Make Kitco Your Homepage
AM-PM Roundup

Gold Down on Bearish Charts, Outside Markets

(Kitco News) - Gold prices are solidly lower and dropped to a 3.5-month low in morning U.S. trading Tuesday. Negative-looking charts and bearish “outside markets”—a higher U.S. dollar index early this week and sharply lower crude oil prices Monday—are keeping the sellers in control of both gold and silver markets. As U.S. trading gets under way the U.S. dollar index has pushed to a four-week high. Silver prices fell to a seven-month low in early U.S. trading Tuesday. August Comex gold was last down $15.90 at $1,157.30 an ounce. September Comex silver was last down $0.543 at $15.21 an ounce.

Negotiations between Greece and the EU/IMF are continuing Tuesday at an EU summit, despite the Sunday Greece “no” vote on new austerity measures. Markets’ reactions to the “no” vote and the increasing likelihood Greece will exit the European Monetary System have not been extreme, so far. However, there is still some modest anxiety in the market place. European stock markets were weaker Tuesday, awaiting the outcome of the EU summit. U.S. stock indexes are firmer in early U.S. pre-market trading. The Euro currency is trading lower. The U.S. dollar index and U.S. Treasuries are higher on safe-haven buying.

Some European market watchers say the Greece matter and the “end-game” could become clearer by the end of this week. However, the market place has heard that kind of talk literally for years, and the problems with European sovereign debt continue to surface. While the gold market has gotten little to no lift from this latest EU debt crisis, it’s my bias that the safe-haven metal will benefit in the coming months or even years from the EU debt crisis and the potential for another worldwide financial market contagion.

A feature in the market place Monday was the sharp sell-off in the crude oil market, in which prices hit a three-month low. Prices are now bearing down on the $50-a-barrel mark, which seems likely to be hit in the not-too-distant future. The steep downturn in the crude oil market recently is a bearish omen for the rest of the raw commodity sector. It will be difficult for a raw commodity market to sustain a price uptrend when its leader, crude oil, is in a steep downtrend.

The Greece debt crisis has overshadowed important economic developments in China recently. China’s stock market is now down nearly 30% in just three weeks’ time, with the Chinese government trying to stem the tide of selling pressure. China economic data released in recent weeks has been mostly downbeat. Keep a close eye on China news in the coming weeks. It’s likely that upcoming economic developments in China will have more worldwide markets significance than will developments in Greece. Copper prices plunged Monday on China economic worries. China is the world’s largest raw commodity importer. China’s economic worries have already spilled over into Australia, as the Australian dollar has plunged to a six-year low versus the U.S. dollar this week.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the trade deficit report, and the IBD/TIPP economic optimism index.

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

Wyckoff’s Daily Risk Rating: 6.0 (Trader and investor market risk aversion is a bit elevated early this week, on the Greece 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 fix is $1,166.25 versus the previous P.M. fix of $1,166.00.

Technically, August gold futures bears have the solid overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,174.40. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the March low of $1,143.80. First resistance is seen at $1,162.10 and then at today’s high of $1,170.00. First support is seen at today’s low of $1,153.60 and then at $1,150.00. Wyckoff’s Market Rating: 1.5

September silver futures bears have the solid near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $15.82 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $15.45 and then at today’s high of $15.71. Next support is seen at today’s low of $15.105 and then at $15.00. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff, contributing to Kitco News;
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.
kitco news