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A.M. Kitco Metals Roundup: Comex Gold Firmer on Short Covering, Lower U.S. Dollar Index

Monday September 16, 2013 8:34 AM

(Kitco News) - Comex gold futures prices are slightly higher in early U.S. trading Monday, but have backed off from the overnight highs. The market is seeing some short covering after prices hit a four-week low on Friday. Selling interest is also limited by a weaker U.S. dollar index. Both gold and silver markets remain in weakened near-term technical postures. December Comex gold was last up $5.60 at $1,314.30 an ounce. Spot gold was last quoted down $14.10 at $1314.25. December Comex silver last traded up $0.165 at $21.88 an ounce.

Many markets posted modest relief rallies Monday morning on the surprise weekend news that former U.S. Treasury secretary Larry Summers withdrew his name for consideration for chairman of the U.S. Federal Reserve, due to the likely acrimony his nomination would have brought. Many reckoned Summers was President Obama's first choice for the Fed chief. Many markets were cheered on the news on ideas Summers would have been a bit more hawkish on U.S. monetary policy than would current Fed vice chair Janet Yellen, who is now widely believed to be next in line to lead the Federal Reserve.

Gold and silver markets also briefly popped up on the Summers news, but that rallies began to fizzle as trading moved from Asia, to Europe, and now to the U.S.

The other factor that has put more risk appetite into the market place is the weekend agreement by the U.S. and Russia on a plan for the international community to take over Syria's chemical weapons stockpiles. The risk of a U.S. military strike against Syria is presently very low, whereas two weeks ago it seemed imminent the U.S. would attack the Syrian regime.

Traders and investors are looking forward to this week's meeting of the U.S. Federal Reserve's Open Market Committee (FOMC). The meeting begins on Tuesday and ends at midday Wednesday. Fed Chairman Ben Bernanke will also hold a press conference Wednesday afternoon. A majority of the market place believes the U.S. central bank at this week's meeting will announce it will begin to scale back, or "taper" its monthly bond-buying program. Some reckon the Fed will announce a $10 billion or $15 billion reduction in its $85 billion-a-month bond-buying program. The surprise to the markets could be if the Fed either does nothing at this meeting, or is more aggressive in its initial reduction in bond purchases. For the past several weeks the market place has been fixated on what the U.S. central bank will announce at the conclusion of this week's FOMC meeting.

U.S. economic data due for release Monday includes the Empire State manufacturing survey, and industrial production and capacity utilization.

The London A.M. gold fix is $1,314.75 versus the previous P.M. fixing of $1,318.50.

Technically, the gold market bears have the overall near-term technical advantage. Prices hit a five-week low on Friday. The gold bulls' next upside near-term price breakout objective is to produce a close in December futures above solid technical resistance at $1,350.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at $1,325.00 and then at the overnight high of $1,336.00. First support is seen at Friday's low of $1,304.60 and then at $1,300.00.

December silver futures prices last Friday hit a four-week low. Silver bears have the 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 $24.25 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.65. First resistance is seen at $22.00 and then at the overnight high of $22.49. Next support is seen at the overnight low of $21.685 and then at last week's low of $21.42.

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Read the latest news in gold and precious metals markets at Kitco News.

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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