Markets

P.M. Kitco Metals Roundup: Comex Gold Ends Sharply Lower Amid General Commodity Weakness, Increased Margins, Stronger U.S. Dollar

Comex gold prices ended sharply lower Tuesday, on some fresh worries about the Chinese government tightening monetary policy that prompted a general sell off in the commodity markets. Increased margin requirements for the precious metals futures and a stronger U.S. dollar also weighed on gold and the other precious metals. December Comex gold last traded down $28.50 at $1,340.00 an ounce. Spot gold last traded down $19.70 at $1,341.25.

Rumors in China overnight that Chinese monetary authorities would soon tighten monetary policy and that the government could also move to rein commodity market speculation hit the Chinese stock and commodity markets hard. That quickly spilled over into selling pressure in U.S. markets Tuesday. Reports also said South Korea raised interest rates overnight to curb inflationary pressures. Chinese economic officials are worried about rising inflationary pressures and have recently moved to tighten monetary policy.

The U.S. dollar index is posted solid gains Tuesday and hit a fresh six-week high on a weaker Euro currency. The Euro was pressured on fresh, serious concerns about Ireland quickly needing a financial bailout, with Austria reportedly balking at helping to fund such a move. Gold failed to respond to the Ireland news, after in recent months being able to post gains on a safe-haven move by investors into gold. Instead, most gold market traders focused on the bearish aspects of a strengthening U.S. dollar. The dollar index bulls have fresh upside technical momentum to suggest a near-term market low is in place. Continued strength in the greenback would continue to limit buying interest in precious metals.

Meantime, the precious metals market bulls were dealt another blow Tuesday when the CME Group announced it is raising futures margin requirements at the end of the business day on Tuesday.

The London P.M. gold fixing was $1,349.00 versus the previous P.M. fixing of $1,368.50 an ounce.

Technically, December Comex gold futures prices closed near the session low Tuesday. Fresh near-term technical damage was inflicted Tuesday to begin to suggest that a near-term market top is in place. Bulls' next near-term upside technical objective is to produce a close above technical resistance at the October high of $1,388.10. Bears' next near-term downside price objective is closing prices below solid technical support at $1,315.60. First resistance is seen at $1,350.00 and then at $1,360.00. Support is seen at Tuesday's low of $1,329.00 and then at the November low of $1,325.50. Wyckoff's Market Rating: 6.0.

December silver futures closed down 71.7 cents at $25.375 an ounce Tuesday. Prices closed near mid-range and hit a fresh two-week low. The key "outside markets" were in a solidly bearish posture for silver Tuesday, as the U.S. dollar index was higher, while crude oil and the U.S. stock indexes were lower. Some fresh near-term chart damage was inflicted Tuesday to begin to suggest that a near-term market top is in place. Prices at present are still in a 3.5-month-old uptrend on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at $24.00. Bulls' next upside price objective is producing a close above solid technical resistance at $27.00 an ounce. First resistance is seen at Tuesday's high of $25.85 and then at $26.00. Next support is seen at Tuesday's low of $24.98 and then at $24.50. Wyckoff's Market Rating: 6.0.

December N.Y. copper closed down 1,970 points at 372.80 cents Tuesday. Prices closed near the session low and hit a fresh five-week low. The key "outside markets" were in a solidly bearish posture for copper Tuesday, as the U.S. dollar index was higher, while crude oil and the U.S. stock indexes were lower. Some near-term chart damage was inflicted in copper Tuesday, and good follow-through selling pressure on Wednesday would produce more serious damage to begin to suggest that a near-term market top is in place. A five-month-old uptrend on the daily bar chart was at least temporarily negated Tuesday. Bulls' next upside objective is pushing and closing prices above solid technical resistance at this week's high of 395.35 cents. The next downside price objective for the bears is closing prices below solid technical support at 355.00 cents. First resistance is seen at 375.00 and then at 380.00 cents. First support is seen at Tuesday's low of 368.55 cents and then at 365.00 cents. Wyckoff's Market Rating: 6.0.

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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