Gold and silver hit hard by profit taking, bearish outside markets

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(Kitco News) – Gold and silver prices are down sharply Monday midday in the U.S. after hitting multi-month highs overnight. Metals are being hit by heavy profit taking from short-term futures traders and bearish outside markets. The US Dollar Index is solidly higher and Crude Oil prices are lower and have lost some good early gains. Rising US Treasury yields are also bearish for precious metals markets today. February gold was last down $24.10 at $1,785.20 and March silver was down $0.88 at $22.375.

Today’s report on the US ISM services index unexpectedly improved in November, and with only a slight drop in prices paid. The data may suggest that wage pressures will remain stronger. The headline index for November came in at 56.6, which was above the expected reading of 53.3. The employment component also returned to expansion territory. The report falls into the hawkish camp on the Federal Reserve’s monetary policy and helped put pressure on the stock market, and in turn supported the US dollar index while boosting US bond yields.

Global stock markets were mixed to strengthen overnight. US stock indexes are significantly lower around noon, but are still not too far below last week’s multi-month highs.

Major outside markets today see the US dollar index solidly higher after hitting a 3.5-month low last Friday. Nymex crude oil prices are lower and trading around $79.00 per barrel. Since Monday, the European Union and the United Kingdom have banned inbound shipments of crude oil from Russia and imposed a cap of $60 a barrel on European companies that facilitate shipments of Russian oil elsewhere in the world. In a meeting over the weekend, the OPEC oil cartel left its collective crude oil output unchanged. Meanwhile, the yield on the benchmark 10-year US Treasury is currently 3.57%.

Technically, February gold futures prices hit a 3.5-month high early today and then reversed course to mark a bearish “outside day” on the daily bar chart. Gold futures bulls still have the overall short-term technical advantage, but they have faded today. Prices are in a four-week uptrend on the daily bar chart. The Bulls’ next upside price objective is to produce a close above strong resistance at today’s high of $1,822.90. Bears next short-term downside price objective is to push futures prices below strong technical support at $1,733.50. The first resistance is seen at $1,800.00 and then at the November high of $1,806.00. First support is seen at $1,770.00 and then at $1,750.00. Wyckoff Market Rating: 6.0

March silver futures prices hit a seven-month high early today but then reversed to mark a bearish “outside day” on the daily bar chart. The silver bulls still have the overall short-term technical advantage, but they have faded today. Prices are in a choppy three-month uptrend on the daily bar chart. The next upside price objective for the silver bulls is to close prices above the strong technical resistance at $24.00. The next downside price objective for the bears is to close prices below the strong support at $20.79. First resistance is seen at $23.00 and then at today’s high of $23.69. The next support is seen at $22.00 and then at $21.435. Wyckoff Market Rating: 6.0.

New York Copper in March closed 440 points at 380.60 cents today. Prices closed near the session low today after hitting an early three-week high. Copper bulls have the overall short-term technical advantage. The next upside price objective for the copper bulls is to push and close prices above strong technical resistance at the November high of 394.70 cents. The next downside price target for the bears is for prices to close below strong technical support at 354.70 cents. First resistance is seen at today’s high of 389.45 cents then 394.70 cents. First support is seen at 373.50 cents and then at 365.00 cents. Wyckoff Market Rating: 6.0.