It has been selling that has dominated today’s lower pricing in both gold and silver, with the U.S. dollar actually weakening giving both precious metals a small tailwind. As of 4:34 PM EDT physical gold is currently down $7.60, and fixed at $1498.90. Upon closer inspection of the KGX (Kitco Gold Index) normal trading actually took spot gold prices $9.25 lower today, but once you factor in dollar weakness which adds $1.65, you get the net price decline today of $7.60.
Gold futures are exhibiting the same basic ratio in which December futures are currently down by $8.20 and fixed at $1507.30. This is a net decline of .54% on the day. When you look at the current dollar index pricing it is still pegged solidly above 98, however the net loss of .08% means that the actual price decline of gold futures today was .62%.
Silver futures are also trading lower on the day but remain just above the key psychological level of $18 per ounce. Current pricing in the December contract is $18.08 per ounce.
After the recent and dynamic run up in both gold and silver pricing it is not unusual to consolidate or even correct. With both gold and silver trading off of their recent highs there is an opportunity to find technical support at defined levels.
As far as gold futures go, recent selling pressure for the last three consecutive weeks has taken current pricing to $1506.70, this after reaching a record high for the year at $1564.90. Our technical studies indicate that there could be strong support for gold futures at $1496.60, that is a 23% retracement from the lows in June when gold traded to $1267.90, up until the high of the year at $1564. If gold can hold above $1500 it most certainly would make a case that the bullish rally which began this year is still quite intact as no major chart damage would occur.
The next level of major support would have to be at the 50-day moving average which currently resides at $1470.40. Below that price point is the .38% retracement level at $1452. Personally, our studies indicate that $1496.60 should hold. However, a break below that level could indicate a move towards the 50-day moving average. As long as gold futures can trade above this price point and not break the short 50 day moving average on a technical basis this is a simple correction a consolidation and we could see gold once again begin to move to higher ground.
Silver is also on the third consecutive day resulting in lower pricing after reaching an apex at $19.74 just prior to the last three days of selling. Based on our Fibonacci retracement that begins just below $15 per ounce up until 19.73 per ounce, silver has already broken through the .23% retracement level of $18.34, and is trading precariously close to the .38% retracement which can be found at $17.92.
It will be important to see where both gold and silver prices head this week, and if they trade lower whether or not our designated technical support levels will hold.
Wishing you as always, good trading,