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P.M. Kitco Roundup: Gold Ends Higher, Gets Additional Boost After FOMC Minutes

Wednesday July 10, 2013 2:37 PM

(Kitco News) - Comex gold futures prices ended the U.S. day session with slight gains Wednesday, but then rallied to near the daily high after the release of the U.S. Federal Reserve Open Market Committee meeting minutes. Gold saw a relief rally as the FOMC minutes contained no new, hawkish information. The key “outside markets” were also in a bullish posture for the precious metals on this day: a solidly lower U.S. dollar index and sharp price gains in crude oil futures. August gold was last up $16.70 at $1,262.50 an ounce. Spot gold was last quoted up $13.40 at $1,264.50. September Comex silver last traded up $0.232 at $19.37 an ounce.

The market place was just a bit surprised by the FOMC minutes reporting that around half of the 19 committee members are in favor of starting to wind down or “taper” its monthly bond-buying program, also known as quantitative easing, by the end of this year. While that could be read as somewhat more hawkish, the minutes also said most FOMC members want to see more economic data before making any firm conclusions on ending QE. The minutes mainly discussed how Fed Chairman Ben Bernanke should articulate the Fed’s monetary policy to the public. The consensus in the market place at present is that the Fed will start to cut back its bond purchases sometime later this year. Fed Chairman Ben Bernanke will also give a speech later Wednesday, which could also be market-sensitive.

China’s latest manufacturing report was released Wednesday and it came in on the weak side. Exports fell 3.1% in June, on an annualized basis. A 3.3% gain was expected. Chinese imports were down 0.7% on the year, while a 5.5% increase was forecast. The news had a somewhat limited impact on the market place, as the Chinese premiere said Wednesday China will continue on its path of long-term reform.

European stock markets were pressured Wednesday after the Standard & Poors ratings agency lowered Italy’s sovereign credit rating. The European Union’s sovereign debt crisis has been on the back burner of the market place for several months, but the situation has never been fully cleared up and could at any time heat up to roil world markets.

The U.S. dollar index was lower Wednesday on profit taking after hitting a three-year high on Tuesday. Still, the overall strong technical posture of the dollar index remains a major bearish underlying factor for the metals. Nymex crude oil prices were sharply higher Wednesday and hit a 14-month high overnight. With Nymex crude trading over $105 a barrel, that is a bullish underlying factor for the raw commodity sector, including the precious metals.

The London P.M. gold fix is $1,256.00 versus the previous London P.M. fixing of $1,255.50.

Technically, August gold futures prices were nearer the session high late Wednesday. The gold bears still have the overall near-term technical advantage. Gold prices are still in an eight-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the June low of $1,179.40. First resistance is seen at last week’s high of $1,267.00 and then at $1,277.50. First support is seen at Wednesday’s low of $1,242.20 and then at Tuesday’s low of $1,232.00. Wyckoff’s Market Rating: 2.5

September silver futures prices closed nearer the session high Wednesday and saw more short covering in a bear market. The key “outside markets” were bullish for the silver market today as the U.S. dollar index was lower and crude oil prices were sharply higher. Silver bears still have the solid overall near-term chart advantage. Prices are in an eight-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $20.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $18.17. First resistance is seen at this week’s high of $19.485 and then at $19.83. Next support is seen at Tuesday’s low of $19.93 and then at Monday’s low of $18.67. Wyckoff's Market Rating: 2.0.

September N.Y. copper closed up 255 points at 309.00 cents Wednesday. Prices closed nearer the session high on short covering in a bear market. The key “outside markets” were bullish for the copper market as the U.S. dollar index was lower and crude oil prices were sharply higher. Copper bears still have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 317.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 298.55 cents. First resistance is seen at this week’s high of 311.60 cents and then at 315.00 cents. First support is seen at 305.00 cents and then at this week’s low of 302.50 cents. Wyckoff's Market Rating: 2.0.

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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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