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A.M. Kitco Metals Roundup: Gold Gains On Safe-Haven Demand, Short Covering, Bargain Hunting

Wednesday July 03, 2013 8:16 AM

(Kitco News) - Gold prices are moderately higher in early U.S. trading Wednesday, on some safe-haven demand amid geopolitical tensions, and on more short-covering and bargain hunting. August gold was last up $11.40 at $1,255.10 an ounce. Spot gold was last quoted up $13.50 at $1,256.40. September Comex silver last traded up $0.491 at $19.80 an ounce.

Nymex crude oil futures prices pushed above $102.00 a barrel and the highest level in over a year in overnight trading, as the civil unrest in Egypt has the world market place anxious. Egypt’s president has defiantly refused the army’s call for him to step down. While Egypt is not a major oil exporter, the tensions in that nation could be a proxy for developments to come in other unsettled regions of the Middle East, and beyond. Crude oil prices above $100.00 are a bullish underlying factor for the precious metals and other raw commodity markets.

It should not be a surprise that there are fresh worries regarding the European Union and its financial problems. There is a political crisis in Portugal and there are concerns Greece can’t meet its debt obligations. Two of Portugal’s key government ministers have resigned in protest of the country’s austerity programs. Most European bond yields rose Wednesday, except for Germany’s, which fell, as European investors sought out the safe-haven German debt. The Euro currency saw selling pressure Wednesday due in part to these new worries. Some better Euro zone retail sales and purchasing managers’ data Wednesday only slightly assuaged the European markets.

Asian and European stock markets were mostly lower overnight on the new geopolitical developments. There was also some more weak economic data coming out of China Wednesday, as the country’s service sector PMI fell to 53.9 in June from 54.3 in May.

The U.S. Independence holiday is Thursday and many U.S. markets close early Wednesday. The important U.S. jobs report is out Friday morning. The key non-farm payrolls number of that report is forecast to come in at up around 160,000 in June, with the unemployment rate seen down to 7.5% in June from 7.6% in May. The European Central Bank and Bank of England monthly meetings are Thursday.

The U.S. dollar index is weaker Wednesday morning on some profit taking after hitting a five-week high overnight. The greenback bulls still have technical momentum on their side, which is a bearish underlying factor for the precious metals markets.

U.S. economic data due for release Wednesday includes the weekly jobless claims report, the weekly MBA mortgage applications survey, the Challenger job cuts report, international trade report, the ISM non-manufacturing report, the global services PMI, the weekly DOE energy stocks report, and the ADP national employment report.  

The London A.M. gold fix is $1,246.00 versus the previous London P.M. fixing of $1,252.50.

Technically, the gold market bears remain in near-term technical command. August gold futures prices are still in an eight-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price objective is to produce a close above technical resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,179.40. First resistance is seen at this week’s high of $1,267.00 and then at $1,275.00. First support is seen at the overnight low of $1,236.00 and then at this week’s low of $1,224.10.

Silver bears still have the overall near-term technical advantage. Prices are in an overall eight-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $21.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $18.17. First resistance is seen at the overnight high of $19.885 and then at this week’s high of $20.075. Next support is seen at the overnight low of $19.315 and then at this week’s low of $19.22.

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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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