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P.M. Kitco Metals Roundup: Gold Sells Off Amid Increased Investor Risk Appetite

Tuesday February 3, 2015 2:40 PM

(Kitco News) - Gold prices ended the U.S. day session moderately lower Tuesday, but up from the daily lows. Better trader and investor risk appetite Tuesday that boosted the world stock markets was a negative for safe-haven gold. However, fully bullish “outside markets”—sharply higher crude oil and a sharply lower U.S. dollar index—did help to lift gold prices up from their daily lows. April Comex gold was last down $12.90 at $1,264.10 an ounce. March Comex silver last traded up $0.144 at $17.395 an ounce.

The gold and silver bulls were disappointed today that the bullish outside markets did not produce any upside price action in the metals. A feature in the market place just recently is the solid rebound in crude oil. Whether this is just an upside technical correction in a strong downtrend in prices, or it is a market bottom, has yet to be determined. However, there are now early technical signals the crude oil market has put in at least a near-term bottom. A close in crude oil prices this Friday that is at or near the weekly high would be a stronger technical clue the market has indeed put in a significant bottom. A bottom in the crude oil market would be overall bullish for gold, silver and most other raw commodity markets. To extrapolate further, a bottom in the crude oil market would be a clue that the U.S. dollar index has limited upside, or has put in a market top, itself.

European stock markets rallied Tuesday on reports the new Greek government will come to terms with the European Union on dealing with Greece’s large amount of government debt, and new financing. The reports also said the new Greek prime minister is taking a more conciliatory tone regarding his anti-austerity rhetoric seen just after the election in late January. An EU official said Tuesday there may be some “wiggle room” regarding the EU accommodating Greece’s new proposals. The gold market also saw selling pressure on this news. But many market watchers are skeptical of this development, saying “the devil is in the details.”

Australia’s central bank on Tuesday is the latest to cut its interest rates (to a record low) in an effort to devalue the Australian dollar and in turn try to invigorate the Australian economy. The Aussie dollar fell to a five-year low versus the U.S. dollar on the news. Over a dozen smaller-country central banks have recently lowered their interest rates, as the “currency wars” scenario continues to build. Only the U.S. and the U.K. central banks have interest rate hikes on their radar scopes. And with another OECD world inflation report out Tuesday showing a five-year low rate of around 1% world inflation annually, the U.S. and U.K. may have their rate-raising plans dashed, or at least delayed. Economists and analysts continue to debate the benefits and/or detriments of a stronger U.S. dollar against the other world currencies.

Technically, April gold futures prices closed nearer the session low and scored a bearish “outside day” down on the daily bar chart today. The bulls still have the slight near-term technical advantage but are fading and need to show fresh power soon to keep it. A 2.5-month-old uptrend on the daily bar chart is still in place, but just barely. Bulls’ next upside near-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 last week’s low of $1,252.10. First resistance is seen at $1,275.00 and then at today’s high of $1,286.50. First support is seen at today’s low of $1,255.80 and then at last week’s low of $1,252.10. Wyckoff’s Market Rating: 5.5

March silver futures closed up $0.159 at $17.41 today. Prices closed near mid-range and saw more short covering. Silver bulls have the slight near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart, but just barely. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the January high of $18.505 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at today’s high of $17.75 and then at $18.00. Next support is seen at today’s low of $17.07 and then at last week’s low of $17.74. Wyckoff's Market Rating: 5.5.

March N.Y. copper closed up 1,040 points at 259.40 cents today. Prices closed near the session high today on short covering in a bear market. The key “outside markets” were fully bullish for copper today as the U.S. dollar index was sharply lower and crude oil prices were sharply higher. The copper market bears still have the firm overall near-term technical advantage as are in a six-month-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 275.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 241.90 cents. First resistance is seen at today’s high of 259.50 cents and then at 260.00 cents. First support is seen at 257.50 cents and then at 255.00 cents. Wyckoff's Market Rating: 2.5.

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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