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P.M. Kitco Roundup: Gold Ends Solidly Lower on Bearish Outside Markets; FOMC Minutes a Non-Event

Wednesday October 9, 2013 2:54 PM

(Kitco News) - Gold prices were solidly lower in afternoon U.S. trading Wednesday.  Gold and silver saw strong selling pressure due to the key “outside markets” being in a fully bearish daily posture Wednesday—a sharply higher U.S. dollar index and sharply lower crude oil prices. Technical selling was also featured in gold and silver markets, with gold hitting sell stops in early U.S. dealings. December Comex gold was last down $17.90 at $1,306.80 an ounce. Spot gold was last quoted down $12.30 at $1307.00. December Comex silver last traded down $0.498 at $21.94 an ounce.

The latest FOMC minutes from the Federal Reserve’s meeting last month revealed a divisive committee, with the doves and hawks pleading their case. The committee expressed concern about shocks to the market place, including the U.S. budget impasse and looming debt ceiling. The majority of the FOMC members also reckoned the Fed would begin to scale back its monthly bond-buying program yet this year. However, that was before the U.S. government shutdown that has gripped the markets the past week. Now, many Fed watchers believe “tapering” of U.S. quantitative easing will not begin until sometime in 2015. Gold and silver prices reacted little to the FOMC minutes.

President Obama plans to nominate Federal Reserve Vice Chair Janet Yellen to the top spot of Chairman of the Fed, it was revealed late Tuesday. This news was not surprising but is still a bullish underlying factor for most markets, including the raw commodity sector and precious metals. Asian stock markets rallied overnight, due in part to the Yellen news. Yellen is perceived by the market place to be a dove when it comes to monetary policy.

The partial U.S. government shutdown drags on and is in its ninth day with still no serious movement from either Democrats or Republicans. In fact, Tuesday both Republican lawmakers and President Obama appeared to “dig in their heels” on the confrontation. There is a rising unease in the world market place at present, but there is still not yet panic. The date now being pegged is October 17—the date at which some U.S. government officials now say the U.S. will start to default on its credit obligations. It appears the budget impasse and government closure could lead right up to the U.S. debt ceiling limit. There may be fresh news on this matter late Wednesday, which could move the markets.

A German five-year note auction saw yields decline amid strong demand Wednesday, mostly due to the keener uncertainty regarding the U.S. government’s dysfunction on its budget and debt ceiling. The average yield on the German “Bobl” fell to 0.81% from 1.00% fetched a month ago.

The London P.M. gold fix is $1,304.00 versus the previous P.M. fixing of $1,329.50.

Technically, December gold futures prices closed near mid-range Wednesday. The gold market bears have the overall near-term technical advantage. A six-week-old downtrend is in place 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 $1,353.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the August low of $1,271.80. First resistance is seen at Wednesday’s high of $1,323.30 and then at this week’s high of $1,330.80. First support is seen at Wednesday’s low of $1,294.60 and then at the September low of $1,291.50. Wyckoff’s Market Rating: 4.0

December silver futures prices closed nearer the session low. Silver bears have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $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 $20.63. First resistance is seen at Wednesday’s high of $22.41 and then at this week’s high of $22.525. Next support is seen at this week’s low of $21.65 and then at $21.44. Wyckoff's Market Rating: 4.0.

December N.Y. copper closed down 580 points at 323.45 cents Wednesday. Prices closed nearer the session low and saw a bearish downside “breakout” from a wedge pattern on the daily bar chart. Copper bears now have the slight near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at this week’s high of 332.15 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the September low of 319.05 cents. First resistance is seen at 325.00 cents and then at 327.50 cents. First support is seen at Wednesday’s low of 322.00 cents and then at 320.00 cents. Wyckoff's Market Rating: 4.5.

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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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