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Gold Firmer, Hits 2-Week High; Technicals Continue to Improve

(Kitco News) - Gold prices ended a choppy, two-sided trading session modestly higher Wednesday. Prices notched another two-week high as bulls are building upon their recent technical momentum. Also, a general rebound in the raw commodity sector this week—led by crude oil—is benefiting the precious metals bulls. December Comex gold was last up $2.40 at $1,148.90 an ounce. December Comex silver was last up $0.071 at $16.055 an ounce.

A feature in the market place so far this week has been the surge in crude oil prices. Nymex crude oil hit a five-week high Wednesday and is now knocking on the door of $50.00 a barrel. Technically, price action in crude oil futures Tuesday produced a bullish upside “breakout” to suggest a market bottom is in place and that prices can trend at least sideways, if not sideways to higher, in the near term. This is also bullish for the entire raw commodity sector, as crude oil is the leader.

The World Gold Council reported Wednesday central banks added 47 metric tons of gold to their reserves in August, after adding 62 tons in July. Russia and China banks were the biggest buyers.

The world market place is generally quieter this week as China’s markets are shuttered for the Golden Week holiday. Many market watchers are attributing less volatile world markets so far this week to China markets being closed, and wonder if market volatility will pick up again when China’s markets reopen.

The present Glencore commodity trading debacle could be producing ramifications that are spreading beyond the raw commodity sector. The big commodity trader and commercial firm’s debt problems and stock volatility could be working to dry up debt financing for firms in other sectors, reports said. This situation could also be prompting a bit of safe-haven demand for gold.

Technically, December gold futures prices closed near mid-range and did poke to a two-week high today. The bulls have upside momentum on their side to suggest a market bottom is in place and that prices can trade at least sideways, if not sideways to higher, in the near term. Gold bears still have the slight overall near-term technical advantage. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the September high of $1,156.40. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,103.80. First resistance is seen at today’s high of $1,153.60 and then at $1,156.40. First support is seen at today’s low of $1,141.30 and then at Tuesday’s low of $1,134.50. Wyckoff’s Market Rating: 4.5

December silver futures prices closed nearer the session high and hit another 3.5-month high today. The silver market bulls have the near-term technical advantage and still have upside momentum. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.50 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 today’s high of $16.115 and then at $16.25. Next support is seen at today’s low of $15.82 and then at Tuesday’s low of $15.57. Wyckoff's Market Rating: 6.0.

December N.Y. copper closed up 125 points at 236.80 cents today. Prices closed nearer the session low after hitting a two-week high early on. Short covering in a bear market was featured. Copper bears still have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the September high of 249.30 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the August low of 220.25 cents. First resistance is seen at today’s high of 239.60 cents and then at 242.50 cents. First support is seen at today’s low of 235.20 cents and then at this week’s low of 232.55 cents. Wyckoff's Market Rating: 2.5.

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

 

 

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