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Gold Sees Sharp Gains, Hits 5-Wk High, on Strong Safe-Haven Demand amid World Stock, Currency Mkts Turmoil

(Kitco News) - Gold ended the U.S. day session sharply up and scored a five-week high Thursday, on strong safe-haven demand for the yellow metal. The world market place was very uneasy on this day. Pre-placed buy stop orders were also triggered in gold futures, to help drive prices even higher. December Comex gold was last up $24.50 at $1,152.40 an ounce. September Comex silver was last up $0.326 at $15.505 an ounce.

World stock markets and secondary currency markets were under selling pressure Thursday, partly due to the uncertainty surrounding Wednesday afternoon’s FOMC minutes, ongoing China economic and financial worries, and as October Nymex crude oil futures prices fell to another 6.5-year low of $40.50 a barrel overnight. Brent crude oil futures are trading around $46.00 at present. The emerging market currencies turmoil Thursday reminded veteran traders of the currency volatility in the late 1990s that began with smaller currencies becoming unstable. And while presently not near the front burner of the market place, traders and investors are taking notice of Brazil’s economic and political troubles. Brazil is the world’s seventh-largest economy. Remember, too, that the upcoming months of September and October have been known to be unfriendly to the stock market through the years.

All of the above worked in the favor of gold market bulls. The near-term chart posture for gold is also becoming more bullish.

Traders and investors were still digesting Wednesday afternoon’s FOMC minutes from last month’s meeting of Federal Reserve monetary policy officials. Ideas are mixed on whether the minutes leaned to the hawkish or dovish side and there is still some debate on that matter. However, judging by the reaction of the U.S. dollar index, which sold off after their release, the minutes were tilted toward the camp of the monetary policy doves. The minutes also indicated FOMC members’ worries about China’s economic health.

The London P.M. gold fix is $1,147.70 versus the previous A.M. fix of $1,137.95.

Technically, December gold futures prices closed near the session high and hit a five-week high today. Gold bulls and bears are now back on a level near-term technical playing field. A four-week-old uptrend has also developed on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,175.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s high of $1,126.30. First resistance is seen at today’s high of $1,153.70 and then at $1,160.00. First support is seen at $1,140.00 and then at today’s low of $1,132.10. Wyckoff’s Market Rating: 5.0

September silver futures prices closed nearer the session high today and closed at a five-week high close. Silver bears still have the overall near-term technical advantage. However, today’s and Wednesday’s price action gives the bulls fresh upside momentum and suggests a near-term market bottom is in place. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the July high of $15.90 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at this week’s low of $14.68. First resistance is seen at the August high of $15.585 and then at $15.75. Next support is seen at today’s low of $15.255 and then at $15.00. Wyckoff's Market Rating: 4.0.

September N.Y. copper closed up 430 points at 231.90 cents today. Prices closed nearer the session high and saw short covering in a bear market. Prices Wednesday hit a contract and six-year low. Copper bears still have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the August high of 242.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 220.00 cents. First resistance is seen at today’s high of 233.25 cents and then at 235.00 cents. First support is seen at230.00 cents and then at the contract low of 226.05 cents. Wyckoff's Market Rating: 1.5.

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

 

 

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