Gold price pounded to 2-plus-year low by economic worries, bearish charts

Gold prices are sharply down and hit a nearly 2.5-year low in midday U.S. trading Thursday. Silver prices are also solidly lower. The precious metals are being hit by global economic worries that threaten to dent commercial and consumer demand for raw commodities, including the metals. October gold was last down $36.00 at $1,662.20 and December silver was down $0.324 at $19.245.

The marketplace was a bit calmer overnight and early this morning, but it appears recent hawkish monetary policy comments from central bank officials and noted market analysts have combined with hot inflation readings to quickly sap what little risk appetite had been seen earlier today. And remember, the stock and financial markets are at the time of year (September and October) where the going can get very tough. Gold and silver bulls remain frustrated that the risk aversion in the marketplace is not translating into more safe-haven demand for the two metals.

Traders are focusing on next week’s FOMC meeting, which is expected to see the Fed raise the key U.S. Fed funds rate by 0.75% in its effort to tamp down problematic price inflation. Precious metals traders are reckoning the tighter monetary policies of most of the major central banks of the world will further slow global economic growth that would in turn reduce consumer and commercial demand for metals.

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Global stock markets were mostly slightly higher overnight. U.S. stock indexes are lower at midday.

The key outside markets today see Nymex crude oil prices solidly lower and trading around $85.50 a barrel. The U.S. dollar index is near steady in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching around 3.44%.

Technically, October gold futures prices hit a nearly 2.5-year low today. The gold futures bears have the solid overall near-term technical advantage and gained more power today. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at $1,675.00 and then at $1,686.30. First support is seen at $1,650.00 and then at $1,635.00. Wyckoff's Market Rating: 1.5.

December silver futures bears have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $21.00. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at today’s high of $19.625 and then at $20.00. Next support is seen at $19.00 and then at this week’s low of $18.775. Wyckoff's Market Rating: 2.5.

December N.Y. copper closed down 380 points at 348.20 cents today. Prices closed nearer the session low today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the August high of 378.35 cents. The next downside price objective for the bears is closing prices below solid technical support at the July low of 315.55 cents. First resistance is seen at 355.00 cents and then at this week’s high of 369.25 cents. First support is seen at the September low of 336.10 cents and then at 330.00 cents. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff

For Kitco News

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