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P.M. Kitco Roundup: Gold Slumps To 6-Month Low Post-FOMC, And Amid Stronger U.S. Dollar
Thursday December 19, 2013 1:50 PM
(Kitco News) - Gold bears quickly took back price gains seen in the immediate aftermath of Wednesday afternoon’s FOMC statement as prices Thursday ended the U.S. day session sharply lower and hit a nearly six-month low. Technical selling was also featured as the bears are in full command of the charts for both gold and silver. February gold was last down $41.40 at $1,193.40 an ounce. Spot gold was last quoted down $24.40 at $1,194.75. March Comex silver last traded down $0.879 at $19.18 an ounce.
With the FOMC meeting over and its results mostly digested it appears, at least for the near term, the winners are the U.S. stock market and the U.S. dollar. The loser is the gold market. While investors, traders and market watchers had pretty much factored into most markets’ prices Wednesday’s FOMC news, the surprise to many was that the stock market rallied sharply. The argument from the stock market bulls is that the FOMC statement “threaded the needle” and was not too hawkish and not too dovish. Or in other words the U.S. economy is growing to the point of not being a big worry to the market place any more, yet the Fed is in no hurry to tap the brakes too hard on its still-very-easy monetary policy.
The gold market and other raw commodity markets saw two significant negatives on the day after the Fed tapering announcement: 1. a stronger U.S. dollar index. 2. money flows that see more funds moving into equities, at the expense of all other investment asset classes.
I am still in the camp that sees the major bull run in the stock market at the tail end of its life. The fact that even more market watchers have turned stock-market-bullish after the FOMC statement makes me even more convinced the bull run in stocks sees its days numbered. While there still may (or may not) be more upside in the U.S. stock indexes in the near term, the vast majority of the energy has already been expended by the bulls, as they have pushed the major stock indexes to record or multi-year highs. Once the money starts to flow out of the stock market, other asset classes, including gold, will then quickly benefit.
The London P.M. gold fix is $1,196.00 versus the previous P.M. fixing of $1,230.50.
Technically, February gold futures prices closed near the session low and careened to a fresh six-month low Thursday. The gold market bears have the strong technical advantage and have gained more power late this week. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,251.70. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the 2013 low of $1,187.90. First resistance is seen at $1,200.00 and then at $1,210.10. First support is seen at Thursday’s low of $1,191.60 and then at $1,187.90. Wyckoff’s Market Rating: 1.0
March silver futures prices closed near the session low and hit a two-week low Thursday. Silver bears have the solid overall near-term technical advantage and have gained more downside momentum this week. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $20.48 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $18.89. First resistance is seen at $19.50 and then at today’s high of $19.905. Next support is seen at Thursday’s low of $19.10 and then at $18.89. Wyckoff's Market Rating: 1.5.
March N.Y. copper closed down 225 points at 329.65 cents Thursday. Prices closed near mid-range today on profit taking from recent gains and due to a stronger U.S. dollar index. Bulls still have the near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 336.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 320.00 cents. First resistance is seen at Thursday’s high of 332.35 cents and then at this week’s high of 333.55 cents. First support is seen at Thursday’s low of 327.50 cents and then at 326.85 cents. Wyckoff's Market Rating: 6.0.
Follow me on Twitter to immediately get the very latest market developments. If you are not on board, then you are not getting key analysis and perspective as fast or as often as you could! Follow me on Twitter to get my very timely intra-day and after-hours briefs on precious metals price action. The precious markets will remain very active. If you want market analysis fast, and in after-hours trading, then follow my up-to-the-second precious metals market perspective on Twitter. It's free, too. My account is @jimwyckoff.By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
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