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A.M. Kitco Metals Roundup: Gold Steady-Weak as Market Pauses After Thursday's Big Gains

Friday June 20, 2014 8:40 AM

(Kitco News) - Gold prices not straying far from unchanged levels in early U.S. trading Friday. Prices did poke to a nine-week high overnight. Traders are taking a breather after Thursday’s price action that saw gold gain nearly $50.00 and silver add over $1.00 in value. It’s been a very good week for the gold and silver market bulls, and they still have technical momentum on their side. August Comex gold was last down $1.00 at $1,313.00 an ounce. Spot gold was last quoted down $7.40 at $1,313.50. July Comex silver last traded up $0.107 at $20.76 an ounce.

The civil war in Iraq remains a major market factor and continues to prompt risk aversion among traders and investors. The risk aversion is scattered however. While the S&P 500 stock index hit a new record high on Thursday (risk on), gold prices rose by nearly $50 an ounce (risk off). It’s doubtful this disparity will continue and may be resolved early next week. The U.S. is sending 300 special ops forces to Iraq, and has not ruled out the use of air power against the rebels. Meantime, reports said Russian troops are massing on its border with Ukraine again. Maybe Russian president Putin reckons he can consolidate his recent land grab during another geopolitical crisis, so as to take some of the negative attention away from him.

Crude oil prices have rallied sharply recently on worries about Iraqi crude oil exports being reduced, and on concerns the violence in Iraq could spread to other Arab nations. The U.S. dollar index hit a four-week low Thursday in the wake of dovishly construed U.S. monetary policy comments from Fed Chair Janet Yellen on Wednesday. These two key “outside markets” are in a near-term bullish posture for the precious metals and other raw commodity markets.

U.S. economic data due for release Friday includes the Chicago Fed national activity index, the U.S. flash manufacturing purchasing managers index, and existing home sales.

Wyckoff’s Daily Risk Rating: 7.0 (Violence and civil war in Iraq has the world market place concerned heading into an uncertain weekend.)

(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 $1,310.00 versus the previous P.M. fixing of $1,293.00.

Technically, August gold futures bulls have regained the slight overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the April high of $1,331.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,285.00. First resistance is seen at the overnight high of $1,322.50 and then at $1,325.00. First support is seen at the overnight low of $1,307.10 and then at $1,300.00.  

July silver futures pushed to a three-month high Thursday and bulls have gained good technical momentum and now have the near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $21.825 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 Thursday’s high of $20.925 and then at $21.00. Next support is seen at the overnight low of $20.58 and then at $20.43.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff



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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