Gold Weaker, But Shaky U.S. Stock Market Limits Downside

(Kitco News) - Goldprices are modestly down in early morning action Wednesday. A higher U.S.dollar index is working against the precious metals market bulls so far today.However, selling interest in safe-haven gold and silver is being limited bylower U.S. stock indexes amid still-volatile trading. April Comex gold futureswere last down $2.90 an ounce at $1,326.60. March Comex silver was last down $0.06at $16.525 an ounce.

SaidKitco veteran metals trader Peter Hug: “Gold continues to experience pressureas investors generate liquidity in the wake of the global equity shakeout.”

Worldstock markets posted solid rebounds overnight, following the lead of the U.S.stock indexes Tuesday. However, U.S. stock indexes are under selling pressureWednesday morning, ahead of the U.S. day session. Serious near-term technicaldamage has been inflicted on the U.S. stock indexes recently, to suggest moreselling pressure in the near term. Volatility is back in the stock andfinancial markets, after a long period of quieter daily trading.

Stalwartstock market bulls are blaming algorithmic traders for the steep sell-off, andpointing to solid economic fundamentals in place around the world as indicatingthis is just a downside correction in a still-bullish equities market. However,the fact of the matter is that traders/investors who entered the equitiesmarkets just a few months ago (and there are many) are now under water, orclose to it. How much pain are these weak longs willing to suffer before theybail out on fear, or get washed out due to margin calls? Any analyst canpontificate about sound market fundamentals at present, but the traders andinvestors with skin in the game are more worried about losing their money thanthey are market fundamentals. In other words, trading markets is still a moneygame.

Inovernight news, the European Union economists forecast the bloc’s GDP at up2.3% in 2018, with inflation at 1.5%. Both of those numbers are just a bithigher than the EU’s previous forecast.

Thekey “outside markets” on Wednesday morning see the U.S. dollar index higher on somemore safe-haven demand. Meantime, Nymex crude oil prices are weaker and tradingjust above $63.00 a barrel. The shaky world equity markets have prompted someselling pressure in the crude oil markets.

U.S.economic data due for release Wednesday includes the weekly MBA mortgageapplications survey, consumer credit and the weekly DOE liquid energy stocksreport.

Technically,April gold futures bulls still have the overall near-term technical advantage,but are fading and need to show fresh power soon. An uptrend on the daily barchart has been at least temporarily halted. Bulls’ next upside technicalobjective is pushing and closing prices above chart resistance at the January highof $1,370.50. Bears' next near-term downside price breakout objective isclosing prices below solid technical support at $1,300.00. First support isseen at this week’s low of $1,322.80 and then at $1,314.00. First resistance isseen at today’s high of $1,334.80 and then at $1,340.00. Wyckoff’s MarketRating: 6.0

Marchsilver prices hit a five-week low today. Bears have the overall near-termtechnical advantage. The next upside price breakout objective is closingfutures prices above solid technical resistance at the January high of $17.705an ounce. The next downside price breakout objective for the bears is closingprices below solid support at $16.00. First resistance is seen at today’s highof $16.73 and then at $17.00. Next support is seen at Monday’s low of $16.25and then at $16.00. Wyckoff's Market Rating: 4.0.

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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