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Gold Ends Near Steady on Chart Consolidation; Bears Still in Control

(Kitco News) - Gold prices finished the U.S. day session near unchanged Tuesday as the market saw chart consolidation after recent strong selling pressure. Some more short covering in the futures market and a bit of bargain hunting in the cash have been featured early this week. The gold and silver bears remain in firm technical control of their markets. December Comex gold was last up $0.40 at $1,088.50 an ounce. December Comex silver was last down $0.033 at $14.38 an ounce.

Reports overnight said demand for physical gold is picking up in India, the world’s second-largest gold consumer. The festival season in India has begun, during which time it is customary for citizens there to buy gold. This news did limit selling pressure in the gold market today.

The key “outside markets” on Tuesday saw the U.S. dollar index firmer, as the greenback bulls continue to have technical power amid a near-term price uptrend on the chart. Meantime, crude oil prices were slightly higher, but the bears still hold the overall technical advantage. The International Energy Agency said Tuesday the Middle Eastern OPEC nations’ strategy of all-out crude oil production in order to force U.S. shale-oil producers out of business is a risky venture that could leave oil prices depressed and trading around $50-a-barrel until the end of this decade.

The first U.S. Federal Reserve interest rate rise in nine years is very likely coming in December, following last Friday’s stronger-than-expected jobs report. The Fed funds futures market this week shows traders think there is a 70% chance the Fed will make its rate hike in December. This notion is U.S. dollar bullish and U.S. stock index, U.S. Treasury and gold markets bearish. However, it’s likely the bearish impact of the expected Fed rate hike has already been mostly factored into market prices. In fact, many in the market place just want the Fed to get the rate hike over with so market participants can stop obsessing about it and focus on other matters.

There was more economic data coming out of China Tuesday. China’s consumer price index rose 1.3% in October, year-on-year, which is down from the reading of up 1.6% in September. The report falls into the camp of China monetary policy doves who want to see more economic stimulus coming from the People’s Bank of China.

There is a big Euro zone finance ministers meeting taking place early this week, which will be closely monitored by the marketplace.

Technically, December gold futures prices closed near mid-range today and hit another three-month low. The gold bears have the solid overall near-term technical advantage. Prices are in a four-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 $1,110.00. 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 this week’s high of $1,094.90 and then at $1,100.00. First support is seen at today’s low of $1,184.00 and then at $1,180.00. Wyckoff’s Market Rating: 1.5

December silver futures prices closed nearer the session low and hit a seven-week low today. The silver market bears have the solid overall near-term technical advantage. Silver 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 $14.00. First resistance is seen at today’s high of $14.555 and then at this week’s high of $14.76. Next support is seen at $14.24 and then at $14.00. Wyckoff's Market Rating: 1.5.

December N.Y. copper closed down 100 points at 222.00 cents today. Prices closed near mid-range and hit a 2.5-month low today. Prices also closed at a contract low close. Copper bears have the solid overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the November high of 236.20 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 220.25 cents. First resistance is seen at this week’s high of 225.10 cents and then at 227.50 cents. First support is seen at 220.25 cents and then at 218.00 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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