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Gold Up, Hits Nearly 3-Mo. High, On More Safe-Haven Buying

(Kitco News) - Gold prices are higher and scored a nearly three-month high in early U.S. trading Tuesday. More safe-haven demand and technical buying are featured and bulls have near-term momentum on their side. February Comex gold was last up $7.60 at $1,112.90 an ounce. March Comex silver was last up $0.081 at $14.335 an ounce.

World stock markets are mostly lower Tuesday, led by another rout in Chinese stock indexes. The Shanghai stock index fell over 6% on Tuesday and is now down 22% so far this year. Worries about the plunging value of the Chinese yuan and capital leaving the country are helping to fuel panic selling of equities in China, which in turn is leading to solid selling pressure in Asian equities markets and also spilling over into European and U.S. stock markets. The shaky stock markets play right into the hands of the safe-haven gold market bulls.

The key “outside markets” on Tuesday morning find Nymex crude oil futures prices firmer following solid losses on Monday. Crude oil bears remain in firm technical control and gained fresh downside momentum Monday. There are now no early clues of a market bottom in oil being close at hand. Meantime, the U.S. dollar index is trading slightly higher in early U.S. dealings.

The Federal Open Market Committee (FOMC) meeting begins Tuesday and ends Wednesday afternoon with a statement. While no change in U.S. interest rates is expected at this meeting, the statement issued after the meeting will be very closely scrutinized. Many market watchers agree the world economies and financial markets have become shakier since the last FOMC meeting in mid-December.

There is a heavy slate of U.S. economic data due for release Tuesday, including the weekly Goldman Sachs and Johnson Redbook retail sales reports, the S&P/Case-Shiller home price index, the U.S. monthly house price index, the U.S. flash services PMI, the consumer confidence index, and the Richmond Fed business survey.

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

Wyckoff’s Daily Risk Rating: 3.0 (Trader and investor market risk aversion is just a bit elevated today.)

(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).

Technically, gold bears still have the overall near-term technical advantage. However, prices are in a choppy five-week-old uptrend on the daily bar chart and recent price action suggests a market bottom is in place. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,150.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,080.00. First resistance is seen at today’s high of $1,118.00 and then at $1,125.00. First support is seen at the overnight low of $1,107.20 and then at $1,100.00. Wyckoff’s Market Rating: 3.5

Silver prices hit a six-week high overnight. While bears still have the overall near-term technical advantage, the recent sideways trading at lower price levels appears to be “basing” action that puts in a market bottom. Silver bulls’ next upside price breakout objective is closing December futures prices above solid technical resistance at the December high of $14.64 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $13.62. First resistance is at the overnight high of $14.485 and then at $14.64. Next support is seen at the overnight low of $14.22 and then at $14.00. Wyckoff's Market Rating: 3.0.

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

 

 

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