Gold Prices Drop Below $1,200, Hit 4-Wk. Low, On Technical Selling, Strong Greenback

(Kitco News) - Gold prices aremodestly down and hit another four-week low below $1,200.00 in early U.S.trading Tuesday. The silver market fell to a two-month low overnight.Chart-based selling pressure has kicked in this week as the technical posturesfor both gold and silver have deteriorated recently. Precious metals are alsopressured by a very strong U.S. dollar on the foreign exchange market that sawthe U.S. dollar index hit a 1.5-year high on Monday. December gold futures werelast down $2.00 an ounce at $1,201.40. December Comex silver was last up $0.004at $14.025 an ounce.

Globalstock markets were mixed overnight. Asian shares were down and European stockindexes were mostly up. U.S. stock indexes are pointed toward higher openingswhen the New York day session begins, following steep losses suffered on Monday.Volatility in the U.S. stock market has heated up again early this week. Manytraders and investors are spooked by the recent sharp drop in crude oil prices.

Nymexcrude oil futures prices are lower again today, hit an eight-month lowovernight and are trading around $58.50 a barrel. The steep slide in oil pricesis a bearish element for most of the raw commodity sector, as oil is arguablythe leader of that sector.

Meantime,the U.S. dollar index is trading weaker today on a mild corrective pullbackafter soaring to a 1.5-year high on Monday.

Europeaninvestors are unsettled as Tuesday is the day Italy's budget is supposed tofall into line with the constricts of the European Union budget process.Meantime, reports said U.K. Prime Minister Theresa May has rejected the latestEuropean Union Brexit proposal. The Euro currency fell to a 16-month lowagainst the U.S. dollar on Monday.

U.S.economic data due for release Tuesday includes the weekly Goldman Sachs andJohnson Redbook retail sales reports, the NFIB small business index and themonthly Treasury budget statement.

Technically,gold bears have the firm overall near-term technical advantage, to suggest achallenge of the recent lows. Bulls' next upside price objective is to producea close in December futures above solid resistance at $1,225.00. Bears' nextnear-term downside price breakout objective is pushing prices below solidtechnical support at the September low of $1,184.30. First resistance is seenat the overnight high of $1,205.50 and then at Monday's high of $1,212.00.First support is seen at the overnight low of $1,196.60 and then at $1,190.00.Wyckoff's Market Rating: 2.5

Decembersilver futures bears have the solid overall near-term technical advantage.Silver bulls' next upside price breakout objective is closing prices abovesolid technical resistance at $15.00 an ounce. The next downside price breakoutobjective for the bears is closing prices below solid support at $13.50. Firstresistance is seen at Monday's high of $14.18 and then at last Friday's high of$14.425. Next support is seen at the overnight low of $13.92 and then at $13.75.Wyckoff's Market Rating: 1.0.

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.

Gold stocks reach new highs on metal price gain

Rise in gold stocks propels TSXV Mining

Market sees gold sector nearing full value overall after target upgrades

Gold stocks gain even as metal pulls back

Gold stocks rocket to new highs, valuations no longer inexpensive