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P.M. Kitco Metals Roundup: Gold Ends Lower, Pressured By Stronger U.S. Dollar, Technical Correction

Tuesday August 13, 2013 2:21 PM

(Kitco News) - Comex gold futures prices ended the U.S. day session moderately lower Tuesday. A solidly higher U.S. dollar index and some technical chart consolidation following recent gains helped to sink the yellow metal. Gold and silver traders are awaiting a batch of U.S. economic data that is coming out later this week. December gold was last down $12.40 at $1,321.80 an ounce. Spot gold was last quoted down $14.50 at $1,323.40. September Comex silver last traded up $0.126 at $21.46 an ounce.

Tuesday morning’s U.S. retail sales data was the first major piece of U.S. economic data this week. That report came out about as expected, at up 0.2% in July from June, and had no lasting impact on the precious metals markets. Many believe this week’s U.S. data will show an improving U.S. economy, one that is possibly strong enough to begin to wean it from the Fed’s monthly bond-buying program, also known as quantitative easing.

There was more “Fed speak” in the market place on Tuesday, as Atlanta Fed president Dennis Lockhart said the uneven performance of the U.S. economy has not allowed the Fed to lay out a clear path for U.S. monetary policy. Lockhart did say he believes the U.S. economy will continue to make growth progress this year and in 2014.

In the European Union Tuesday, it was reported industrial output rose by 0.7% from May to June.  In the second quarter, output was up 1.1% from the first quarter. The closely watched German ZEW economic expectations index for August came in at 42.0 versus 36.3 in July. The data hints the Euro zone economy is also on the upswing.

Recent news reports cite a significant increase in demand for physical gold coming out of China. Demand for gold from Chinese consumers hit a record of 385.5 metric tons in the second quarter, according to a Chinese trade group. The reports also said China is poised to take over leadership from India as the world’s leading consumer of gold. Consumer demand for physical gold from India is also on the upswing, the reports said.

India has again raised its import taxes on gold and silver in an effort to curb its current-account deficit, it was reported Tuesday. That news also added to the selling pressure in gold.

The U.S. dollar index rallied Tuesday on more short covering. The greenback bears still have the overall near-term chart advantage. Nymex crude oil futures prices were firmer Tuesday. The crude oil bulls have the overall near-term technical advantage and have gained momentum recently. These two key “outside markets” will continue to have a daily influence on the metals markets, to varying degrees.

The London P.M. gold fix is $1,328.50 versus the previous P.M. fixing of $1,341.00.

Technically, December gold futures prices closed nearer the session low Tuesday on a downside technical correction from recent gains. Gold bears have the overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,271.80. First resistance is seen at $1,330.00 and then at Tuesday’s high of $1,341.00. First support is seen at this week’s low of $1,313.50 and then at last Friday’s low of $1,304.10. Wyckoff’s Market Rating: 3.0

September silver futures prices closed near mid-range Tuesday and hit another fresh seven-week high. Prices have just seen an upside “breakout” from a recent sideways trading range. Bulls have now gained good upside technical momentum to suggest a near-term market low is in place and that prices can continue to trend sideways to higher in the near term. Bears do still have the slight overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $22.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.00. First resistance is seen at Tuesday’s high of $21.75 and then at $22.00. Next support is seen at Tuesday’s low of $21.12 and then at $21.00. Wyckoff's Market Rating: 4.5.

September N.Y. copper closed up 115 points at 331.45 cents Tuesday. Prices closed near mid-range and hit another fresh nine-week high. Price action recently has seen a bullish upside “breakout” from a choppy trading range on the daily bar chart. Copper bulls have the slight overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the June high of 341.25 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of 312.85 cents. First resistance is seen at Tuesday’s high of 334.30 cents and then at 336.00 cents. First support is seen at this week’s low of 328.40 cents and then at 325.00 cents. Wyckoff's Market Rating: 5.5.

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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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