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P.M. Kitco Metals Roundup: Gold Up on Short Covering, Bargain Hunting and Safe-Haven Buying

Monday January 05, 2015 2:03 PM

(Kitco News) - Gold prices ended the U.S. day session with solid gains Monday, boosted by short covering in the futures market and bargain hunting in the cash market—following a drop to a four-week low last Friday. Some safe-haven for demand for gold also surfaced Monday as U.S. and European stock markets sold off. February Comex gold was last up $15.90 at $1,202.10 an ounce. Spot gold was last up $12.70 at $1,203.00. March Comex silver last traded up $0.442 at $16.21 an ounce.

The gains in gold were especially impressive Monday, in the face of keenly bearish “outside market” forces. Nymex crude oil prices fell to a 5.5-year low of $49.95 a barrel. Meantime, the U.S. dollar index hit a 10-year high Monday. These two key markets continue to trend strongly in the opposite directions, and that continues to be a major negative force working against the raw commodity markets. However, many raw commodity markets, including gold and silver, have stabilized at lower levels and have begun to trade sideways on the daily charts. This is an early clue those commodity market prices may have bottomed out. It is my strong bias that 2015 will be a better year for the raw commodity market bulls than last year.

The Euro currency dropped to a nine-year low against the greenback Monday, mainly due to ideas the European Central Bank will act soon to stimulate European Union monetary policy. However, EU traders and investors are still worried about the debt situations of the smaller countries in the union--especially Greece and to a lesser degree Spain and Italy. European and U.S. stock markets were in part pressured on those concerns, which in turn prompted safe-haven demand for gold.

U.S. economic data due released Monday was light, but the pace picks up as the week progresses. The U.S. employment report for December is due out on Friday. This piece of economic data is arguably the most important report of the month. There are also other important U.S. economic reports out this week, and the U.S. Congress begins its new session.

The London P.M. gold fix is $1,200.00 versus the previous A.M. fixing of $1,192.00.

Technically, February gold futures prices closed near the session high today. Prices last Friday hit a four-week low. The gold bears do still have the overall near-term technical advantage. Their next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,210.90. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,167.30. First resistance is seen at $1,210.90 and then at $1,221.00. First support is seen at $1,200.00 and then at $1,195.00. Wyckoff’s Market Rating: 3.5

March silver futures prices closed near the session high today on short covering and bargain hunting. Silver bears still have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at last week’s high of $16.48 and then at $16.75. Next support is seen at $16.00 and then at today’s low of $15.63. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed down 520 points at 276.55 cents today. Prices closed nearer the session low today and hit another contract low. The key “outside markets” were bearish for copper today--a stronger U.S. dollar index and lower crude oil prices. The copper bears have the strong overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 290.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 270.00 cents. First resistance is seen at 280.00 cents and then at today’s high of 282.70 cents. First support is seen at today’s contract low of 274.40 cents and then at 272.50 cents. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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