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Gold Up on Safe-Haven Demand, Weak U.S. Economic Report

(Kitco News- Gold prices ended the U.S. day session firmer Monday, on some more safe-haven buying and following a much weaker-than-expected U.S. economic report issued in morning trading. Increased speculator buying interest was also seen amid an improving technical picture. December Comex gold was last up $5.50 at $1,118.20 an ounce. September Comex silver was last up $0.077 at $15.29 an ounce.

Gold prices were sporting modest gains and then extended those gains when the Empire State manufacturing survey came in at a much worse-than-expected reading of -14.9 in August from plus 3.86 in July. A reading of plus 4.5 was expected in August. A number above zero indicates growth.

Gold gave back a bit of its early price gains as the U.S. trading session progressed, but still ended moderately higher on the day.

There is still some safe-haven demand for gold following last week’s devaluation of the Chinese yuan against the U.S. dollar. There are ongoing worries about the health of the Chinese economy, which is the world’s second-largest. Economic and political troubles in Brazil—the world’s seventh-largest economy--are also moving closer to the front burner of the market place.

Gold scored gains despite bearishly postured “outside markets” on this day. Nymex crude oil futures were lower and are hovering near a 6.5-year low that was scored last week. Notions of a world oil glut were bolstered by the Baker Hughes U.S. oil rig count, which was reported on Friday, climbing for the fourth straight week. The other outside market saw the U.S. dollar index firmer Monday. Trading in the dollar index has been choppy recently.

The big data point of the trading week is likely to be Wednesday’s release of the FOMC minutes from last month’s meeting. Traders and investors will be looking for further clues on the precise timing of the expected upcoming U.S. interest rate hike. The U.S. consumer price index is also due out Wednesday and will be closely scrutinized.

The London P.M. gold fix is $1,118.80 versus the previous A.M. fix of $1,117.30.

Technically, December gold futures prices closed near mid-range today. Gold bears have the overall near-term technical advantage. However, recent price action produced a bullish upside “breakout” from a sideways trading range, which is a clue that a near-term market bottom is in place. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,133.80. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,090.00. First resistance is seen at today’s high of $1,122.20 and then at last week’s high of $1,126.30. First support is seen at $1,110.00 and then at $1,100.00. Wyckoff’s Market Rating: 2.5

September silver futures prices closed near mid-range today. Silver bears have the overall near-term technical advantage. However, a bullish rounding-bottom reversal pattern is in place on the daily bar chart, to suggest a market bottom is in place. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the July low of $14.33. First resistance is seen at last week’s high of $15.585 and then at $15.90. Next support is seen at today’s low of $15.18 and then at $15.00. Wyckoff's Market Rating: 2.5.

September N.Y. copper closed down 265 points at 232.50 cents today. Prices closed near mid-range. Copper bears have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 242.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 225.00 cents. First resistance is seen at today’s high of 234.85 cents and then at 238.25 cents. First support is seen at today’s low of 230.95 cents and then at last week’s contract low of 229.25 cents. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff

 

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