Top Prices Paid for Gold, Silver, Coins and Collectibles


A.M. Kitco Metals Roundup: Gold, Silver Pounded to Near 3-Year Lows on Weak Long Liquidation, Technical Selling
Wednesday June 26, 2013 8:15 AM
(Kitco News) - Gold and silver prices sank to nearly three-year lows in overnight trading. Both markets have seen weak-handed long liquidation and technical short-selling in the futures markets due to several factors, including ideas the U.S. economy is getting strong enough that the Federal Reserve will begin to scale back its monetary stimulus program. Comex August gold was last down $39.10 at $1,236.00 an ounce. Spot gold was last quoted down $39.90 at $1,238.25. July Comex silver last traded down $0.866 at $18.66 an ounce.
A strong batch of U.S. economic data on Tuesday further bolstered notions the Fed will begin to wean the U.S. economy from its easy-money policies, which for several years have been a bullish underlying factor for the raw commodity sector, including the precious metals.
A cash crunch in China recently has also worked to reduce demand for physical gold in that nation. Also, major gold consumer India is also seeing slack demand for physical gold after the Indian government slapped additional duties on the import of gold in order to reduce its trade deficit. Other raw commodity markets are also seeing selling pressure because of worries about China’s economy, which is the second-largest in the world.
Asian stock markets were mixed overnight as the credit crunch in China appeared to ease just a bit Wednesday following reports Tuesday that the People’s Bank of China said the liquidity tightness was only temporary and would be dealt with effectively. European stocks were mostly higher on a much better consumer sentiment report from Germany.
European Central Bank President Mario Draghi said Wednesday the ECB will keep its monetary policy accommodative for the foreseeable future. Draghi’s statement echoed other major central bank officials who earlier this week made more dovish remarks. There is some speculation in the market place that Fed Chairman Ben Bernanke believes the market place misinterpreted the results of last week’s FOMC meeting as too hawkish.
There’s an old trading adage that says a market is the most bearish at the very bottom in price--just before the market starts to turn up. The market place’s general attitude toward gold is presently the most bearish I’ve seen it in a very, very long time. There’s also an old trading adage that rings very true: The majority of traders are wrong most of the time. As the majority of the market place appears to be very bearish the gold market, it can be argued from a market psychology perspective that the bottom must be close at hand for the gold market.
The U.S. dollar index is higher Wednesday morning and hit a three-week high overnight. The greenback bulls have technical momentum on their side. Nymex crude oil prices are slightly lower Wednesday. These two key “outside markets” are in a bearish posture for the precious metals Wednesday morning.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the third-quarter GDP estimate, and the weekly DOE liquid energy stocks report.
Technically, the gold market bears are in strong near-term technical command. Prices Wednesday saw a downside “breakout” from a bearish pennant pattern on the daily bar chart, which I pointed out to you on Tuesday. The next major, longer-term downside price targets are $1,100 and then at $1,027 for nearby Comex futures. August gold futures prices are in an eight-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price objective is to produce a close above psychological resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below psychological support at $1,200.00. First resistance is seen at $1,250.00 and then at last week’s low of $1,268.70. First support is seen at the overnight low of $1,223.20 and then at $1,200.00.
Silver bears have the strong overall near-term technical advantage. Major chart damage has been inflicted, including more Wednesdsay. Prices are in an overall eight-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above major psychological resistance at $20.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $17.50. First resistance is seen at $19.00 and then at Wednesday’s high of $19.58. Next support is seen at the overnight low of $18.36 and then at $18.00.