Keener Risk Appetite Tempers Gold Bulls
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(Kitco News) - A “risk-on” trader and investor mentality in the marketplace early this week is keeping the safe-haven gold bulls squelched. More profit taking is featured after gold scored a 12-month high last Friday. December Comex gold was last down $4.30 an ounce at $1,331.40. December Comex silver prices were last down $0.027 at $17.875 an ounce.
World stock markets were mostly firmer again overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. stock indexes have rallied to record or near record highs early this week, and that’s a significantly bearish development for the gold market.
News the United Nations Security Council late Monday imposed new sanctions on North Korea that were not as harsh as the U.S. wanted is being perceived as somewhat de-escalating the tensions between the U.S. and North Korea.
The key outside markets on Tuesday morning see the U.S. dollar index slightly higher. A modest rebound in the greenback this week is slightly bearish for the precious metals markets. Meantime, Nymex crude oil futures are also slightly higher this morning.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the NFIB small business index.
The key U.S. economic data point of the week is Thursday’s consumer price index report for August. That report is expected to show a rise of 0.4%. Notions are growing that low inflation in the U.S. and the Euro zone will keep the Federal Reserve and European Central Bank from tightening their monetary policies as soon as they would like. However, recent economic data from China and the U.K. do point to a modest pick-up in inflation. On Tuesday the August producer price index in the U.K. was reported up 0.6% from July and up 2.9%, year-on-year.
Technically, December gold futures bulls still have the firm overall near-term technical advantage, but are fading and need to show fresh power soon. A two-month-old uptrend is still in place on the daily bar chart. Bulls’ next upside technical objective is pushing and closing prices above chart resistance at last week’s high of $1,362.40. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,307.00. First resistance is seen at Monday’s high of 1,344.60 and then at $1,350.00. First support is seen at the overnight low of $1,333.50 and then at $1,325.00. Wyckoff’s Market Rating: 7.0
December silver bulls have the overall near-term technical advantage. Silver prices are in a nine-week-old uptrend on the daily bar chart. The next upside price breakout objective is closing futures prices above solid technical resistance at $18.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.25. First resistance is seen at $18.00 and then at last week’s high of $18.29. Next support is seen at Monday’s low of $17.77 and then at $17.50. Wyckoff's Market Rating: 6.5.