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A.M. Kitco Metals Roundup: Comex Gold Sharply Lower on Technical Selling, Up-Tick in Investor Risk Appetite

(Kitco News) - Comex December gold futures prices are sharply lower in early U.S. trading Thursday. Early losses were extended following a batch of U.S. economic data released. Some technical support levels were also breached on the downside in December gold, to set off sell stops and push gold prices even lower. It was a "risk on" day in the world market place early Thursday, as evidenced by firmer world stock markets that appear to have stabilized this week. That's bearish for the safe-haven investment asset gold. Investors and traders at are viewing, at least temporarily, the European Union debt crisis as de-escalating. December gold last traded down $19060 at $1,807.50 an ounce. Spot gold last traded down $17.20 an ounce at $1,804.50. December Comex silver last traded down $0.083 at $40.45 an ounce.

This week may have seen investors and traders turn the corner on the ongoing European Union sovereign debt crisis front. On Wednesday Moody's downgraded two major French banks' credit ratings. But the markets showed little reaction. That's a clue that the market place has probably factored in all the bad news coming out of the EU. Worries were also eased when a conference call between the leaders of Greece, Germany and France Wednesday resulted in all three leaders pledging to keep Greece afloat in the EU. The apparent de-escalation in the EU debt crisis has worked to put downside price pressure on safe-haven gold.

U.S. economic data released Thursday morning showed a slight rise in inflation, a rise in U.S. weekly jobless claims and a weak manufacturing report. All that data combined would seem to favor the gold market bulls. However, gold prices extended losses following the release of the U.S. data.

The U.S. dollar index is trading weaker Thursday, as the Euro currency is seeing a rebound on the easing EU debt tensions. The greenback bulls still have some upside near-term technical momentum after prices hit a fresh six-month high this week.

Crude oil futures prices are trading near steady Thursday. Crude oil bulls have gained a bit of fresh upside momentum this week as prices Wednesday hit a fresh five-week high. Crude oil will remain an important "outside market" that will influence the precious metals markets.

U.S. economic data due for release Thursday includes real earnings, the consumer price index, the Empire State manufacturing survey, the Philadelphia Fed business survey and the weekly jobless claims report.

The London A.M. gold fixing was $1,806.00 versus the previous P.M. fixing of $1,818.50.

Technically, December gold futures prices Thursday morning dropped below psychological support at $1,800.00 and below solid near-term chart support at last week's low of $1,793.80, to set off some sell stops and drive prices still lower. However, gold bulls still have the overall technical advantage and downside days like early Thursday have not produced any significant chart damage. Veteran market watchers know that even bull markets see "backing and filling" price action on the charts, which is actually healthy for a bull trend. Shorter-term and longer-term price uptrends are in place on the charts. Bulls' next upside technical objective is to produce a close above solid technical resistance at the all-time high of $1,923.70. Bears' next near-term downside price objective is closing prices below solid technical support at $1,750.00. First resistance is seen at $1,800.00 and then at the overnight high of 1,829.70. First support is seen at Thursday's low of $1,779.70 and then at $1,770.00.

December silver futures bulls still have the overall near-term technical advantage. Prices are still in a choppy, 10-week-old uptrend on the daily bar chart. Bulls' next upside price objective is producing a close above strong technical resistance at the September high of $43.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week's low of $39.75. First resistance is seen at the overnight high of $40.85 and then at $41.00. Next support is seen at this week's low of $39.75 and then at $39.50.

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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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