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A.M. Kitco Metals Roundup: Gold Down, Hits 7-Week Low, on Greece-EU Deal, Bearish Outside Markets
Monday February 23, 2015 8:16 AM
(Kitco News) - Gold prices are under moderate selling pressure and hit a seven-week low in early U.S. trading Monday, on some better risk appetite in the market place and amid bearish outside markets—a stronger U.S. dollar index and lower crude oil prices. April Comex gold was last down $7.80 at $1,197.00 an ounce. May Comex silver last traded up $0.15 at $16.47 an ounce.
There was a last-minute deal reached late Friday between Greece and the European Union--a four-month extension of Greece’s present financing package. European stock and bond markets on Monday were buoyed on the news. Safe-haven gold sold off. However, this is yet another bandaid placed over a gaping wound that has plagued the European Union for years. Also, other details of Greece’s future financing from the EU have to be worked out this week.
European markets also got some good news to boost investor risk appetite from a report that showed German business confidence on the rise for the fourth straight month. The Ifo business index came in at 106.8 in February versus 106.7 in January. However, the February reading was not as high as expected by the market place.
The Russian ruble saw more downside pressure Monday as Moody’s late Friday downgraded Russia’s credit rating to junk status. I said last week but it bears repeating: Russia is likely to be the major geopolitical hotspot in the coming months—more so than the European Union. Such would be a bullish underlying factor for gold.
A big markets event this week will be Fed Chair Janet Yellen making trips to Capitol Hill to testify before the U.S. Congress on the state of the economy. She speaks on Tuesday and Wednesday.
China’s Lunar New Year holiday ends at mid-week, which could make for quieter markets in Asia early this week.
U.S. economic data due for release Monday includes the Chicago Fed national activity index, existing home sales, and the Texas manufacturing outlook survey.
(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)
Wyckoff’s Daily Risk Rating: 6.0 (Trader and investor market risk aversion is not high early this week. Some progress on the Greece-EU financing talks has temporarily assuaged investor worries about the matter.)
(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 $1,193.50 versus the previous P.M. fixing of $1,208.25.
Technically, April gold futures bears have the firm overall near-term technical advantage as a five-week-old downtrend line is in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,236.70. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the January low of $1,168.30. First resistance is seen at the overnight high of $1,204.70 and then at Friday’s high of $1,215.30. First support is seen at the overnight low of $1,190.60 and then at $1,185.00. Wyckoff’s Market Rating: 2.5
May silver futures bears have the overall near-term technical advantage as prices hit a seven-week low overnight. Prices are also in a five-week-old downtrend. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.50 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 Friday’s high of $16.59 and then at $16.81. Next support is at the overnight low of $16.115 and then at $16.00. Wyckoff’s Market Rating: 2.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
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