Tuesday November 13, 2012 1:49 PM
(Kitco News) - Comex gold prices ended the U.S. day session moderately lower Tuesday. Bearish “outside markets” limited buying interest in the gold and silver markets, as the U.S. dollar index was firmer, while crude oil prices were weaker. Gold and silver have seen some mild profit taking and chart consolidation occur early this week, following last week’s good gains. December gold last traded down $6.60 at $1,724.30 an ounce. Spot gold was last quoted down $4.30 at $1,725.00. December Comex silver last traded down $0.082 at $32.44 an ounce.
The ongoing European Union sovereign debt crisis has ratcheted up a notch, which has put a crimp on many raw commodity markets recently. That, in turn, has spilled over into some selling pressure in gold and silver markets early this week. In overnight news, European stocks declined on apparent disagreement among European Union troika officials on the terms and when to disburse the next tranche of EU bailout money to Greece, which is now running out of cash. An EU meeting Monday failed to come to agreement on when to give Greece a new cash infusion. Now, another EU meeting is scheduled for November 20 on the matter. There was also more weak economic data coming out of Germany Tuesday, where the ZEW index of economic sentiment fell sharply. There is key economic data coming out of the EU on Thursday, as gross domestic product data is released by the major EU countries.
Meantime, focus in the U.S. remains on resolving the so-called fiscal cliff matter by the end of the year. The Obama administration and congressional leaders are both jawboning the matter at present, with mixed ideas on whether the rhetoric is good or bad. Ratings agencies have issued warnings to the U.S. that U.S. credit will be downgraded if the fiscal cliff problem is not sufficiently resolved. This market watcher reckons both sides will come to agreement on the matter before the end of the year, likely by agreeing to short-term funding measures and then agreeing to visit the situation again in the coming months.
The U.S. dollar index traded firmer Tuesday and hit another two-month high. The U.S. dollar bulls still have good upside near-term technical momentum. Nymex crude oil prices traded weaker Tuesday. The crude oil bears have the overall near-term technical advantage as a two-month-old downtrend is in place on the daily bar chart. Interestingly, while not overtly near-term market-sensitive, a shocker study was released by the International Energy Agency (IEA) Monday. It said that in just seven years the U.S. will be the largest crude oil producer in the world and shortly thereafter will not need to import any foreign crude oil. This surprised most in the market place and it has huge longer-term implications for the psychology of the market place. Reason: For years there has been a Middle East “fear premium” added into the overall price of a barrel of crude. As time goes on now, that fear premium will gradually recede to no premium at all, if the IEA’s assumptions are correct. To extrapolate further, Monday’s IEA report may mean the 2008 all-time high in Nymex crude oil futures, at near $150.00 a barrel, may not be reached again for decades.
This week is the festival of Diwali in India, in which gold buying is a tradition. Fresh physical demand for gold coming out of India will be closely monitored in the near term.
The London P.M. gold fixing was $1,726.25 versus the previous P.M. fixing of $1,735.25.
Technically, December gold futures prices closed near mid-range Tuesday. Bulls still have the overall near-term technical advantage. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at $1,755.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the November low of $1,672.50. First resistance is seen at Tuesday’s high of $1,733.30 and then at last week’s high of $1,739.40 and then at $1,750.00. First support is seen at Tuesday’s low of $1,717.60 and then at $1,710.00. Wyckoff’s Market Rating: 6.0
December silver futures prices closed near mid-range Tuesday but did hit a fresh three-week high early on. Silver bulls still have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $33.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the November low of $30.655. First resistance is seen at Tuesday’s high of $32.83 and then at $33.00. Next support is seen at Tuesday’s low of $32.10 and then at $32.00. Wyckoff's Market Rating: 6.0.
December N.Y. copper closed up 50 points at 347.30 cents today. Prices closed nearer the session high today and saw tepid short covering in a bear market. Copper bears still have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 357.50 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 335.00 cents. First resistance is seen at 350.00 cents and then at 352.50 cents. First support is seen at 345.00 cents and then at Tuesday’s low of 342.15 cents. Wyckoff's Market Rating: 3.0.
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By Jim Wyckoff, contributing to Kitco News; email@example.com