P.M. Kitco Metals Roundup: Comex Gold Ends Higher on Follow-Through Safe-Haven Buying, Technical Strength

25 August 2010, 2:40 p.m.
By Jim Wyckoff
Of Kitco News www.kitco.com

Comex gold futures closed higher and hit a fresh nearly two-month high Wednesday, on follow-through safe-haven buying interest and on the building technical strength in the market. December gold last traded up $7.70 an ounce at $1,241.10. Spot gold was last quoted up $9.00 at $1,240.00.

Another weak U.S. housing report Wednesday--new home sales were down a larger-than-expected 12.4% in July--prompted more safe-haven buying interest in the precious yellow metal. Durable goods orders data issued on Wednesday was also weaker than the market place had expected. Wednesday's weak economic data followed a dour U.S. existing home sales report on Tuesday that reminded traders the U.S. and world economies are still on shaky ground, and prompted a fresh influx of safe-haven buying interest in the gold market.

The U.S. dollar index was firmer, too, Wednesday, as the greenback is also viewed by investors as a safe-haven asset. Investor risk appetite this week has again receded. European and U.S. stock markets have been under pressure this week, while U.S. Treasury yields hover at or near record lows. Recent history shows that during times of keener investor uncertainty, both gold and the U.S. dollar index can appreciate at the same time.

Reports overnight said the large SPDR Gold Trust fund has this week seen holdings decline by 1.5 metric tons. The World Gold Council Wednesday reported gold demand pushed above $40 billion in the second quarter of this year. Investment demand for gold more than doubled from the year earlier, to 534 tons, the WGC said.

The London P.M. fixing was $1,237.50 compared to the previous P.M. fixing of $1,222.00.

From an important technical perspective, December gold futures prices closed nearer the session high again Wednesday as the bulls have gained fresh upside near-term technical momentum. Gold market bulls have the solid near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above solid chart resistance at $1,250.00. Bears' next near-term downside price objective is closing prices below solid technical support at this week's low of $1,211.70. First resistance is seen at Wednesday's high of $1,243.40 and then at $1,250.00. Support is seen at Wednesday's low of $1,230.90 and then at $1,223.50. Wyckoff's Market Rating: 7.5.

December silver futures closed up 55.7 cents at $18.985 an ounce Wednesday. Prices closed near the session high and hit a fresh two-month high. Stronger gold market prices have pulled silver higher as bargain hunters and fresh speculative buying interest have boosted the silver market just recently. Silver bulls have the near-term technical advantage and have gained fresh upside technical momentum. The next downside price objective for the bears is closing prices below solid technical support at $18.40. Bulls' next upside price objective is closing prices above solid technical resistance at the June high of $19.55 an ounce. First resistance is seen at Wednesday's high of $19.09 and then at $19.25. Next support is seen at $18.75 and then at $18.675. Wyckoff's Market Rating: 7.0.

December N.Y. copper closed down 160 points at 324.60 cents Wednesday. Prices closed near mid-range and hit another fresh four-week low. A firmer U.S. dollar index today did help to pressure copper prices. Copper bulls and bears are now back on a level near-term technical playing field. The next downside price objective for the bears is closing prices below solid technical support at 315.00 cents. Bulls' next upside objective is pushing and closing prices above solid technical resistance at the August high of 343.05 cents. First resistance is seen at Wednesday's high of 328.00 cents and then at 330.00 cents. First support is seen at 321.10 cents and then at Wednesday's low of 320.00 cents. Wyckoff's Market Rating: 5.5.

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

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