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A.M. Kitco Metals Roundup: Comex Gold Trades Weaker U.S. Dollar Firms

Comex gold prices are trading weaker Monday morning, on some follow-through selling pressure from strong losses suffered on Friday. A stronger U.S. dollar is limiting buying interest in the precious metals Monday, but good bargain-hunting buying interest at the lower price levels is somewhat limiting the downside. December Comex gold last traded down $6.00 at $1,359.50 an ounce. Spot gold last traded down $7.60 at $1,361.50.

The U.S. dollar index is trading higher Monday morning, supported by fresh worries over the sovereign debt of the smaller European Union countries, especially Ireland, which has pressured the Euro currency. The U.S. dollar index hit a fresh five-week high overnight and the index bulls have gained some fresh upside technical momentum to suggest a near-term market low is in place. Precious metals traders will continue to keep a close eye on the U.S. dollar index. The recent rebound in the dollar index has been a bearish weight on precious metals prices.

China's stock and commodity markets sold off sharply Friday amid worries of further interest rate increases and monetary policy tightening from the Chinese government. That selling spilled over into strong selling pressure in U.S. commodity futures markets Friday. The Chinese markets did stabilize on Monday. Chinese economic officials are worried about rising inflationary pressures and have recently moved to tighten monetary policy. Commodity traders are concerned China will make further monetary policy tightening moves in the near term, which could choke off demand for commodities from China.

Veteran market watchers know that markets do not go straight up in price and do experience downside "corrections" in overall price uptrends. Traders and investors are now pondering the degree of the present downside price corrections in gold and silver, and at what price levels strong buying interest will resurface in the precious metals.

U.S. economic data due for release Monday includes the Empire State Manufacturing Survey, retail sales and manufacturing and trade data.

The London A.M. gold fixing was $1,367.00 versus the previous London P.M. fixing of $1,388.50.

Technically, December gold futures bulls faded on Friday as the market saw strong losses that produced a bearish weekly low close. No serious chart damage occurred, but strong follow-through selling pressure early this week would likely produce significant near-term chart damage.

At present, however, gold bulls still have the overall near-term and longer-term technical advantage. A 3.5-month-old uptrend on the daily bar chart is still in place. Bulls' next near-term upside technical objective is to produce a close above technical resistance at $1,400.00. Bears' next near-term downside price objective is closing prices below solid technical support at the November low of $1,325.50. First resistance is seen at the overnight high of $1,375.50 and then at $1,388.10. Support is seen at Friday's low of $1,359.30 and then at $1,350.00. Today's near-term Fibonacci support/resistance level: $1,364.00.

December silver futures last traded down 6.7 cents at $25.875 an ounce. A bearish weekly low close on Friday did occur, to produce some minor near-term chart damage. Follow-through selling pressure this week would produce more significant technical damage to begin to suggest a near-term market top is in place. Silver bulls do still have the overall near-term technical advantage at present. Prices are still in a 3.5-month-old uptrend on the daily bar chart. The important longer-term technical posture of silver remains fully bullish.

The next downside price objective for the bears is closing prices below solid technical support at $25.00. Bulls' next upside price objective is producing a close above solid technical resistance at $27.50 an ounce. First resistance is seen at the overnight high of $26.48 and then at $27.00. Next support is seen at Friday's low of $25.76 and then at $25.50. Today's near-term Fibonacci support/resistance level: $25.99.

By Jim Wyckoff of 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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