Wednesday November 14, 2012 8:18 AM
(Kitco News) - Comex gold prices are trading firmer and near the daily high in the early going Wednesday, having rebounded from weaker levels seen overnight. There is some fresh bargain hunting amid more chart consolidation. The U.S. dollar index has weakened in early U.S. trading, which is also adding to some buying interest in gold and silver. December gold last traded up $3.80 at $1,728.50 an ounce. Spot gold was last quoted up $4.50 at $1,729.75. December Comex silver last traded up $0.158 at $32.64 an ounce.
The overall market place is just a bit more at ease Wednesday. Overnight the Euro currency made modest gains against the U.S. dollar, suggesting at least the European Union sovereign debt crisis did not worsen the past 24 hours. However, there was more dour economic news coming out of the EU, which suggested the bloc is headed for, or already in, economic recession. Overall industrial production in the EU countries fell 2.5% in September, it was reported Wednesday. There is key economic data coming out of the EU on Thursday, as gross domestic product data is released by the major EU countries.
If recent history repeats itself Greece will soon be back on the front burner of the market place, regarding fresh EU bailout money and the debating about when and if to disburse fresh funds to the cash-starved country. There was a German newspaper report Tuesday that suggested the EU might soon shell out one big lump sum of cash to Greece, to the tune of $56 billion. That did somewhat buoy European markets. Many doubt that plan will actually occur, however. Spanish and Italian bond yields did back off a bit Wednesday, which is also a clue of anxiety levels in the market place that are not rising.
A European Central Bank official once again stressed Wednesday that ECB monetary policy cannot solve the economic structural problems facing the EU. Such can also be said about monetary policy being able to solve the U.S.’s economic structural problems.
In the U.S., traders and investors will closely monitor Wednesday afternoon’s release of the minutes of the last meeting of the Federal Reserve’s Open Market Committee (FOMC). The ongoing “fiscal cliff” rhetoric between the Democrats and Republicans will continue to be closely monitored by the market place.
The U.S. dollar index is slightly lower Wednesday morning but is hovering near a two-month high. The U.S. dollar bulls still have upside near-term technical momentum. Nymex crude oil prices are trading near steady Wednesday morning. 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.
U.S. economic data due for release Wednesday includes the FOMC minutes, weekly MBA mortgage applications survey, the Producer Price Index, retail sales, and manufacturing and trade inventories.
The London A.M. gold fixing is $1,724.50 versus the previous A.M. fixing of $1,726.25
Technically, gold futures bulls still have the overall near-term and longer-term technical advantage. Price action this week is seeing a pause, or consolidation on the daily chart. This is not bearish. The gold bulls’ next upside price breakout objective is to produce a close above solid chart resistance at $1,755.00. Bears' next near-term downside 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. First support is seen at Tuesday’s low of $1,716.60 and then at $1,712.60.
December silver futures bulls have the overall near-term technical advantage. Their 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 the overnight low of $32.365 and then at $32.00.
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By Jim Wyckoff, contributing to Kitco News; firstname.lastname@example.org