More price pressure on gold, silver as USDX, bond yields spike up

Gold and silver prices are lower in midday U.S. trading Monday. Gold prices hit a nearly 2.5-year low and silver a more-than-two-week low today. Rising government bond yields and a very strong U.S. dollar index are the main bearish factors pushing the precious metals markets down. October gold was last down $12.70 at $1,632.80 and December silver was down $0.17 at $18.73.

The global marketplace experienced rough waters Monday, in a continuation of keener risk-off trading attitudes seen late last week. U.S. and/or global economic recession worries are rising rapidly. Global stock markets were mostly lower overnight. U.S. stock indexes are mixed at midday but not far above last week's three-month lows. The Wall Street Journal today reported this year has been the worst year since 1930 for a "buy-the-dips" strategy in U.S. stock trading and investing. FOREX volatility and rising government bond yields are in the spotlight Monday.

The U.K.'s big plan to sell more government bonds in an effort to finance better economic growth has helped to prompt a rout in global government bond markets. "The bond vigilantes are back and the British pound is the target," read a Barron's headline today.

Broker SP Angel in an email dispatch this morning said gold saw a "minor flash crash" overnight. "The metal continues to get hammered" by the U.S. dollar. Foreign exchange volatility is rising, with the British pound passing its record low in 1984 and presently trading around $1.04 to the dollar. The Chinese yuan is nearing 2008 lows. "Traders are ramping up short positions on gold, with fund managers more bearish on the metal than any other time over the past four years, according to a Bloomberg report. Rising U.S. Treasury yields have been a major headwind to the gold and silver markets. "Gold ETF outflows continue, with holdings near their 2-year lows," said the broker.

Despite its losses, the gold market continues to outperform most other major assets - WGC

The key outside markets today see Nymex crude oil prices weaker, hitting a seven-month low and trading around $78.00 a barrel. The U.S. dollar index is higher and pushed to another 20-year high today. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.771%. The 2-year Treasury note yield is 4.74%.

Technically, October gold futures prices hit a nearly 2.5-year low today. The gold futures bears have the solid overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at the overnight high of $1,646.40 and then at $1,652.00. First support is seen at today's low of $1,624.40 and then at $1,615.00. Wyckoff's Market Rating: 1.0

December silver futures prices hit a two-week low today. The silver bears have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $20.00. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at today's high of $19.045 and then at $19.40. Next support is seen at today's low of $18.435 and then at $18.00. Wyckoff's Market Rating: 2.0.

December N.Y. copper closed down 375 points at 330.50 cents today. Prices closed near mid-range today and hit a nine-week low. The copper bears have the firm overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 369.25 cents. The next downside price objective for the bears is closing prices below solid technical support at the July low of 315.55 cents. First resistance is seen at 340.00 cents and then at 347.25 cents. First support is seen at 325.00 cents and then at 315.55 cents. Wyckoff's Market Rating: 2.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips