US Gold prices finished pit trade near the daily low Tuesday on chart consolidation and some corrective pullback from solid gains posted Monday.

The Key outside markets were Bearish for the precious metals Tuesday as the USD index firmer and Crude Oil prices fell sharply.

Dec Gold last traded -12.10 at 1,722.30 oz.

Spot Gold was last quoted -0.40 at 1,732.00 oz.

Dec Comex Silver last traded – 0.254 at 32.93 oz.

Gold prices came under pressure in early Tuesday and then modestly extended those losses around midday. There were 2 developments Tuesday seen as Bearish for Gold. In late-morning trading news reports surfaced that Israel and Hamas had agreed to an Egyptian-brokered ceasefire that will go into effect Tuesday night. That news hammered the Crude Oil market, prompting spillover selling into the precious metals. If those news reports are correct, it would take a bit of the safe-haven bid out of the Gold market. But, there was not any strong safe-haven buying seen during the past few days, during the height of the Israel-Hamas conflict.

Also mid-day; US Federal Reserve Chairman Ben Bernanke delivered a speech in New York, in which he warned Obama, and the politicians of the dangers of the US going over the “F-Cliff,” and said the Fed could do little to repair the damage such would inflict on the US economy. That admonition from Mr. Bernanke deflated the US stock market some, which in turn put some further downside pressure on Crude Oil, Gold and Silver prices also hit their session lows shortly after Mr. Bernanke’s speech came on the wire. The market is not always logical as Mr. Bernanke’s speech really contained nothing new, and the sense of the market is that U.S. lawmakers will deal with the F-Cliff before 1 January. It can also be argued that if the US moves closer to falling off the F-Cliff it would be Bullish for Gold, on a safe-haven move by investors.

Crude Oil fell into negative territory on reports that Hamas and Israel have agreed to a ceasefire.

A stronger USD index also put pressure on the energy component. Crude Oil fell as low as 86.17 bbl in afternoon pit action and settled with a 2.9% loss at 86.76 bbl.

Precious metals came under pressure during Tuesday’s pit trade as the stronger USD index and better-than-expected housing data weighed on prices.

Gold opened near unchanged line and spent morning floor action chopping around just below that level. The precious Yellow metal sold off further in afternoon action and brushed a session low of 1722.50 oz moments before settling with a 0.6% loss at 1723.70 oz. Silver fell off its session high of 33.19 oz and tapped a session low of 32.86 oz. Like Gold, it settled 0.6% lower at 32.96 oz.

In contrast, Nat Gas steadily climbed higher after coming off its session low of 3.74 per MMBtu. It closed with a 2.7% gain at 3.83 per MMBtu, just below its session high of 3.84 per MMBtu.

In overnight news: the market showed little reaction to a move by credit rating agency Moody’s to downgrade France’s sovereign credit rating. Given other major countries have also been downgraded the past couple years, and the fact that the credit rating agencies have seen their own credibility ebb, the market ho-hummed the news.

There is a meeting of Euro zone officials in Brussels Tuesday on when to disburse the next tranche of bailout money to Greece, and on what terms Greece will be held in order to receive the money. It’s widely expected Greece will get the money, as the EU does not have much choice if the bloc wants the financially troubled country to stay afloat and stay in the union. Spanish and Italian bond yields have been stable to falling, which hints the EU debt crisis is at least not worsening in here.

The USD index traded firmer Tuesday. The USD Bulls have the overall near-term technical advantage.

Nymex Crude Oil prices finished sharply lower on the Israel-Hamas ceasefire news.

Crude Oil (WTI) 87.08 -2.20 (-2.46%)

Trading has been choppy in Crude Oil. These 2 Key outside markets continue to have daily influence on the price of precious metals.

The London PM Gold fixing was 1,732.25 Vs the prior PM fixing at 1,730.50.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service

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