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A.M. Kitco Metals Roundup: Gold Gains On Bullish Outside Market Forces; FOMC Minutes Awaited

Wednesday July 10, 2013 8:03 AM

(Kitco News) - Gold prices are moderately higher in early U.S. trading Wednesday, supported by the key "outside markets" that are in a bullish posture for the precious metals on this day: a lower U.S. dollar index and solid price gains in crude oil futures. More short covering and bargain hunting are featured in gold. August gold was last up $10.40 at $1,256.60 an ounce. Spot gold was last quoted up $7.00 at $1,258.25. September Comex silver last traded up $0.202 at $19.34 an ounce.

The market place is awaiting the minutes of the last U.S. Federal Reserve Open Market Committee meeting, due out Wednesday afternoon. Recent FOMC statements and minutes of meetings have been markets-movers. Traders and investors will closely inspect the FOMC minutes for any clues on when the Fed will start to "taper" its monthly bond-buying program, also known as quantitative easing. The consensus in the market place at present is that the Fed will start to cut back its bond purchases sometime later this year. Fed Chairman Ben Bernanke will also give a speech later Wednesday, which could also be market-sensitive.

China's latest manufacturing report was released Wednesday and it came in on the weak side. Exports fell 3.1% in June, on an annualized basis. A 3.3% gain was expected. Chinese imports were down 0.7% on the year, while a 5.5% increase was forecast. The news had a somewhat limited impact on the market place, as the Chinese premiere said Wednesday China will continue on its path of long-term reform.

European stock markets were pressured Wednesday after the Standard & Poors ratings agency lowered Italy's sovereign credit rating. The European Union's sovereign debt crisis has been on the back burner of the market place for several months, but the situation has never been fully cleared up and could at any time heat up to roil world markets.

The U.S. dollar index is weaker Wednesday morning on profit taking after hitting a three-year high on Tuesday. Still, the overall strong technical posture of the dollar index remains a major bearish underlying factor for the metals. Nymex crude oil prices are solidly higher Wednesday and hit a 14-month high overnight. With Nymex crude trading well above $100 a barrel, that is a bullish underlying factor for the raw commodity sector, including the precious metals.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, wholesale trade, the weekly DOE energy stocks report, and the FOMC minutes.

The London A.M. gold fix is $1,252.25 versus the previous London P.M. fixing of $1,255.50.

Technically, the gold market bears remain in firm overall near-term technical control. August gold futures prices are in an eight-month-old downtrend on the daily bar chart. The gold bulls' next upside near-term price objective is to produce a close above technical resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the June low of $1,179.40. First resistance is seen at last week's high of $1,267.00 and then at $1,277.00. First support is seen at the overnight low of $1,242.20 and then at Tuesday's low of $1,232.00.

Silver bears also have the solid overall near-term technical advantage. Prices are in an eight-month-old downtrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at last week's high of $20.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $18.17. First resistance is seen at Tuesday's high of $19.485 and then at $19.83. Next support is seen at the overnight low of $18.985 and then at this week's low of $18.67.

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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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