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P.M. Kitco Metals Roundup: Gold Weaker on Corrective Pullback, Strong U.S. Dollar

Wednesday January 7, 2015 2:30 AM

(Kitco News) - Gold prices ended the U.S. day session moderately lower Wednesday, on a profit-taking and technical pullback following gains that took prices to a three-week high on Tuesday. A sharply higher U.S. dollar index was also a negative outside market force working against the precious metals Wednesday. February Comex gold was last down $5.80 at $1,213.50 an ounce. Spot gold was last down $6.00 at $1,214.25. March Comex silver last traded down $0.037 at $16.605 an ounce.

The afternoon release of the minutes from the latest meeting of the Federal Reserve’s Open Market Committee showed the members are considering an interest rate hike, but are worried about elements that could thwart the modest U.S. economic recovery. The market place deemed the FOMC minutes as a non-event, and gold and silver prices showed little reaction.

News that three masked gunmen entered the newsroom of a publication in Paris and murdered 12 people had a minimal markets impact Wednesday. Still, the event was a reminder of how geopolitics can quickly change the landscape of the market place.

The U.S. dollar index continues on its bullish rampage, hitting another 10-year high overnight as prices traded sharply higher on the day. The Euro currency slumped to a nine-year low versus the greenback Wednesday.

Crude oil prices fell to another 5.5-year low of $46.83 a barrel overnight, basis nearby Nymex futures. Crude prices recovered a bit and were near steady as of this writing.
It appears Nymex crude prices will at least dip into the lower $40 in the not-too-distant future. However, it’s now my bias there is not strong downside price pressure left in the crude oil market. The main reason for my thinking is that now too many are calling for oil to bottom out in the mid-30s a barrel. Markets have a history of proving the majority of prognosticators wrong.

In overnight news, consumer price inflation in the European Union fell by 0.2% in December, on an annual basis, which is the first decline on an annual basis since 2009. This news further advances notion the European Central Bank will implement quantitative easing of its monetary policy sooner rather than later. The ECB holds its next regular meeting on January 22.

Germany held a note auction (Schatz) Wednesday that fetched a record low and average yield of negative .011%. Demand was termed strong. This news is another clue of the keener anxiety in the market place at present, regarding the overall financial and economic health of the European Union.

The London P.M. gold fix is $1,210.50 versus the previous A.M. fixing of $1,213.75.

Technically,  February gold futures prices closed near mid-range on a corrective pullback from this week’s good gains that saw prices hit a three-week high Tuesday. Recent price action in gold suggests a market bottom is in place. The gold bears do still have the overall near-term technical advantage. 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 $1,184.80. First resistance is seen at today’s high of $1,219.40 and then at this week’s high of $1,223.30. First support is seen at today’s low of $1,209.10 and then at Tuesday’s low of $1,201.60. Wyckoff’s Market Rating: 3.5

March silver futures prices closed nearer the session high today. Recent price action suggests a market bottom is in place for silver. Silver bears do still have the overall near-term technical advantage. Bulls’ 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 this week’s high of $16.74 and then at $17.00. Next support is seen at today’s low of $16.30 and then at Tuesday’s low of $16.115. Wyckoff's Market Rating: 3.5.

March N.Y. copper closed down 60 points at 276.10 cents today. Prices closed near mid-range today and closed at another contract low close. The strong U.S. dollar index today limited buying interest in copper. The copper bears have the strong overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 290.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 270.00 cents. First resistance is seen at 278.20 cents and then at 280.00 cents. First support is seen at this week’s contract low of 274.40 cents and then at 272.50 cents. Wyckoff's Market Rating: 1.0.

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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