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Gold Prices Pop Higher On Short Covering, Bargain Hunting

Kitco News

(Kitco News) - Gold prices are moderately up and trading at their daily highs in early-afternoon U.S. trading Wednesday. Some short covering by the shorter-term futures traders is featured today, as well as some perceived bargain basement buying in the cash market. The silver market is slightly up at midday after dipping to a nearly three-year low overnight. December gold futures were last up $7.30 an ounce at $1,208.60. December Comex silver was last up $0.088 at $14.065 an ounce.

A sell off in the U.S. stock market today is also aiding the safe-haven gold market.

The U.S. economic highlight of the day was the release of the Consumer Price Index for October, which came in at up 0.3%, which was right in line with expectations and had little impact on the metals.  This report fell into the camp of those believing U.S. inflation, while creeping up recently, is not yet problematic.

The recent big drop in crude oil prices has spooked the world marketplace. Nymex crude oil futures prices are firmer today on a corrective bounce after hitting an 11-month low of $54.75 a barrel on Tuesday. In less than six weeks’ time Nymex crude prices have dropped by over $20 a barrel. The steep slide in oil prices is a bearish element for most of the raw commodity sector, including the metals, as oil is arguably the leader of that sector.

European investors are unsettled at mid-week. Reports said U.K. Prime Minister Theresa May has told her cabinet members to back her on her Brexit agenda, or quit. Late reports said that May has pulled her Brexit plan off the table. The Euro currency fell to a 16-month low against the U.S. dollar on Monday. Italian bond yields rose to a three-week high today as the Italian government and EU officials wrangle over the specifics of Italy’s budget.

In other overnight news, China’s industrial output was reported up a better-than-expected 5.9% in October, year-on-year. However, China’s retail sales rose by 8.6% in October, which is down from a 9.2% pace in September, year-on-year.

Germany’s gross domestic product shrank 0.8% in the third quarter, for the slowest pace of growth for the leading European Union economy in over five years. Meantime, the Euro zone GDP was reported up 0.2% in the third quarter, and up 1.7%, year-on-year, which was in line with market expectations.

The U.S. dollar index is trading weaker on a corrective pullback today, but not far below this week’s 1.5-year high.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bears still have the firm overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,225.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the September low of $1,184.30. First resistance is seen at this week’s high of $1,212.00 and then at $1,220.00. First support is seen at $1,200.00 and then at this week’s low of $1,196.60. Wyckoff's Market Rating: 3.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $14.775 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.50. First resistance is seen at this week’s high of $14.18 and then at $14.425. Next support is seen at today’s low of $13.86 and then at $13.75. Wyckoff's Market Rating: 1.0.

December N.Y. copper closed up 230 points at 271.05 cents today. Prices closed nearer the session high on short covering. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 287.10 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 257.45 cents. First resistance is seen at this week’s high of 274.85 cents and then at 278.00 cents. First support is seen at this week’s low of 266.25 cents and then at the November low of 264.25 cents. Wyckoff's Market Rating: 3.0.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.