Gold Sharply Lower, Hits 10-Week Low, Amid Bearish Outside Market Forces

(Kitco News) - Gold prices ended the U.S. day session solidly lower and hit a 10-week low Tuesday. A stronger U.S. dollar index that hit a 13-month high and sharply lower crude oil prices sunk the yellow metal. No major geopolitical flare-ups during the long U.S. holiday weekend also prompted weak long liquidation in gold futures. Technical selling pressure was also featured in the futures markets as pre-placed sell stop orders were triggered when prices breached chart support levels. December Comex gold was last down $22.20 at $1,265.20 an ounce. Spot gold was last quoted down $22.50 at $1,265.25. December Comex silver last traded down $0.307 at $19.18 an ounce.

There was a hefty slate of U.S. economic data out Tuesday, including the U.S. manufacturing PMI, construction spending, the IBD/TIPP economic optimism index, the ISM manufacturing report, and the global manufacturing PMI. This data was generally upbeat and that was also a negative for gold, as it suggests the U.S. Federal Reserve will move to raise interest rates sooner rather than later.

It's a big week for economic data points that are likely to be market sensitive for the precious metals. The highlights are Thursday's European Central Bank meeting and Friday's U.S. jobs report. The market place reckons the ECB is on the verge of announcing fresh monetary stimulus. And the U.S. jobs report will give the latest reading on the important non-farm payrolls growth, seen at up 220,000 in August.

The OECD reported Monday that inflation in its 34 world member economies fell again, at 1.9% in July from 2.1% in June, year-on-year. The OECD said the slowing inflation rate reflects continued weak overall world economic growth. The report is yet another worrisome clue that deflationary price pressures are lurking in the entire world economic system. Such is a bearish factor that has contributed to the present downward trend in the raw commodity sector.

The London P.M. gold fix was $1,267.00 versus the previous London A.M. fixing of $1,277.75.

Courtesy: Kitco News