Tuesday November 05, 2013 2:26 PM
(Kitco News) - Gold prices ended the U.S. day session moderately lower Tuesday and gave up slight gains scored just after the futures market opened in New York. The key “outside markets” were bearish for the precious metals Tuesday, as the U.S. dollar index was higher and crude oil prices were lower. December Comex gold was last down $4.10 at $1,310.60 an ounce. Spot gold was last quoted down $3.70 at $1311.50. December Comex silver last traded steady at $21.70 an ounce.
The U.S. ISM non-manufacturing index came in stronger than expected Tuesday morning, and that gave the U.S. dollar index a boost which in turn put moderate downside price pressure on the gold market. The better ISM reading also somewhat stoked fears the Federal Reserve could make a move sooner to begin “tapering” its quantitative easing of monetary policy. The next FOMC meeting is in December.
Nymex crude oil futures slumped to a more-than-four-month low Tuesday. The solid price downtrend in crude oil remains a bearish underlying factor not only for the precious metals but also for the entire raw commodity sector. It would not surprise me to see more downside price pressure in the crude oil market in the coming weeks.
Economic news out of China overnight showed its services PMI rose to 52.6 in October from 52.4 the previous month. This continues a string of mostly upbeat economic data coming out of China the past few months. China’s Communist party meets this week, during which time major plans and economic reforms are unveiled by the leaders of the country. The world market place will be closely watching for any proclamations coming from that confab.
In the European Union, the bloc’s producer price index fell at the fastest annual rate in three years, it was reported Tuesday. EU producer prices rose 0.1% in August, month-on-month, but were down 0.9% on the year. Tuesday’s EU inflation numbers, combined with similar figures released last week, are worrisome as they suggest deflationary conditions could be on the horizon for the EU. Tuesday’s data bolsters ideas the European Central Bank could move to ease its monetary policy in an effort to keep the tepid EU economic recovery moving forward. The ECB monthly monetary policy meeting is Thursday. The Euro currency has dropped significantly in value against the U.S. dollar just recently, on beliefs the ECB will soon cut its key interest rate.
In other EU news, the 17-nation bloc’s official economists said Tuesday the collective economy’s unemployment rate will remain near record highs through 2015. Government austerity and debt reduction will curtail business investment and consumer spending. The economists said 2013 will end with another year of overall economic recession—the third in five years.
Reports Tuesday said consumer demand for physical gold in India was only half of normal heading up to the key Diwali festival. Added Indian government taxes and other import hurdles crimped consumer demand in this major gold-consuming nation.
The London P.M. gold fix is $1,307.50 versus the previous P.M. fixing of $1,320.50.
Technically, December gold futures prices closed near mid-range in more quiet trading Tuesday. The gold market bulls and bears are still on a level near-term technical playing field. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,361.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,322.50 and then at $1,327.30. First support is seen at Tuesday’s low of $1,305.20 and then at $1,300.00. Wyckoff’s Market Rating: 5.0
December silver futures prices closed near mid-range and hit another two-week low Tuesday. Silver bulls and bears are on a level near-term technical playing field. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $23.095 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $21.00. First resistance is seen at $22.00 and then at $22.25. Next support is seen at Tuesday’s low of $21.56 and then at $21.25. Wyckoff's Market Rating: 5.0.
December N.Y. copper closed up 80 points at 326.10 cents Tuesday. Prices closed near mid-range. Bulls and bears are still on a level near-term technical playing field amid choppy trading. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 335.50 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of 321.50 cents. First resistance is seen at Tuesday’s high of 327.65 cents and then at 330.00 cents. First support is seen at Tuesday’s low of 324.30 cents and then at 323.40 cents. Wyckoff's Market Rating: 5.0.
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By Jim Wyckoff, contributing to Kitco News; firstname.lastname@example.org