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P.M. Kitco Roundup: Gold Prices End Mixed On Some Profit Taking, But Bulls Still Have Technical Momentum
Tuesday February 18, 2014 1:50 PM
(Kitco News) - Gold prices ended the U.S. day session mixed, with Comex futures prices firmer and the spot (cash) market prices modestly lower. A downside technical correction and some mild profit taking from recent gains were featured. Overnight, prices hit a 3.5-month high of $1,332.40, basis April futures. The gold market bulls are enjoying the near-term technical advantage for the first time in months. Gold prices have appreciated by more than $100.00 an ounce since the beginning of January. April gold was last down $3.70 at $1,314.90 an ounce. Spot gold was last quoted down $5.20 at $1,324.50. March Comex silver last traded up $0.484 at $21.905 an ounce.
A weaker U.S. dollar index was also a bullish underlying factor for the precious metals markets Tuesday, and bullish for the raw commodity sector, in general. A little-noticed development in the market place in recent weeks has been a general rebound in the raw commodity sector. It is my bias that sector has hit a cycle low and raw commodities will see better times just ahead. That includes gold and silver. And if the raw commodity sector does continue to see a general rebound, it can be extrapolated that the U.S. stock market does not have much more upside price potential. The U.S. stock indexes peaking out and trending sideways to lower in the coming weeks and months would be another bullish development for the gold and silver markets.
It’s been a calm trading week so far, with U.S. traders and investors coming back from a three-day holiday weekend on Tuesday. In overnight news, the Bank of Japan made a de facto monetary policy stimulus move Tuesday following weak gross domestic product data released Monday. The BOJ offered incentives to Japanese banks to lend more money. The Nikkei stock index rallied sharply and the yen weakened on the BOJ move. Japanese government officials continue to work to get out of a deflationary cycle that has been in place for many years.
Meantime, there was upbeat economic data coming out of China as foreign investment in the world’s most populous nation and the world’s second-largest economy rose during the month of January. That’s a bullish underlying factor for the raw commodity sector, too. China’s central bank used repurchase agreements to drain liquidity from its financial system Tuesday—the second straight week of such a move. The Chinese central bank is trying to curb bank lending a bit after a rise in lending in January.
In the European Union, the closely watched German ZEW economic expectations survey unexpectedly fell to 55.7 in February from 61.7 in January.
U.S. economic data released Tuesday included the Empire State manufacturing survey, Treasury international capital data, and the NAHB housing market index. The Empires State survey came in on the weak side of expectations, and that was also a bit bullish for gold and silver.
The London P.M. gold fix is $1,320.75 versus the P.M. fixing of $1,327.50.
Technically, April gold futures prices closed near mid-range and hit a fresh 3.5-month high Tuesday. A seven-week-old uptrend is in place on the daily bar chart. Bulls still have good upside near-term technical momentum and have the overall near-term technical advantage. Gold prices on Friday pushed above the key 200-day moving average on the daily chart for the first time in over a year. That’s another bullish technical clue. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,360.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,280.00. First resistance is seen at Tuesday’s high of $1,332.40 and then at $1,340.00. First support is seen at $1,320.00 and then at Tuesday’s low of $1,312.30. Wyckoff’s Market Rating: 6.0
March silver futures prices closed nearer the session high and hit a fresh more-than-three-month high Tuesday. Recent price action has also seen a big and bullish upside “breakout” from a sideways trading range at lower price levels—which now suggests a price uptrend can be sustained in silver. Silver bulls now still have the overall near-term technical advantage. Prices are in a three-week-old uptrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $22.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.00. First resistance is seen at Tuesday’s high of $21.07 and then at $22.25. Next support is seen at $21.49 and then at Tuesday’s low of $21.315. Wyckoff's Market Rating: 6.0.
March N.Y. copper closed up 210 points at 328.55 cents Tuesday. Prices closed near mid-range and hit a fresh three-week high and saw more short covering. Copper bulls and bears are now back on a level overall near-term technical playing field. 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 the February low of 317.50 cents. First resistance is seen at 330.00 cents and then at Tuesday’s high of 332.00 cents. First support is seen at Tuesday’s low of 325.30 cents and then at 324.00 cents. Wyckoff's Market Rating: 5.0.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
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