.S. dollar index higher and hitting anine-week high overnight. Meantime, November Nymex crude oil prices are firmerand trading just above $67.00 a barrel. Oil prices fell to a two-month low onTuesday.

Technically,gold bulls have the overall near-term technical advantage. Prices Tuesday saw abullish upside “breakout” from the recent sideways and choppy trading range.Gold bulls' next upside near-term price breakout objective is to produce aclose above solid technical resistance at $1,275.00. Bears' next near-termdownside price breakout objective is pushing prices below solid technicalsupport at $1,220.00. First resistance is seen at today’s high of $1,236.80 inDecember futures and then at this week’s high of $1,243.00. First support isseen at $1,225.00 and then at $1,220.00. Wyckoff's Market Rating: 6.0

Silverfutures prices closed near the session low today on a corrective pullback afterclosing at a nearly two-month high close on Tuesday. The silver bears stillhave the overall near-term technical advantage. However, the bulls are workingon restarting a price uptrend on the daily chart. Silver bulls' next upsideprice breakout objective is closing prices above solid technical resistance at$15.00 an ounce. The next downside price breakout objective for the bears isclosing prices below solid support at the September low of $13.965 in Decemberfutures. First resistance is seen at last week’s high of $13.88 and then at theOctober high of $13.95. Next support is seen at this week’s low of $14.54 andthen at last week’s low of $14.47. Wyckoff's Market Rating: 4.0.

DecemberN.Y. copper closed down 40 points at 275.40 cents today. Prices closed nearerthe session low today. The copper bears have the overall near-term technicaladvantage. Copper bulls' next upside price objective is pushing and closingprices above solid technical resistance at the September high of 287.10 cents.The next downside price objective for the bears is closing prices below solidtechnical support at the August low of 257.45 cents. First resistance is seenat today’s high of 280.40 cents and then at this week’s high of 283.35 cents.First support is seen at this week’s low of 273.90 cents and then at theOctober low of 271.30 cents. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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