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Gold Up on Short Covering, Bargain Hunting, a Bit More Risk Aversion

(Kitco News) - Gold prices are moderately higher in early U.S. trading Thursday. Short covering in the futures market and bargain hunting in the cash market are featured. There is also less risk appetite in the marketplace on this day, which is favorable to the safe-haven metal. December Comex gold was last up $6.60 at $1,108.50 an ounce. December Comex silver was last up $0.089 at $14.665 an ounce.

The latest U.S. weekly jobless claims data showed claims fell by 6,000 in the latest week, which was in line with trade expectations, but still falls into the camp of the U.S. monetary policy hawks. Gold prices were not impacted by the report.

World stock markets were mostly lower overnight, as uncertainty about the outcome of next week’s U.S. FOMC meeting has moved to center stage and is causing a bit a trader and investor anxiety. The Federal Open Market Committee meets next Tuesday and Wednesday to discuss monetary policy. There is no clear consensus among traders and investors on whether the Fed will make an interest rate hike for the first time in several years at next week’s meeting, or wait until December, or later.

China’s Shanghai stock index closed down 1.4% Thursday. Japan’s Nikkei stock index was down 2.5% on the day. European stock markets were also weaker Thursday. U.S. stock indexes were firmer in preopening trading, after posting solid losses Wednesday.
China's consumer price index rose 2.0% in August, year-on-year, which was stronger than expected. However, China’s August producer price index fell 5.9% from a year ago, which was worse than expectations.

The Bank of England left its interest rates unchanged at its Thursday monetary policy meeting. No change in rates was expected.

The key “outside markets” early Thursday find Nymex crude oil futures are firmer and the U.S. dollar index is slightly higher.

U.S. economic data due for release Thursday includes the weekly jobless claims report, import and export price indexes, monthly wholesale trade, and the weekly DOE liquid energy stocks report.

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

Wyckoff’s Daily Risk Rating: 3.0 (Trader and investor market risk aversion is a bit keener early Thursday.)

(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 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).

The London A.M. gold fix is $1,107.75 versus the previous P.M. fix of $1,109.85.

Technically, December gold futures bears have the solid near-term technical advantage as prices hit a four-week low Wednesday. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,126.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the July low of $1,073.70. First resistance is seen at $1,116.90 and then at $1,120.00. First support is seen at $1,100.00 and then at $1,090.00. Wyckoff’s Market Rating: 2.5

December silver futures bears have the solid near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.50. First resistance is seen at last week’s high of $14.95 and then at $15.00. Next support is seen at this week’s low of $14.44 and then at last week’s low of $14.39. Wyckoff's Market Rating: 2.0.

By Jim Wyckoff, contributing to Kitco News;
Follow me on Twitter @jimwyckoff



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