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A.M. Kitco Metals Roundup: Gold Lower on "Sell-the-Fact" Following Greek Elections

Monday January 26, 2015 8:26 AM

(Kitco News) - Gold prices are moderately lower in early U.S. trading Monday, on a classic “sell-the-fact” scenario following the Greek election results on Sunday. Traders had “bought the rumor” last week, heading into the important elections. Profit taking from recent gains also has gold and silver markets feeling selling pressure to start the trading week. February Comex gold was last down $10.40 at $1,282.10 an ounce. Spot gold was last down $12.00 at $1,282.60. March Comex silver last traded down $0.255 at $18.045 an ounce.

Important weekend news saw the Greek anti-austerity party win elections by a wider-than-expected margin Sunday. The Syriza party’s victory raises more concerns about the viability of the European Union, longer-term. A main question is how long will the Germans put up with other EU countries that can’t get their own financial/economic house in order? This summer Greece will need another big infusion of funding from the EU, to stay solvent.

World markets took the news from Greece fairly well. European stocks traded mixed in midday dealings, while U.S. stock indexes are seeing moderate losses in pre-opening trading. The Greek news was partially offset by an upbeat German Ifo business confidence index reading Monday that came in at 106.7 in January from 105.5 in December. The data suggests the German economy is on the upswing.

Focus on Greece will not last long as other important matters are on the horizon, including the regular meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC), which begins on Tuesday and ends Wednesday afternoon. Traders will look for clues coming from that meeting, regarding when the U.S. central bank will begin to raise interest rates. Recent developments, including plunging crude oil prices, have led many to believe the Fed might not raise interest rates until late this year, or may have to wait until 2016.

The Chinese currency, the yuan, fell to a multi-month low Monday, as China’s central bank weighs monetary stimulus measures to jumpstart its flagging economy. The Russian ruble faced more downside pressure against world currencies Monday, following weekend fighting in Ukraine and the threats of more sanctions against Russia coming from the U.S. and European Union. The U.S. dollar index pushed to another 11-year high Monday, on safe-haven demand for U.S. dollar-backed assets.

Nymex crude oil prices slumped to nearly six-year low overnight. Nearby crude oil futures dropped below $45.00 a barrel as the steep downdraft in prices continues.

U.S. economic data out Monday is light and includes the Texas manufacturing survey.

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

Wyckoff’s Daily Risk Rating: 6.0 (Market risk was has up-ticked a bit early this week, due to the Greek election results.)

(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 $1,282.75 versus the previous P.M. fixing of $1,294.75.

Technically, gold bulls still have the overall near-term technical advantage. Prices hit a 5.5-month high last week. 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 the August 2014 high of $1,323.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,256.20. First resistance is seen at $1,290.00 and then at $1,300.00. First support is seen at the overnight low of $1,275.60 and then at last week’s low of $1,272.10.

March silver futures bulls still have the overall near-term technical advantage as prices hit a four-month high last week. 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 $17.00. First resistance is seen at last week’s high of $18.505 and then at $18.75. Next support is seen at the overnight low of $17.865 and then at last week’s low of $17.63.

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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