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A.M. Kitco Metals Roundup: Comex Gold Pressured by Firmer U.S. Dollar, "Risk-Off" Attitudes

Thursday November 15, 2012 8:16 AM

(Kitco News) - Comex gold prices are under moderate selling pressure Thursday. The precious metals are seeing selling come from a stronger U.S. dollar index that is hovering near a two-month high. It’s also a “risk-off” day in the market place Thursday, which is also limiting buying interest in risk assets, including the raw commodities. December gold last traded down $12.00 at $1,718.10 an ounce. Spot gold was last quoted down $9.80 at $1,718.25.  December Comex silver last traded down $0.355 at $32.53 an ounce.

In overnight news, European stocks were lower on fresh economic news that suggested the European Union countries are in collective recession. Gross domestic product in the Euro zone decreased 0.4% in the third quarter, on an annualized basis, to mark the second straight quarter of decline and four quarters of no growth in the zone. The major economies of Germany and France did show modest growth in the third quarter, which did mitigate the overall contraction in the Euro zone.

Asian stocks also declined overnight, in part on the U.S. “fiscal cliff” worries that have helped put traders and investors in a risk-averse frame of mind just recently. Negotiations and machinations from the U.S. lawmakers on the matter will be very closely scrutinized and parsed in the coming few weeks. It is likely that Democrats and Republicans will reach some form of agreement on the matter before the end of the year—but not without some drama in the meantime.

On the geopolitical front, Israel’s assassination of the Hamas military leader Wednesday and Israel’s pledge to take out more Hamas leaders has the Middle East region even more uneasy late this week. This situation would turn into a solid underlying bullish factor for safe-haven gold should military action in that region escalate.

Reports say the Diwali festival in India has kept Indian gold buyers out of the market this week, which has added to the downside price pressure in the gold market this week.

The U.S. dollar index is modestly higher Thursday morning and 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 Thursday morning. The Middle East tensions are limiting the downside in oil, but slack worldwide demand is limiting the upside. The crude oil bears still 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 Thursday includes the weekly jobless claims report, the consumer price index, the Empire State manufacturing survey, the weekly DOE energy stocks report, and the Philadelphia Fed business outlook survey.

The London A.M. gold fixing is $1,723.50 versus the previous A.M. fixing of $1,725.75

Technically, gold futures bulls still have the overall near-term and longer-term technical advantage as trading turns choppy this week. 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 the overnight high of $1,727.90 and then at Wednesday’s high of $1,734.10. First support is seen at the overnight low of $1,715.50 and then at $1,703.00.

December silver futures bulls have the overall near-term technical advantage and are having a good week. Prices hit a four-week high on Wednesday.  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 the overnight high of $32.745 and then at Wednesday’s high of $32.93. Next support is seen at Wednesday’s low of $32.365 and then at $32.00.

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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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