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P.M. Kitco Roundup: Gold Ends Mixed But Near Daily Lows in Active and Choppy Trading Session

Tuesday December 16, 2014 1:52 PM

(Kitco News) - Gold futures prices ended the U.S. day session lower, with the spot, or cash, market finishing with slight gains. Prices fell back below the key $1,200.00 level, in a volatile day that saw prices trade both sides of unchanged. Safe-haven demand early in the session gave way to selling pressure on ideas upcoming FOMC data will favor the U.S. monetary policy hawks. The gold and silver bulls have now lost most of the technical momentum they gained last week. February Comex gold was last down $12.40 at $1,195.20 an ounce. Spot gold was last up $1.40 at $1,195.40. March Comex silver last traded down $0.808 at $15.755 an ounce.

As the U.S. trading day got under way, it was a keen “risk-off” scenario in the world market place Tuesday. U.S. stock indexes and world stock markets were lower after posting moderate gains overnight. However, as the U.S. session progressed U.S. stocks rebounded well off their daily lows, but in choppy fashion. The fact the U.S. stock indexes posted solid rebounds from their daily lows also put downside price pressure on gold and silver.

There were several worrisome developments today but the main concern is the Russian ruble plunged around 15% in value and hit another record low versus the U.S. dollar—despite the Russian central bank on Tuesday implementing an emergency interest rate increase from 10.5%, to 17%. Traders and investors are wondering what Russian president Vladimir Putin will do now. His economy is in shambles from falling oil prices and western sanctions. But he still controls the world’s second or third most powerful military, and he has shown in recent months he will use that military power to attain his objectives.

Crude oil prices overnight sunk to a five year low of $53.60 a barrel, basis January Nymex futures today. In stunning fashion, crude oil prices have lost half of their value since June. That’s a very rare feat in any commodity market. While it’s good news at the gasoline pumps, the market place has been spooked by crude oil’s steep downdraft.

Surprisingly, the U.S. dollar index was under strong selling pressure today. The greenback did not benefit from any safe-haven flows amid the markets turmoil.

There were also reports that the Taliban terrorists have attached a school in Pakistan and killed around 125 students. This comes after a terrorist in Australia captured world attention Monday by holding hostages in a Sydney café.

In other dour overnight news, China reported its HSBC purchasing managers’ index (PMI) fell to a seven-month low of 49.5 in December from 50.0 in November. A reading below 50.0 suggests contraction in the sector. This news was another bearish element pushing crude oil prices still lower Tuesday.

Meantime, the Markit data firm reported the European Union composite PMI came in at 51.7 in December from 51.1 in November. However, in Germany, the EU’s largest economy, the composite PMI fell to 51.4 in December versus 71.7 in November.

Traders and investors are also looking to Tuesdays’ start of the Federal Reserve Open Market Committee (FOMC) meeting to discuss U.S. monetary policy. Many believe the Fed meeting will slightly change statement wording to favor the monetary policy hawks. The FOMC could also further elaborate on a timeline for raising interest rates. The Fed has not raised interest rates in six years.

The London P.M. gold fix was $1,202.50 versus the previous London A.M. fixing of $1,199.25.

Technically, February gold futures prices closed nearer the session low again today. The gold bulls are fading again and have lost last week’s momentum. Their next upside near-term price breakout objective is to produce a close above solid technical resistance at the December high of $1,239.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the October low of $1,184.80. First resistance is seen at $1,200.00 and then at $1,210.00. First support is seen at today’s low of $1,187.80 and then at $1,184.80. Wyckoff’s Market Rating: 2.5

March silver futures prices closed nearer the session low and hit a two-week low. Silver bulls are fading badly again and their next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $16.00 and then at $16.25. Next support is seen at today’s low of $15.54 and then at $15.30. Wyckoff's Market Rating: 2.0.

March N.Y. copper closed down 195 points at 285.90 cents today. Prices closed nearer the session low and hit a two-week low today. The copper bears have the solid overall 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 the contract low of 277.75 cents. First resistance is seen at today’s high of 288.60 cents and then at 290.00 cents. First support is seen at today’s low of 2.8440 cents and then at 282.50 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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