Markets

A.M. Kitco Metals Roundup: Comex Gold Firmer in Subdued Trading as Wednesday Afternoon FOMC Statement Awaited

Comex gold prices are trading modestly higher Wednesday morning in tentative market action, as traders await the highly anticipated FOMC meeting conclusion Wednesday afternoon. A weaker U.S. dollar index Wednesday morning is also adding to buying interest in gold. December Comex gold last traded up $6.10 at $1,363.00 an ounce. Spot gold was last quoted up $4.90 at $1,363.00.

With the U.S. mid-term elections now out of the way, trader and investor focus is squarely on Wednesday afternoon's Federal Reserve's FOMC meeting conclusion and the statement issued immediately after the meeting. Most in the market place believe the Fed will announce a fresh quantitative easing measure to help stimulate the U.S. economy. The size of the expected "QE" package from the Fed will be key. The QE package is likely to start out at around $500 billion. Any figure significantly above or below the $500 billion level is likely to prompt stronger market reactions.

As has been reported for some time now, many market watchers think the QE has already been factored into markets' price structures. Thus, the markets are not likely to show strong price reactions to Wednesday afternoon's expected QE announcement. In fact, the U.S. dollar index could see an upside bounce on a "sell the rumor, buy the fact" phenomenon that occurs in markets when an event is highly anticipated by traders.

The U.S. dollar index is trading slightly lower Wednesday morning. The dollar index remains technically and fundamentally weak, which has been and continues to be bullish for the precious metals. The value of the U.S. dollar against the other major currencies will continue to be an important market factor for the precious metals. Any strong rebound in the U.S. dollar index would likely be temporarily bearish for gold, to likely produce a significant downside near-term "correction" in an overall price uptrend. However, the gold market has enough strong fundamental and technical factors in its favor that even a sustained near-term rally in the U.S. dollar index is not likely to change the overall bullish posture of the gold market.

News reports overnight said physical demand for gold (bars, coins, jewelry) remains strong in the eastern countries.

U.S. economic data due for release Tuesday includes the weekly MBA mortgage applications survey, the ADP monthly employment report, the U.S. Treasury's quarterly refunding, manufacturer's shipments and orders, the ISM non-manufacturing report and domestic auto sales data.

The London A.M. gold fixing was $1,358.50 versus the previous London P.M. fixing of $1,351.00.

Technically, gold bulls have the overall near-term and longer-term technical advantage and have recently gained upside near-term technical momentum to re-establish a 13-week-old uptrend on the daily bar chart for December Comex gold.

Gold bulls' next near-term upside technical objective is to produce a close in December futures above solid technical resistance at the all-time record high of $1,388.10. Bears' next near-term downside price objective is closing prices below solid technical support at $1,315.60. First resistance is seen at this week's high of $1,366.40 and then at $1,372.00. Support is seen at this week's low of $1,349.10 and then at $1,340.00. Today's near-term Fibonacci support/resistance level: $1,361.00.

December silver futures last traded up 16.4 cents at $25.00 an ounce Wednesday morning. Silver bulls have the solid overall near-term technical advantage. The bulls have good upside near-term technical momentum. The next downside price objective for the bears is closing prices below solid technical support at $24.00. Bulls' next upside price objective is producing a close above solid technical resistance at $26.00 an ounce. First resistance is seen at this week's high of $25.055 and then at $25.25. Next support is seen at the overnight low of $24.71 and then at this week's low of $24.515. Today's near-term Fibonacci support/resistance level: $24.21.

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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