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P.M. Kitco Roundup: Gold Backs Off On Profit-Taking, Technical Correction

Wednesday October 23, 2013 2:50 PM

(Kitco News) - Gold prices ended the U.S. day session moderately lower Wednesday, with profit-taking from the shorter-term traders and a technical correction featured following recent gains. December Comex gold was last down $9.60 at $1,332.90 an ounce. Spot gold was last quoted down $7.20 at $1334.50. December Comex silver last traded down $0.190 at $22.60 an ounce.

It was an uneventful day of trading in the U.S., as U.S. economic data failed to move markets.

Rising short-term interest rates in China recently are starting to worry the market place a bit. Rising rates could be a harbinger to Chinese banking officials tightening monetary policy. That in turn would crimp demand coming from the world’s second-largest economy, which is also a big importer of raw commodities. An overheating housing market in China was also in the news headlines just recently, which is also worrisome.

Tuesday’s U.S. employment report bolstered notions the Federal Reserve will not be “tapering” its monthly bond-buying program, also called quantitative easing, any time soon. It will likely be at least the second quarter of 2014 before the Fed makes any significant changes in its monetary policy. That scenario is at least a temporary bullish factor for many markets, including stock indexes, the precious metals and the raw commodity sector. Reason: The extra money being printed by the Fed will seek out investment assets. However, that’s also a potential price inflation problem down the road.

Starting in November the European Central Bank will begin stress tests on 130 financial institutions in the European Union. It’s a well-known fact that EU banks have a lot of non-performing loans on their books. Recent EU economic data has painted a mixed picture, but generally the collective economies have shown slight growth to lift the bloc out of recession—but just barely. If the results of the upcoming EU bank stress tests are not positive, that could quickly erode investor confidence in the European Union’s financial system as a whole.

The U.S. dollar index traded just slightly higher Wednesday but sunk to a 10.5-month low overnight. Meantime, Nymex crude oil futures were sharply lower and hit a seven-week low overnight. Prices have fallen well below the $100.00 level this week. These two key “outside market” forces were in a bearish daily posture for the precious metals markets.

The London P.M. gold fix is $1,331.25 versus the previous P.M. fixing of $1,333.00.

Technically, December gold futures prices closed nearer the session low Wednesday. The gold market bulls and bears are on a level near-term technical playing field. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,353.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the October low of $1,251.00. First resistance is seen at this week’s high of $1,344.70 and then at $1,353.80. First support is seen at last week’s high of $1,328.90 and then at $1,320.00. Wyckoff’s Market Rating: 5.0

December silver futures prices closed nearer the session low on mild profit taking from recent gains, and on a technical pullback. The bulls and bears are on a level near-term technical playing field. 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 the October low of $20.495. First resistance is seen at this week’s high of $22.83 and then at $23.00. Next support is seen at $22.25 and then at $22.00. Wyckoff's Market Rating: 5.0.

December N.Y. copper closed down 700 points at 326.55 cents Wednesday. Prices closed nearer the session low. The bulls today quickly faded. Bulls and bears are back on a level near-term technical playing field. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the August high of 339.50 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of 321.50 cents. First resistance is seen at 328.00 cents and then at 330.00 cents. First support is seen at Wednesday’s low of 326.00 cents and then at 325.00 cents. Wyckoff's Market Rating: 5.0.

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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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