US Gold prices finished pit trade sharply lower Wednesday, but up from the daily low. Just after the Comex Gold futures market opened at 8:20 a EST Wednesday heavy sell orders flooded in and prices quickly dropped by over 20 oz, to extend earlier losses and hit the daily low.
Technical selling, including stop-loss orders were triggered, and options-related selling pressure exacerbated the steep and rapid downturn in Gold prices.
Some reports said there were heavy Put options purchases seen in the market Tuesday.
Reports also said Sell orders of over 7,500 futures contracts worth 100 oz each were executed right at the opening of Comex futures trading Wednesday.
There was no major news event which occurred during or near that timeframe to explain the sudden downdraft in prices.
Silver futures followed Gold’s lead and also sold off sharply. Silver by the close Wednesday did post a good recovery from its daily low.
Feb Gold last traded off 26.00 at 1,718.80 oz.
Spot Gold was last quoted off 25.20 at 1,717.25 oz.
Mar Comex silver last traded off 0.349 at 33.725 oz.
Importantly, no significant near-term chart damage was inflicted in Gold or Silver markets Wednesday. But, Wednesday’s price action did see the Gold and Silver Bulls’ technical strength fade a bit and the Bulls now need to step up and show fresh power soon in order to avoid any near-term chart damage being inflicted.
The early part of the trading day Wednesday saw a “risk-off” trader and investor mentality in the market place, with Gold and Silver on this day choosing to act more like a raw commodity, risk asset, than like a safe-haven asset.
Traders and investors are more keenly focused on the negotiations among US lawmakers and President Obama regarding the F-Cliff tax increases and spending cuts that are approaching.
Talk coming from all US lawmakers earlier this week was not soothing to the market; highlighted by Senate Majority Leader Harry Reid, who said late Tuesday there had been scant progress made in the negotiating process to resolve the matter. However, more conciliatory words came from US lawmakers Wednesday, which did assuage the markets anxiety, as the US stock indexes pushed into positive territory after starting the day lower.
European and Asian stock markets, and the Euro currency were weaker overnight on F-Cliff worries. There is still a sense among veteran market watchers that some type of deal will be reached soon to avoid the US government going over the Cliff.
In the Middle East there are growing tensions in Egypt, as its President awarded himself major powers last week, and the public did not like it. Protesting in the streets is occurring this week. This situation bears close watching and if it escalates, it will more significantly impact markets.
The USD index was modestly higher earlier Wednesday but then sold off when the US stock market came off its daily lows on the more conciliatory rhetoric on the F-Cliff matter coming out of Washington.
The USD index weakening also allowed Gold and Silver prices to move up from their daily lows.
Nymex Crude Oil prices were lower Wednesday.
Crude Oil (WTI) 86.48 -0.70 ( -0.80%)
The Crude Oil Bears still have the overall near-term technical advantage and gained some fresh downside momentum Wednesday.
These 2 Key outside markets continue to impact the precious metals markets on a daily.
The London PM Gold fixing was 1,708.00 Vs the previous PM fixing at 1,746.25.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.