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P.M. Kitco Roundup: Gold Slumps as U.S. Stock Market Surges, U.S. Dollar Strengthens

Tuesday October 21, 2014 1:52 PM

(Kitco News) - Gold prices ended the U.S. day session solidly lower Thursday, on more profit taking from the shorter-term futures traders and on a weakening near-term technical posture that prompted chart-based selling. Less risk aversion in the market place this week, evidenced by the strong rally in the U.S. stock market, has also been a major negative for the safe-haven gold market. December Comex gold was last down $16.50 at $1,229.00 an ounce. Spot gold was last quoted down $12.30 at $1,229.25. December Comex silver last traded down $0.056 at $17.175 an ounce.

The significantly better trader and investor risk appetite in the market place continued on Thursday. U.S. stock indexes posted strong rallies amid generally upbeat corporate earnings reports this week. Also, no major flare-ups on the world geopolitical scene are helping to assuage investor anxiety this week, even though there was unsettling news coming out of Canada Wednesday with an apparent “lone-wolf” terrorist attack.

Traders and investors continue to keep an extra close eye on the two key “outside markets”—crude oil and the U.S. dollar index. Crude oil is still in a major bear market as prices hover near two-plus year lows. The dollar index is also trading not far below its recent four-year high and has made a good up-move this week. The present postures for these two important markets remain a negative force working against most raw commodity markets, including the precious metals.

In overnight news, the HSBC preliminary report on China manufacturing activity came in at 50.4 in October compared to 50.2 in September. However, Asian stock markets gave this report a negative slant as they sold off a bit on the news.

There was also modestly upbeat economic data coming out of the European Union Thursday, as the Markit EU composite purchasing managers index (PMI) came in at 52.2 in October versus 52.0 in September. This news helped the support the Euro currency against the U.S. dollar. European stock markets also were lifted on the PMI news.

The London P.M. gold fix was $1,232.75 versus the previous London A.M. fixing of $1,240.50.

Technically, December gold futures prices closed nearer the session low today. A fledgling three-week-old uptrend on the daily bar chart was negated today as the bears gained some fresh downside momentum. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,255.60. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,200.00. First resistance is seen at $1,237.00 and then at today’s high of $1,244.90. First support is seen at today’s low of $1,226.30 and then at last week’s low of $1,222.00. Wyckoff’s Market Rating: 3.0

December silver futures prices closed nearer the session high today. The silver bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $17.82 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 $17.50 and then at this week’s high of $17.655. Next support is seen at $17.00 and then at $16.64. Wyckoff's Market Rating: 2.0.

December N.Y. copper closed up 170 points at 303.45 cents today. Prices closed near mid-range on short covering. The bears are still in near-term technical control. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 310.45 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 today’s high of 304.90 cents and then at 306.50 cents. First support is seen at 300.00 cents and then at 297.45 cents. Wyckoff's Market Rating: 3.0.

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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