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P.M. Kitco Metals Roundup: Gold Pushes to 4-Week High on Safe-Haven and Technical Buying

Monday January 12, 2015 1:48 PM

(Kitco News) - Gold prices ended the U.S. day session with solid gains and scored a four-week high Monday. Safe-haven demand was featured amid recent stock market shakiness and lingering worries about the European Union’s economic and financial health. The near-term technical posture for the gold market has also been slowly improving recently. February Comex gold was last up $18.30 at $1,234.50 an ounce. Spot gold was last up $11.00 at $1,235.00. March Comex silver last traded up $0.191 at $16.61 an ounce.

Crude oil prices slumped again Monday and hit fresh 5.5-year lows. That once again spooked stock market investors, which in turn prompted a movement toward the safe-haven gold market. The stock markets have made solid rebounds from the January lows, but there are still technical clues the U.S. stock indexes have, or are close to, topping out.

The U.S. dollar index also backed off from its overnight high, which was also encouraging for the gold and silver bulls. Still, the greenback is not far below last week’s 10-year high. Gold’s recent resilience in the face of the stronger U.S. dollar and falling oil prices is also an encouraging signal for gold market bulls.

In overnight news, the Organization for Economic Cooperation and Development reported economic growth in the coming months is likely to be stable in the U.S. and Canada, to slow in Germany, Italy Russia and the U.K., and to increase in China and India.

In another worrisome development on the deflation watch, copper prices fell to a 4.5-year low overnight. Recent weaker economic data coming out of major copper consumer China, and the plunging price of crude oil, have sunk the major industrial red metal.

The next major data point coming into focus for traders and investors is the January 22 meeting of the European Central Bank. Recent downbeat European Union economic data, the specter of price deflation and rhetoric coming from ECB officials suggest the central bank will soon initiate monetary stimulus in the forming of quantitative easing.

The London P.M. gold fix is $1,226.50 versus the previous A.M. fixing of $1,222.00.

Technically, February gold futures prices closed nearer the session high and closed at a 2.5-month high close today. The gold bulls have upside momentum and are now on a level near-term technical playing field with the bears. 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 $1,200.00. First resistance is seen at today’s high of $1,234.90 and then at $1,239.00. First support is seen at $1,225.00 and then at $1,220.00. Wyckoff’s Market Rating: 5.0

March silver futures prices closed near mid-range 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 the January low of $15.51. First resistance is seen at the January high of $16.74 and then at $16.00. Next support is seen at today’s low of $16.43 and then at $16.115. Wyckoff's Market Rating: 3.5.

March N.Y. copper closed down 270 points at 272.75 cents today. Prices closed near mid-range today and hit a contract and 4.5-year low. The copper bears have the strong overall near-term technical advantage and there are no early clues that a market bottom is close at hand. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 285.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 260.00 cents. First resistance is seen at 275.00 cents and then at today’s high of 276.00 cents. First support is seen at today’s contract low of 270.00 cents and then at 268.00 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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