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P.M. Kitco Roundup: Gold Up, at 3-Week High, on Safe-Haven Demand, Bargain Hunting
Thursday October 9, 2014 2:17 PM
(Kitco News) - Gold prices ended the U.S. day session with solid gains and hit a three-week high Thursday. Prices did back down from the early gains to close near the middle of the day’s trading range. A combination of heavy short covering in the futures market, bargain hunting and safe-haven buying boosted the yellow metal. The technical posture for gold has also become much less bearish this week. December Comex gold was last up $19.60 at $1,225.70 an ounce. Spot gold was last quoted up $3.60 at $1,225.50. December Comex silver last traded up $0.376 at $17.44 an ounce.
The big sell-off in the U.S. stock Thursday added to the safe-haven demand for gold. This recent higher volatility in the stock market is a bearish warning signal of a topping process in the stock indexes. If the U.S. stock indexes to top out, that would be a significant underlying bullish factor for gold and the other precious metals markets.
Traders were still digesting the dovish Federal Reserve Open Market Committee (FOMC) minutes released Wednesday. The Fed expressed increasing concern about weakening world economies and some FOMC members questioned whether the appreciation of the U.S. dollar against the other major currencies might act as a drag on the U.S. economy. The market place reckons the FOMC minutes hint the Fed may have to hold off longer on raising U.S. interest rates, given the increasing concerns about weakening world economies—especially the serious weakness coming out of the European Union. Importantly, the FOMC minutes also suggested the Fed is worried about the recent appreciation of the U.S. dollar curtailing U.S. economic growth. The U.S. dollar index sold off overnight on the FOMC news, but rallied during the U.S. day session as the U.S. stock market sold off.
The London P.M. gold fix was $1,226.75 versus the previous London A.M. fixing of $1,227.50.
Technically, December gold futures prices closed near mid-range after hitting a three-week high in early trading. Gold bears still have the overall near-term technical advantage. However, a three-month-old downtrend on the daily bar chart was negated Thursday and the bulls are gaining upside momentum. This week’s price action begins to hint at a near-term low in gold. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,250.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,200.00. First resistance is seen at Thursday’s high of $1,234.00 and then at $1,242.00. First support is seen at Thursday’s low of $1,219.30 and then at $1,210.00. Wyckoff’s Market Rating: 2.5
December silver futures prices closed nearer the session low Thursday and did hit a two-week high early on. Short covering was featured. The silver bears still have the firm overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $16.64. First resistance is seen at Thursday’s high of $17.72 and then at $18.00. Next support is seen at $17.25 and then at $17.00. Wyckoff's Market Rating: 2.0.
December N.Y. copper closed up 315 points at 303.50 cents Thursday. Prices closed near mid-range and saw short covering. Copper bears still have the firm overall near-term technical advantage. Prices are in a choppy, three-month-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 310.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the March low of 288.45 cents. First resistance is seen at Thursday’s high of 305.90 cents and then at 306.75 cents. First support is seen at Thursday’s low of 301.85 cents and then at 300.00 cents. Wyckoff's Market Rating: 3.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
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