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A.M. Kitco Metals Roundup: Gold Posting Solid Gains on Short Covering, Some Safe-Haven Demand

Monday October 14, 2013 8:18 AM

(Kitco News) - Gold prices are solidly higher in early U.S. trading Monday, on a corrective, short-covering bounce after prices fell to a three-month low last Friday. Some bargain hunting and safe-haven buying interest are also featured to start the new trading week. December Comex gold was last up $20.50 at $1,288.50 an ounce. Spot gold was last quoted up $15.20 at $1289.00. December Comex silver last traded up $0.396 at $21.655 an ounce.

The U.S. stock indexes are seeing selling pressure Monday morning as the U.S. Congress and President Obama over the weekend made little to no progress on reopening the government and agreeing on a measure to extend the government debt ceiling. Such has also sparked some safe-haven demand for gold. Friday afternoon there was hope in the market place a weekend deal would be reached. However, some congressional leaders did meet Sunday and termed their meeting constructive.

The U.S. government has now been closed for two weeks and late this week it's likely the U.S. will reach its debt ceiling. World economic and political leaders have warned the U.S. government to get its act together and get its budget mess solved, or risk very serious markets and economic disruption worldwide.

Still, the sense of the market place so far is that a last-minute deal will be reached by U.S. lawmakers. Markets have been remarkably calm with not much risk aversion the past couple weeks. The dearth of U.S. economic data the past two weeks has put a damper on many markets.

There is no U.S. economic data due for release Monday, which is the U.S. Columbus Day holiday. The U.S. Treasury markets are closed Monday.

Economic data released from China Monday showed its consumer price index rose to 3.1% on an annual basis versus a 2.6% rise in August. The CPI rise was a bit hotter than expected by the market place. In other economic data from China, new car sales rose in September at the fastest rate in eight months. China's trade surplus narrowed to $15.2 billion in September from $28.5 billion in August.

The London A.M. gold fix is $1,276.00 versus the previous P.M. fixing of $1,265.50.

Technically, December gold futures bears have the firm overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart and on Friday closed at a bearish weekly low close besides hitting a three-month low. The gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at last week's high of $1,330.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,250.00. First resistance is seen at the overnight high of $1,291.60 and then at $1,300.00. First support is seen at the overnight low of $1,268.40 and then at Friday's low of $1,259.60.

December silver futures are also seeing some short covering Monday but the bears have the overall near-term technical advantage. Prices are in a seven-week-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 $22.525 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of $20.63. First resistance is seen at $22.00 and then at $22.25. Next support is seen at the overnight low of $21.11 and then at last week's low of $20.95.

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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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