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Walsh's Lusk: Gold Must Break Resistance To Gain Follow-Through

Kitco News

Gold has rallied since the outcome of a Federal Open Market Committee meeting Wednesday, but the metal needs to break through resistance to generate follow-through buying, says Sean Lusk, director of commercial hedging with Walsh Trading. Policymakers hiked interest rates by 25 basis points and continued to hint at three more hikes in 2018. However, they also said inflation remains tame, Lusk points out. “That is leading some to believe the Fed may not be able to raise interest rates as rapidly as it would like in the coming months,” Lusk says. “The comments about inflation, in my view, spurred gold higher and led the dollar lower. While gold and silver have been oversold on the charts, gold and silver will need follow-through above an upward trend line that to me presents near-term resistance on the charts.” For Comex February gold, this resistance sits at $1,262.90, Lusk says. “A close above and the market will quickly challenge the 200-day moving average at $1,268.30 [as of late Wednesday]. Longer-term resistances come in at the 100-day moving average at $1,286.90 and downward trendline resistance at $1,288.40.” As of 9:46 a.m. EST, the February gold contract was $6.10 higher at $1,254.70 an ounce.

By Allen Sykora of Kitco News; asykora@kitco.com

 

FXTM: U.S. Inflation Concerns May Underpin Gold

Thursday December 14, 2017 10:10

Gold could draw further support on ideas U.S. inflation remains low, although the pattern on technical charts still looks weak despite Thursday’s rally, says Lukman Otunuga, research analyst at FXTM. The metal is higher so far due to a vulnerable U.S. dollar, the analyst says. “Although the Federal Reserve raised U.S. interest rates on Wednesday as widely expected, concerns over low inflation in the U.S. stole the show, ultimately punishing the greenback,” the analyst says. “With markets questioning the central bank’s ability to raise rates three times next year amid inflation fears, gold, which is zero-yielding, may receive further support.” Technically, the analyst continues, “the yellow metal still remains somewhat pressured on the daily charts despite Wednesday’s impressive resurgence. A technical bounce is in the process, with the next level of interest at $1,267. Alternatively, a failure of prices to keep above $1,250 may trigger a decline back towards $1,230.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

Commerzbank: Incentives May Have Moved Ahead China’s Car Purchases

Thursday December 14, 2017 10:10

Chinese car sales in 2017 are only modestly higher than 2016 so far and government incentives may have moved ahead some future purchases, Commerzbank says. The Chinese data have implications for palladium since the metal is used for catalytic converters in gasoline-powered vehicles, which make up the bulk of the Chinese car market. Analysts cite data from the China Association of Automobile Manufacturers showing that 2.59 million cars were sold in the country during November. “Although this does not constitute any year-on-year growth, the high sales figure of last November was repeated,” Commerzbank says. “At the turn of the year, the Chinese government will completely withdraw the tax incentives for buying vehicles with small engines (they had already been halved at the turn of 2016-17), which is clearly prompting people to buy cars now. Looking at the year as a whole, car sales in China are likely to have risen by only around 2%. This would be the weakest growth rate in at least 12 years. 2016 still saw growth of 15%. This has not slowed the rapid rise of the palladium price this year, however.” 

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