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A.M. Kitco Metals Roundup: Gold Pops Following Fresh "Fed Speak"

Friday September 27, 2013 8:23 AM

(Kitco News) - Comex gold futures prices are solidly higher in early U.S. trading Friday, and saw a pop up just before U.S. futures trading opened. More comments coming from a U.S. Federal Reserve official were deemed as near-term bullish by gold traders. Short covering, bargain-hunting and some safe-haven buying are featured in gold. Buy stop orders were also triggered in Friday morning’s price spurt. December Comex gold was last up $16.20 at $1,340.30 an ounce. Spot gold was last quoted up $17.30 at $1341.70. December Comex silver last traded up $0.294 at $22.065 an ounce.

Gold prices were trading near unchanged levels and then spurted solidly higher following wire reports that Chicago Federal Reserve president Charles Evans said the U.S. central bank may not begin to scale back its monthly bond-buying program until 2014 because the U.S. economic environment still needs to improve.  The U.S. dollar index also slumped to its session low in the wake of Evans’ remarks. However, his comments, overall, were ambiguous. Still, the gold market bulls chose to jump on those specific Evans remarks they deemed to be bullish.

In other overnight news, consumer confidence in the European Union rose to its highest level in more than two years during August. The EU’s economic sentiment indicator rose to 96.9 in September versus 95.3 in August. However, European stock markets were weaker due to concerns about the Italian government’s stability amid a fraud scandal involving former prime minister Berlusconi. Asian stock markets were firmer in uneventful action Friday, following Wall Street’s advance Thursday.

The main focus of the market place is now on the U.S. budget and debt ceiling impasses that threaten to shut down the U.S. government as soon as next Tuesday. Congress needs to pass a budget by that time and is working on bills. Presently, it’s highly uncertain if the Congress can come to agreement by October 1.  Also, in mid-October the U.S. will hit its borrowing limit. These matters are presently an underlying bearish factor for most markets and could become a major bearish factor in the next couple weeks.

Some analysts are saying gold is presently seeing selling interest limited due to some safe-haven demand ahead of the U.S. budget and spending deadlines and the uncertainty of the matter. But other analysts are saying recent selling pressure in gold is because it’s acting like a raw commodity ahead of the U.S. budget deadlines. It’s likely one of these scenarios will more clearly come to the forefront by early next week.

Reports overnight said gold imports to India are set to increase significantly as a main festival season approaches and because the Indian government is now allowing heretofore delayed gold shipments into the country. The delay was because the government was not allowing gold imports into the country because of confusing import rules that have now been cleared up.

U.S. economic data due for release Friday includes personal income and outlays, and the University of Michigan consumer sentiment survey. A couple more Federal Reserve officials are scheduled to speak Friday, and their comments will be closely watched by the market place.

The London A.M. gold fix is $1,321.50 versus the previous P.M. fixing of $1,333.00.

Technically, December gold futures bears still have the overall near-term technical advantage. Prices are in a four-week-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 last week’s high of $1,375.40. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,291.50. First resistance is seen at the overnight high of $1,345.20 and then at $1,350.00. First support is seen at $1,330.00 and then at the overnight low of $1,320.00.  

December silver futures bears still have the overall near-term technical advantage. A four-week-old downtrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $23.445 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $21.225. First resistance is seen at this week’s high of $22.13 and then at $22.50. Next support is seen at the overnight low of $21.41 and then at this week’s low of $21.30.

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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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