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P.M. Kitco Roundup: Gold Soars to 5-Week High on Major Rebound; Bulls Regain Technical Momentum

Monday December 1, 2014 2:00 PM

(Kitco News) - Gold prices saw a massive rebound Monday and hit a five-week high, after prices overnight scored a three-week low. The huge daily trading range in gold prices was the largest in years. Several factors worked to support gold Monday, including heavy short covering and buy stop orders triggered in the futures, and bargain hunting in the cash market. A weaker U.S. dollar index and a bounce in crude oil prices Monday--and even some safe-haven demand--were also featured to start the trading week and the first trading day of the month. Silver also posted a mammoth rebound after hitting a five-year low in Asian trading. February Comex gold was last up $41.90 at $1,217.40 an ounce. Spot gold was last up $49.90 at $1,219.00. March Comex silver last traded up $1.019 at $16.575 an ounce.

World stock and commodity markets were under pressure early Monday following Friday’s major collapse in crude oil prices—the day after an OPEC meeting that failed to produce production cuts by member nations. January Nymex crude oil prices dropped to a five-year low of $63.72 a barrel in overnight trading. However, as the U.S. day session began many markets recovered from their lowest price levels seen in overnight trading. The recovery in crude oil prices spilled over into buying in many other commodity markets.

News that Moody’s cut the Japanese government’s credit rating was credited with prompting some safe-haven demand for gold, especially from Asian investors.

The Swiss “Save our Gold” referendum was handily defeated by voters Sunday. The measure would have required the Swiss National Bank to hold 20% of its assets in gold. The referendum was not expected to pass. The gold market did see selling pressure following the vote. However, the yellow metal started a solid recovery from its lows, in part due to reports major gold consumer India has lifted its import restrictions on gold, effective immediately.

In other overnight news, the Euro Zone’s manufacturing purchasing managers index (PMI) came in at 50.1 in November from 50.6 in October. A reading of 50.4 was expected. A reading below 50.0 suggests contraction. Focus of the market place is on Thursday’s regular monthly meeting of the European Central Bank. The ECB says its read to implement further monetary stimulus measures to boost the ailing EU economy. The central bank could make a move at Thursday’s meeting.

Meantime, China’s manufacturing PMI came in weaker than expected in November, at 50.3 versus 50.8 in October, which is an eight-month low. This report also helped to pressure Asian markets.

The Russian ruble fell to another record low against the U.S. dollar overnight, dropping by another 5%. Reports said the Russian central bank intervened in the currency markets to support the ruble. The U.S. dollar index is trading lower after posting gains in Asian trading. The greenback is still hovering near a four-year high.

The London P.M. gold fix was $1,194.00 versus the previous London A.M. fixing of $1,178.75.

Technically, February gold futures prices closed near the session high. Prices today hit a fresh five-week high, while scoring a huge, bullish “outside day” up on the daily bar chart. The bears today quickly became exhausted and the bulls have regained upside technical momentum. Bears do still have the overall near-term technical advantage. However, a 4.5-month-old downtrend on the daily bar chart was negated today. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,256.20. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,163.90. First resistance is seen at today’s high of $1,219.20 and then at $1,225.00. First support is seen at $1,208.20 and then at $1,200.00. Wyckoff’s Market Rating: 3.0

March silver futures prices closed nearer the session high after hitting a contract and five-year low early on today. Prices also scored a big and bullish “key reversal” up on the daily bar chart, which suggests the bears have become exhausted and a market bottom is in place. By the close today the bulls had good upside momentum on their side as prices hit a four-week high. The silver bears still have the overall near-term technical advantage. However, a four-month-old downtrend on the daily bar chart was negated today. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at last week’s low of $15.41. First resistance is seen at today’s high of $16.81 and then at $17.00. Next support is seen at $16.50 and then at $16.00. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed up 555 points at 290.15 cents today. Prices closed near the session high after hitting a contract and multi-year low today. Today’s high-range close does suggest the bears became exhausted at the lower price levels. Good follow-through buying early this week would suggest a market bottom is in place. But right now the bears have the solid near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at today’s contract low of 277.75 cents. First resistance is seen at today’s high of 290.55 cents and then at 292.50 cents. First support is seen at today’s low of 2.8750 cents and then at last week’s low of 284.35 cents. Wyckoff's Market Rating: 1.5.

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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