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A.M. Kitco Metals Roundup: Gold Higher On Safe-Haven Demand, Short Covering

Wednesday August 6, 2014 8:26 AM

(Kitco News) - Gold prices are solidly higher and pushed above the key $1,300.00 level in early U.S. trading Wednesday. The yellow metal is boosted by safe-haven demand and short covering on renewed geopolitical concerns. December Comex gold was last up $14.30 at $1,298.30 an ounce. Spot gold was last quoted up $8.20 at $1,297.50. December Comex silver last traded up $0.101 at $20.00 an ounce.

The feature in the market place Wednesday morning is the sell-off in world stock markets, following the U.S. lead Tuesday afternoon, as investors and traders exhibit keener “risk-off” attitudes. The U.S. dollar, gold and U.S. Treasuries are seeing safe-haven buying support from renewed attention on the Russia-Ukraine crisis. Reports said Russian president Putin is getting ready to retaliate after his country has been slapped with economic sanctions recently. There were reports Tuesday afternoon that Russian troops were massing on the Ukraine border. Even though that news was not fresh, it was partly credited with sinking the U.S. stock market Tuesday afternoon.

In other overnight news, the yield on the German five-year bond (the Bobl) dropped to a record low Wednesday, at 0.28%, down from 0.33% last month. The record-low German bond yield is another clue of the heightened risk aversion presently in the market place.

Italy’s GDP was reported down 0.2% in the second quarter from the first, and down 0.3% year-on-year. This means Italy’s economy has slipped back into recession, which is another bearish clue for the collective European Union economy.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the international trade report, and the weekly DOE liquid energy stocks report.

Wyckoff’s Daily Risk Rating: 7.0 (The market place is again focused on the still-simmering geopolitical matters, namely the Russia-Ukraine crisis.)

(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 $1,288.50 versus the previous A.M. fixing of $1,284.75.

Technically, August gold futures bears have the near-term technical advantage as a four-week-old downtrend is still in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,314.60. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,279.70. First resistance is seen at Wednesday’s high of $1,301.30 and then at $1,305.00. First support is seen at the overnight low of $1,288.50 and then at this week’s low of $1,283.30.  

December silver futures bears have the near-term technical advantage as prices Tuesday hit a six-week low and are in a four-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $20.70 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $19.50. First resistance is seen at $20.20 and then at $20.35. Next support is seen at this week’s low of $19.835 and then at $19.75.

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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