Gold hit hard by profit taking as Fed Chair Powell stays

Gold and silver futures are sharply down in midday U.S. trading Monday, with gold notching a two-week low. The metals’ prices were under pressure overnight and then selling pressure accelerated when it reported early this morning that President Biden plans to keep Federal Reserve Chairman Jerome Powell for another term. December gold was last down $41.10 at $1,810.40 and December Comex silver was last down $0.421 at $24.36 an ounce.

The yellow metal slumped, the U.S. dollar index rallied to a 15-month high and U.S. Treasury yields rose when it was announced Biden chose Powell to continue in his position for another term. Speculation had been that Biden might choose the more monetary-policy-dovish Lael Brainard as Fed chair. With Powell remaining as chairman of the Federal Reserve, traders and investors reckon U.S. monetary policy will remain on its present course, compared to notions that Brainard as a new Fed chair would have leaned easier on U.S. money policies.

Sell stop orders were triggered in gold futures when prices dropped below several key near-term technical support levels this morning, which drove prices still lower.

It can be argued that the Powell news was just an excuse for the shorter-term gold and silver futures traders to ring the cash register and take profits after recent good price gains. Reason: The marketplace generally expected Powell to be reappointed and gold should not have reacted the way it did. Nothing has changed for the metals markets, fundamentally, from last Friday’s closes. No significant chart damage was inflicted in gold or silver today and their near-term price uptrends remain in place. The metals markets are likely to continue to be supported by the inflation trade—meaning the metals will continue to be sought out as a hedge against rising and even problematic price inflation.

Global stock markets were mixed in overnight trading. The U.S. stock indexes are mixed at midday. It may be a quieter rest of the trading week in the U.S. as the Thanksgiving holiday is on Thursday, with an abbreviated trading session Friday being historically one of the lowest-volume days of the year. European traders and investors remain worried about Covid lockdowns as infections in Europe and Asia are on the rise. The world is also keeping a wary eye on the buildup of Russian troops near the Russia-Ukraine border.

The key outside markets today saw the U.S. dollar index higher and hitting a 15-month high. Nymex crude oil prices are up and trading around $76.50 a barrel. Oil prices hit a six-week low overnight and it appears a market top is in place. The 10-year U.S. Treasury note yield is presently fetching 1.605%.

Technically, December gold futures bulls still have the overall near-term technical advantage. Prices are in a seven-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at today’s high of $1,850.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at $1,825.00 and then at $1,839.00. First support is seen at today’s low of $1,810.90 and then at $1,800.00. Wyckoff's Market Rating: 6.0

December silver futures bulls still have the slight overall near-term technical advantage amid a seven-week-old uptrend in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the November high of $25.49 an ounce. The next downside price objective for the bears is closing prices below solid support at the November low of $23.045. First resistance is seen at $24.75 and then at $25.00. Next support is seen at today’s low of $24.25 and then at $24.00. Wyckoff's Market Rating: 5.5.

December N.Y. copper closed down 30 points at 440.55 cents today. Prices closed nearer the session high today. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 460.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the November low of 419.15 cents. First resistance is seen at today’s high of 442.35 cents and then at last week’s high of 448.90 cents. First support is seen at today’s low of 435.20 cents and then at 430.00 cents. Wyckoff's Market Rating: 5.0.
 

By Jim Wyckoff

For Kitco News

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