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A.M. Kitco Metals Roundup: Gold Up, at 5.5-Mo. High, on Safe Haven Demand Ahead of Critical Market Events

Monday January 05, 2015 8:16 AM

(Kitco News) - Safe-haven demand and chart-based buying are features that pushed the gold market to a 5.5-month high Tuesday. This week is an extra important one for the market place and many traders and investors are anxious. The coming days will see critical fundamental news, and price action in many markets could be extra volatile as the week progresses. February Comex gold was last up $13.20 at $1,290.00 an ounce. Spot gold was last up $9.80 at $1,290.50. March Comex silver last traded up $0.105 at $17.855 an ounce.

The first U.S. trading day of the week finds Asian and European stock markets rallying Tuesday, while U.S. stock indexes are also higher in pre-market trading.

In overnight news, the International Monetary Fund downgraded its 2015 world economic growth forecast by 0.3%, to 3.5%. The IMF cited major currencies’ depreciation against the U.S. dollar as a negative world economic growth factor.

China on Tuesday reported its 2014 GDP came in at 7.4% growth, which is the weakest annual reading in many, many years. However, fourth-quarter China GDP was reported up 7.3%, year-on-year, which was better than expected. China also received an upbeat industrial production report Tuesday. The market place read this latest China data as a mixed bag.

Germany got some upbeat economic news Tuesday when the ZEW business sentiment index rose to 48.4 in January—the highest reading in 11 months.

A Wall Street Journal story on Monday said the U.S. Federal Reserve is still on track to raise U.S. interest rates in the second half of this year. The story says despite present falling interest rates (lower U.S. Treasury bond and note yields) and sharply lower oil prices, the Fed wants to get on track for raising rates and getting its monetary policy back closer to a normal state.

On Thursday the European Central Bank holds its monthly monetary policy meeting. France’s president revealed on Monday the ECB will announce a quantitative easing plan at Thursday’s meeting. Many had already expected the ECB to make its monetary policy stimulus move at this meeting.

This weekend brings the much-anticipated Greek elections, which could determine if that country remains a member of the European Union.

On Wednesday the annual World Economic Forum begins in Davos, Switzerland. Movers and shakers from around the world will be at the event.

U.S. economic data out Tuesday is light and includes the NAHB housing index. President Obama delivers his annual state-of-the-union address Tuesday evening.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Wyckoff’s Daily Risk Rating: 5.0 (Market risk is perceived to be less as the U.S. trading week begins.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

The London A.M. gold fixing is $1,292.25 versus the previous P.M. fixing of $1,273.75.

Technically, gold bulls have the overall near-term technical advantage and gained more upside momentum today as prices hit a 5.5-month high. Prices are in a 2.5-month-old uptrend on the daily bar chart. The gold bulls’ next upside ear-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,250.00. First resistance is seen at today’s high of $1,294.30 and then at $1,300.00. First support is seen at $1,280.00 and then at the overnight low of $1,272.10.

March silver futures bulls have gained the overall near-term technical advantage as prices hit a four-month high overnight. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $19.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at the overnight high of $18.045 and then at $18.25. Next support is seen at today’s low of $17.63 and then at $17.50.

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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