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Gold Ends Weaker on Firmer U.S. Dollar, Technical Selling

Monday March 2, 2015 1:53 AM

(Kitco News) - Gold prices ended the U.S. day session modestly lower Monday. Early gains gave way to selling pressure at mid-morning as the U.S. dollar index pushed higher and to its daily high. The still-bearish overall chart posture for gold also encouraged sellers to step in. April Comex gold was last down $5.00 at $1,208.10 an ounce. May Comex silver was last down $0.107 at $16.451 an ounce.

Gold saw some buying interest overnight after the weekend news that China eased its monetary policy by reducing interest rates. The People’s Bank of China’s surprise move saw the one-year loan rate and the one-year deposit rate both reduced by 0.25%--to 5.35% and 2.5%, respectively. The central bank said the move was due to increasing deflationary price pressures. This news is bullish for the raw commodity sector as China is a major raw commodity importer.

China’s purchasing managers index (PMI) was released Monday. The HSBC China PMI came in at 50.7 in February from 49.7 in January. A reading above 50.0 suggests growth. However, the official China PMI was released during the weekend and showed contraction (below 50.0), reports said.

In other overnight news, Eurozone consumer prices fell 0.3% in February, year-on-year, which was the third monthly decline in a row. However, the number was expected to have declined by 0.4% in February. Unemployment in the EU fell to 11.2% in January from 11.3% in December. Also, the Euro zone manufacturing PMI was 51.1 in February from 51.0 in January. Deflation is the archenemy of the raw commodity sector and the recent slump in raw commodities is evidence of deflation creeping into world economies.

Geopolitics moved closer to the front burner of the market place to start the trading week, on news that a Russian politician and leading critic of President Vladimir Putin was assassinated right outside the Kremlin. The Putin regime denied involvement but many Russians are skeptical. The Russian ruble was pressured further on this news. More and more, Russia is becoming isolated from the West, which does not at all bode well for stability in that region of the world down the road. Such is a longer-term bullish factor for the safe-haven gold market.

The London P.M. gold fix was $1,212.50 versus the previous A.M. fixing of $1,216.75.

Technically, April gold futures prices closed near the session low today. The gold bears have the firm overall near-term technical advantage. A six-week-old downtrend is in place on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,236.70. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the March low of $1,190.00. First resistance is seen at today’s high of $1,223.00 and then at $1,230.00. First support is seen at today’s low of $1,206.60 and then at $1,200.00. Wyckoff’s Market Rating: 3.0

May silver futures prices closed nearer the session low today. Silver bears have the firm near-term technical advantage. A six-week-old downtrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 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 $16.79 and then at last week’s high of $16.905. Next support is seen at today’s low of $16.42 and then at $16.295. Wyckoff's Market Rating: 3.0.

May N.Y. copper closed up 30 points at 269.45 cents today. Prices closed near mid-range today and hit a seven-week high. The copper market bears still have the overall near-term technical advantage but the bulls have gained upside momentum recently to suggest that a market bottom is in place. A four-week-old uptrend is in place on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 280.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 255.00 cents. First resistance is seen at today’s high of 271.80 cents and then at 275.00 cents. First support is seen at today’s low of 267.70 cents and then at 266.00 cents. Wyckoff's Market Rating: 4.0.

May N.Y. copper closed up 495 points at 269.30 cents today. Prices closed nearer the session high today and hit a six-week high. The key “outside markets” were in a bearish posture for copper today, yet copper rallied anyway, which is a bullish clue for the red metal. The copper market bears still have the overall near-term technical advantage but the bulls have gained upside momentum to suggest that a market bottom is in place. A four-week-old uptrend is in place on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 280.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 255.00 cents. First resistance is seen at today’s high of 271.40 cents and then at 275.00 cents. First support is seen at 265.00 cents and then at today’s low of 263.60 cents. Wyckoff's Market Rating: 4.0.

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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