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A.M. Kitco Metals Roundup: Gold Steady-Firm On Short Covering, Technical Bounce

Tuesday December 03, 2013 8:19 AM

(Kitco News) - Gold prices are steady to firmer in early U.S. trading Tuesday, on some mild short covering and an upside technical correction from recent selling pressure that drove prices to a five-month low this week. Traders and investors are awaiting the next data points to help drive market prices. February gold was last up $1.20 at $1,223.10 an ounce. Spot gold was last quoted up $4.10 at $1223.75. March Comex silver last traded down $0.074 at $19.215 an ounce.

This is a big week for economic data, highlighted by the European Central Bank’s monthly monetary policy meeting on Thursday and the U.S. jobs report on Friday. However, there are other key reports out this week, including Wednesday’s U.S. Federal Reserve’s beige book and Thursday’s U.S. GDP report. Traders and investors for many weeks have been obsessing about the precise timing of when the Fed will alter its monetary policy and back off from its monthly bond-buying program—called quantitative easing. Monday’s batch of generally upbeat U.S. data fell into the camp that reckons the Fed will act to taper sooner rather than later. This week’s data will provide at least some new insight on the timing of the Fed’s next move. Meantime, the ECB recently eased its monetary policy and the market place is wondering what central bank’s next move will be.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York business report, the IBD/TIPP economic optimism index, and domestic auto industry sales.

In overnight news, the OECD reported inflation in its 34 member economies fell for a third straight month in October—to 1.3% from 1.5% in September, on an annualized basis. The EU statistics agency said Tuesday the EU’s producer prices fell at the fastest rate in four years in October, at down 0.5% from September and down 1.4% from the previous year. This news is likely to keep the ECB in a very easy money policy mode, as the central bank does not want deflation to set in.

Wyckoff’s Daily Risk Rating: 5.0 (A quieter day Tuesday, but the headline risk from major economic data released later this week will see risk aversion increase.)

(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), and 5 being neutral.

The London A.M. gold fix is $1,219.00 versus the previous P.M. fixing of $1,229.50.

Technically, February gold futures bears have the solid overall near-term technical advantage as prices hover near a five-month low. The gold bulls’ next upside near-term price breakout objective is to produce a close above technical resistance at last week’s high of $1,258.20. Bears' next near-term downside breakout price objective is closing prices below technical support at $1,200.00. First resistance is seen at the overnight high of $1,225.40 and then at $1,236.50. First support is seen at the overnight low of $1,217.10 and then at $1,210.00.  

March silver futures bears have the solid near-term technical advantage. Prices hit a five-month low overnight. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $20.35 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $18.60. First resistance is seen at the overnight high of $19.335 and then at $19.62. Next support is seen at the overnight low of $19.075 and then at $19.00.

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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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