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A.M. Kitco Metals Roundup: Gold Pushes Higher, at 7-Mo. High, on Bargain Hunting, Bullish Fed Official Comments

Monday October 1, 2012 9:22 AM

Comex gold prices have popped solidly higher and hit a fresh 7.5-month high in morning trading Monday. Prices were trading modestly lower in early U.S. dealings, but then quickly popped higher following remarks from U.S. Federal Reserve official Evans, who made dovish remarks on U.S. monetary policy on CNBC. He suggested U.S. monetary policy could remain very accommodative for quite some time to come. Technical buying and bargain hunting also kicked in on the first day of the new quarter, as the gold and silver markets are in bullish near-term technical postures. December gold last traded up $17.00 at $1,790.00 an ounce. Spot gold was last quoted up $17.00 an ounce at $1,788.50.  December Comex silver last traded up $0.673 at $35.26 an ounce.

In overnight news, Chinese economic data released Monday was again downbeat, showing a weak manufacturing sector via its PMI index. China is on holiday this week, celebrating Golden Week. A major Japanese economic report was also released Monday and it also showed Japanese companies are pessimistic regarding their business prospects. In Europe, there was some better-than-expected euro zone manufacturing data issued Monday, which helped to lift European stock markets. Spanish and Italian bond yields edged down Monday.

Moody’s is set to release later Monday its latest credit rating on Spain. Later this week there will be some more important U.S. economic data released, including the FOMC minutes on Thursday and the employment report on Friday.

The U.S. dollar index is solidly lower in early trading Monday. The U.S. dollar bears have the overall near-term technical advantage. Meantime, Nymex crude oil prices are firmer Monday morning.  Crude oil bulls and bears are on a level near-term technical playing field. These two key “outside markets” are in a bullish posture for the precious metals Monday and will continue to have a significant daily influence on gold and silver prices.

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM report on business, construction spending and the global manufacturing PMI.

The London A.M. gold fixing is $1,770.50 versus the previous P.M. fixing of $1,776.00.

Technically, December gold futures prices hit a fresh seven-month high and are scoring a bullish “outside day” up on the daily bar chart—whereby the high is higher and low is lower than the previous session’s trading range. Bulls have the solid overall near-term technical advantage and gained fresh upside momentum Monday. Prices are in a three-month-old uptrend on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the 2012 high of $1,800.90. Bears' next near-term downside price objective is closing prices below solid technical support at last week’s low of $1,738.30. First resistance is seen at $1,800.90 and then at $1,810.00. First support is seen at $1,780.00 and then at the overnight low of $1,765.70.

December silver futures hit a fresh seven-month high and are also scoring a bullish “outside day” up on the daily bar chart Monday. Bulls are in solid near-term technical command. Prices are in a 10-week-old uptrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $36.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $33.36. First resistance is seen at Monday’s high of $35.445 and then at $36.00. Next support is seen at $35.00 and then at $34.50.

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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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 precious metal products, 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.

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