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A.M. Kitco Metals Roundup: Gold Lower Amid Less Risk Aversion in Market Place

Friday August 15, 2014 8:30 AM

(Kitco News) - Gold prices are lower Friday, under pressure from better risk appetite in the market place that is evidenced by stock market rallies that see the Nasdaq and S&P back near their highs scored in July. Selling pressure in gold intensified just before the Comex futures market opened. Then after the futures market opened sell stop orders were triggered to drive prices still lower. December Comex gold was last down $9.60 at $1,306.10 an ounce. Spot gold was last quoted down $8.30 at $1,305.25. December Comex silver last traded down $0.276 at $19.695 an ounce.

The recent strength of the U.S. dollar index, which is hovering near a 6.5-month high, is also a bearish underlying factor for the precious metals markets. Most pricing of precious metals on the world markets is in U.S. dollars. When the greenback appreciates it makes it more expensive to purchase those precious metals with other currencies.

On the geopolitical front, the market place perceives the Russia-Ukraine tensions might be easing just a bit following conciliatory words from Russian president Putin late this week. Also, reports said a Russian convoy of non-military goods has passed, or is ready to pass, into Ukraine. If the convoy is allowed to pass into Ukraine it would be considered a further de-escalation of the crisis. However, if there is a confrontation at the border of Russia and Ukraine, regarding the convoy, it could quickly escalate the tensions. There has been no escalation of violence on the Gaza strip or in Iraq this week, which has allowed the market place to put the above matters on the back burner, for now. However, I suspect that early September could see renewed concerns regarding geopolitics, which would be bullish for the safe-haven gold market.

The market place is looking ahead to next week’s annual Federal Reserve officials’ meeting in Jackson Hole, Wyoming. That confab has in the past yielded important U.S. monetary policy speeches and clues to the direction of monetary policy. Fed Chair Janet Yellen is scheduled to speak in Jackson Hole next week.

U.S. economic data due for release Friday is significant and includes the producer price index, the Empire State manufacturing survey, Treasury international capital data, industrial production and capacity utilization, and the University of Michigan consumer sentiment survey.

Wyckoff’s Daily Risk Rating: 6.0 (The market place this week was less focused on the still-simmering geopolitical matters: the Russia-Ukraine crisis, Iraq and the Gaza strip.)

(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 $1,313.60 versus the previous P.M. fixing of $1,313.50.

Technically, gold bulls and bears are on a level near-term technical playing field. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at that August high of $1,324.30. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at $1,310.00 and then at the overnight high of $1,316.50. First support is seen at $1,300.00 and then at $1,295.00.  

December silver futures bears have the firm near-term technical advantage as prices are in a six-week-old downtrend on the daily bar chart. Prices Friday hit a two-month low.
Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $20.25 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 $19.84 and then at $20.00. Next support is seen at today’s low of $19.635 and then at $19.50.

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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