P.M. Kitco Metals Roundup: Comex Gold Ends Solidly Higher, Hits New High, as U.S. Dollar Continues Slump

22 September 2010, 1:57 p.m.
By Jim Wyckoff
Of Kitco News
www.kitco.com

Comex gold futures prices ended solidly higher and near the middle of the day's trading range Wednesday, hitting another fresh all-time record high of $1,298.00 an ounce, basis the December futures contract. Gold is seeing strong buying support from a slumping U.S. dollar index. December Comex gold last traded up $17.90 an ounce at $1,292.30. Spot gold was last quoted up $4.00 at $1,291.50.

The U.S. dollar has been hit hard by Tuesday's Federal Open Market Committee meeting statement from the Federal Reserve. While the Fed did not specifically detail quantitative easing measures, most analysts said the statement strongly suggests such due to the very accommodative stance of the Fed, amid a still-anemic U.S. economy. Fresh quantitative stimulus from the Fed, which basically means increasing the U.S. money supply by buying of U.S. securities by the Fed, is significantly dollar-bearish.

The U.S. dollar index, which is a basket of six major currencies weighted against the greenback, hit a fresh eight-month low Wednesday. The index had already been in a weak technical posture, and the index has now become even more technically bearish. As long as the U.S. dollar index is in a solid price downtrend on the charts, look for the path of least resistance for gold to be sideways to higher.

Gold traders will now start to focus on other economic data coming from the world's major economies, starting with Thursday morning's weekly U.S. jobless claims report.

The London P.M. gold fixing was $1,293.50 versus the previous P.M. fixing of $1,275.00 an ounce.

From an important technical perspective, December gold futures bulls have the solid overall near-term and longer-term technical advantage. There are still no early technical clues to suggest a market top is close at hand in the gold market. The fact that volatility in the gold market has not increased significantly with prices now in uncharted territory is another bullish clue and suggests the modest uptrend in prices can continue. Prices are in a two-month-old uptrend on the daily bar chart.

Bulls' next near-term upside technical objective is to produce a close in December Comex gold above psychological resistance at $1,300.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,270.00. First resistance is seen at Wednesday's all-time high of $1,298.00 and then at $1,300.00. Support is seen at Wednesday's low of $1,287.50 and then at $1,280.00. Wyckoff's Market Rating: 9.0.

December silver futures closed up 41.0 cents at $21.05 an ounce Wednesday. Prices hit another fresh 30-month high. A sinking U.S. dollar and the record-high gold prices have boosted silver recently. Silver bulls still have the solid near-term technical advantage. Prices are still in a steep four-week-old uptrend on the daily bar chart. There are still no early technical clues to suggest a market top is close at hand. The next downside price objective for the bears is closing prices below solid technical support at $20.50. Bulls' next upside price objective is producing a close above solid technical resistance at $22.50 an ounce. First resistance is seen at Wednesday's high of $21.20 and then at $21.30. Next support is seen at Wednesday's low of $20.93 and then at $20.75. Wyckoff's Market Rating: 8.5.

December N.Y. copper closed up 825 points at 356.35 cents Wednesday. Prices closed nearer the session high and hit a fresh five-month high. The U.S. dollar index was lower again Wednesday, which helped boost the copper market. The copper bulls have the solid overall near-term technical advantage. Prices are in a four-month-old uptrend on the daily bar chart. Bulls' next upside objective is pushing and closing prices above solid technical resistance at the April high of 366.90 cents. The next downside price objective for the bears is closing prices below solid technical support at 339.30 cents. First resistance is seen at Wednesday's high of 359.05 cents and then at 360.00 cents. First support is seen at 355.00 cents and then at 352.50 cents. Wyckoff's Market Rating: 8.0.

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.