A.M. Kitco Metals Roundup: Gold Slightly Higher as Market Pauses

Thursday June 27, 2013 8:18 AM

(Kitco News) - Gold prices are slightly higher in early U.S. trading Thursday, as the market pauses after Wednesday's slump to a nearly three-year low. Some tepid short covering is featured. Traders and investors are awaiting fresh fundamental inputs to move the markets. Thursday's batch of U.S. economic data could provide a spark for price movement. Comex August gold was last up $2.60 at $1,232.80 an ounce. Spot gold was last quoted up $7.50 at $1,233.50. July Comex silver last traded up $0.098 at $18.685 an ounce.

The market place is a bit calmer Thursday morning. Wednesday's weaker-than-expected final revision to U.S. first-quarter gross domestic product-at up 1.8% on an annual basis versus the previous estimate of up 2.4%-did suggest to many market watchers worldwide that the Federal Reserve cannot be too heavy on the brakes in tapering its very easy monetary policy. Still, the trend of U.S. economic data released recently has been for stronger data, and most traders and investors still believe the Fed will start to back off on its quantitative easing of monetary policy by the end of this year. Such has been a significantly bearish weight on the raw commodity sector the past week, while giving the U.S. dollar index a solid boost.

Asian stock markets were mostly higher Thursday, following Wall Street's good gains on Wednesday. European stock markets were weaker Thursday, but losses were pared after better-than-expected German unemployment and Euro zone consumer confidence data were released.

The U.S. dollar index is weaker Thursday morning, on some mild profit taking after hitting a three-week high Wednesday. The greenback bulls still have technical momentum on their side, which is a bearish underlying factor for the precious metals markets. Nymex crude oil prices are slightly higher Thursday as trading has been choppy this week.

U.S. economic data due for release Thursday includes weekly jobless claims, the Chicago Fed Midwest manufacturing index, personal income and outlays, the pending home sales index, and the Kansas City Fed manufacturing survey.

The London A.M. gold fix is $1,232.00 versus the previous London P.M. fixing of $1,236.25.

Technically, the gold market bears remain in strong near-term technical command. The next major, longer-term downside price targets are $1,100 and then at $1,027 for nearby Comex futures. The $1,088 price level for nearby Comex gold futures marks a 50% Fibonacci retracement level of the up-trending price move from the 2001 low to the 2011 record high. If that key technical level is breached on the downside, it would be an ominous chart development. 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 psychological resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below psychological support at $1,200.00. First resistance is seen at the overnight high of $1,244.20 and then at $1,250.00. First support is seen at Wednesday's low of $1,221.00 and then at $1,200.00.

Silver bears have the strong overall near-term technical advantage. Prices are in an overall eight-month-old downtrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above major psychological resistance at $20.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $17.50. First resistance is seen at $19.00 and then at Wednesday's high of $19.58. Next support is seen at Wednesday's low of $18.36 and then at $18.00.

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Read the latest news in gold and precious metals markets at Kitco News.

By Jim Wyckoff, contributing to Kitco News;

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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