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A.M. Kitco Metals Roundup: Gold Firmer On Short Covering; Technical Posture Remains Bearish

Tuesday November 12, 2013 8:16 AM

(Kitco News) - Gold prices are slightly higher in early action Tuesday, after scoring another three-week low in overnight dealings. Bullish fundamental news in the gold market has been scarce recently, while the overall technical posture in gold favors the bearish camp. December Comex gold was last up $2.80 at $1,283.90 an ounce. Spot gold was last quoted up $2.90 at $1286.25. December Comex silver last traded down $0.027 at $21.26 an ounce.

In overnight news, Chinese leaders at their annual Communist party meeting on Tuesday pledged to enact fiscal and land reforms, ease controls on investment and become more market-oriented, reports said.

The Organization for Economic Cooperation and Development (OECD) reported Tuesday that the economies of the European Union, China and the U.K. will see better economic growth in the coming year. However, India, Brazil and Russia are likely to see weaker economic growth in the coming year. The OECD said little change in the rate of economic growth is expected in the U.S. and Japan.

The U.S. dollar is firmer Tuesday, seeing support the past week on ideas the U.S. Federal Reserve will begin to back off on its easing of monetary policy in the not-too-distant future. Some in the market place now expect the Fed to begin “tapering” its monthly bond-buying program (quantitative easing) as early as December. The greenback is also supported by last week’s surprise move by the European Central Bank to lower its main interest rate to a record-low 0.25%.

There continue to be reports of weak demand for physical gold coming from Asian countries, which remains an underlying bearish fundamental factor for the gold market.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, the Chicago Fed national activity index, and the employment trends index.

Tuesday’s Wyckoff’s Daily Risk Rating: 5.0 (No major developments overnight and no major economic reports out Tuesday.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off).

The London A.M. gold fix is $1,281.00 versus the previous P.M. fixing of $1,282.50.

Technically, December gold futures bears have the overall near-term technical advantage as prices hit another three-week low overnight. 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 $1,326.00. 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 Monday’s high of $1,288.80 and then at $1,300.00. First support is seen at the overnight low of $1,275.80 and then at $1,270.00.  

December silver futures bears have the near-term technical advantage as prices hit a four-week low overnight. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $23.095 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 Monday’s high of $21.45 and then at $21.905. Next support is seen at the overnight low of $21.05 and then at $20.63.

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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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