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P.M. Kitco Metals Roundup: Comex Gold Ends Moderately Lower on Profit Taking and a Corrective Pullback; Bulls Still Technically Strong

Monday September 10, 2012 2:14 PM

Comex gold futures prices ended the day session moderately lower Monday, on some profit taking and chart consolidation. Prices backed down a bit from last week’s solid gains that saw prices Friday hit a fresh six-month high of $1,745.40, basis December futures. The key “outside markets” were mildly bearish for the precious metals markets Monday, as the U.S. dollar index was slightly higher and crude oil prices were slightly lower. December gold last traded down $8.40 at $1,732.10 an ounce. Spot gold was last quoted down $5.40 an ounce at $1,730.25.  December Comex silver last traded down $0.105 at $33.585 an ounce.

Focus in the market place is squarely on this week’s meeting of the Federal Open Market Committee of the U.S. Federal Reserve, which starts on Wednesday and ends on Thursday with Fed Chairman Bernanke holding a press conference. Last Friday’s weak U.S. jobs report likely opened the door wider for a fresh U.S. monetary stimulus announcement by the FOMC. Such would be at least initially bullish for the stock and commodity markets. The consensus is not clear on whether the Fed will act this week, or wait a while. But the market place is expecting some fresh monetary stimulus sooner rather than later.

In overnight news, European stock markets were stable and quiet ahead of the FOMC meeting and a German constitutional court ruling Wednesday on the validity of the European Stability Mechanism. Dutch elections are also slated for Wednesday. Spanish and Italian bond yields inched up overnight, but were still near multi-month lows and well below 6%. There was more downbeat economic news coming out of China overnight. China’s trade surplus widened as imports declined. Industrial production in China also slowed in August. Asian stocks were narrowly mixed overnight.

The U.S. dollar index was slightly higher Monday,  but did hit another fresh four-month low overnight. The greenback bears still have the solid near-term technical advantage as a seven-week-old downtrend line is in place on the daily bar chart. Meantime, crude oil prices were slightly lower Monday. Oil bulls still have the overall near-term technical advantage. These two key “outside markets” will continue to have a daily influence on precious metals prices.

The London P.M. gold fixing is $1,732.00 versus the previous P.M. fixing of $1,728.00.

Technically, December gold futures prices closed nearer the session low Monday on a corrective pullback from big gains last week that saw prices a six-month high on Friday. Gold prices are still in a two-month-old uptrend on the daily bar chart. The gold market bulls have the solid overall near-term technical advantage. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at $1,750.00. Bears' next near-term downside price objective is closing prices below psychological support at $1,700.00. First resistance is seen at last Friday’s high of $1,745.40 and then at $1,750.00. First support is seen at Monday’s low of $1,729.20 and then at $1,725.00. Wyckoff’s Market Rating: 7.5

December silver futures prices closed nearer the session low Monday but did hit a fresh five-month high early on. Profit taking and a corrective pullback were featured. The key “outside markets” were in a mildly bearish posture for silver Monday as the U.S. dollar index was firmer and crude oil prices were weaker. Bulls are still in firm near-term technical command. Prices are in a six-week-old uptrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $35.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $32.00. First resistance is seen at Monday’s high of $34.02 and then at $34.415. Next support is seen at Monday’s low of $33.41 and then at $33.00. Wyckoff's Market Rating: 7.5.

December N.Y. copper closed up 380 points at 368.30 cents Monday. Prices closed nearer the session high and hit a fresh four-month high. Copper bulls have the near-term technical advantage and have gained good upside technical momentum the past two sessions. Prices are in a five-week-old uptrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 380.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 350.00 cents. First resistance is seen at Monday’s high of 370.00 cents and then at 372.50 cents. First support is seen at 365.00 cents and then at Monday’s low of 363.30 cents. Wyckoff's Market Rating: 7.0.

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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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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