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A.M. Kitco Metals Roundup: Gold Sees Some Safe-Haven Demand And A Corrective Bounce

Monday February 9, 2015 8:23 AM

(Kitco News) - Gold prices are modestly higher in early U.S. trading Monday, lifted on some modest safe-haven demand and by an upside technical correction following Friday’s strong losses that drive prices to a three-week low. The gold market bears on Friday did regain the slight near-term technical advantage. April Comex gold was last up $5.50 at $1,240.20 an ounce. March Comex silver last traded up $0.206 at $16.90 an ounce.

It’s a “risk-off” day in the market place to start the trading week Monday. That’s bearish for stocks and most commodities but bullish for the U.S. dollar, U.S. Treasuries and gold.

During the weekend concerns increased markedly regarding Greece’s future within the European Union. As he tried to wiggle out of previous sovereign debt repayment commitments, Greek Prime Minister Tsipras also said he would not accept any extension of Greece’s bailout package but instead wanted a bridge loan. This news sunk the Greek stock market and Greek bond yields rose. Other European stock markets also felt selling pressure from the Greece news. The Euro currency was also down against the U.S. dollar. Some EU watchers are wondering if Greece will exit the European Union as soon as the end of the month.

Asian shares were under selling pressure Monday on a bearish economic report coming out of the region’s economic leader. China’s exports and imports were reported at surprising declines in January. Exports were down 4.9% and imports were down a whopping 21.4%, year-on-year.

On the geopolitical front, the U.S. and key European nations are trying to keep a unified stance on the crisis between Russia and Ukraine. Meetings on the matter this week could prove crucial, but Russia appears to be unwilling to budge on its hard-line stance.

U.S. economic data due for release Monday is light and includes the employment trends index.

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

Wyckoff’s Daily Risk Rating: 6.5 (Trader and investor market risk aversion is a bit keener to start the trading week, due to Greece debt repayment concerns.)

(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 $1,242.25 versus the previous P.M. fixing of $1,241.00.

Technically, April gold futures bears now have the slight overall near-term technical advantage as an uptrend on the daily chart has been negated and a downtrend line is now in place. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,275.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,200.00. First resistance is seen at the overnight high of $1,243.60 and then at $1,250.00. First support is seen at today’s low of $1,234.40 and then at last week’s low of $1,228.20.

March silver futures bulls have also lost the slight overall near-term technical advantage as a choppy uptrend on the daily chart has been negated and prices are now in a three-week-old downtrend. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $17.75 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 $17.145 and then at $17.37. Next support is at the overnight low of $16.685 and then at last week’s low of $16.545.

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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