Wednesday August 21, 2013 2:45 PM
(Kitco News) - Comex gold futures prices were modestly higher in afternoon U.S. trading Wednesday, in a modest "relief rally" after the release of the FOMC minutes from the latest Federal Open Market Committee meeting of the U.S. Federal Reserve. After some initial price gyrations gold and silver prices settled down and then rallied a bit after the release of the minutes. Gold and silver bulls decided to do some buying when the FOMC minutes did not appear to have any new, hawkish wording on U.S. monetary policy. December gold was last up $2.60 at $1,375.00 an ounce. Spot gold was last quoted down $2.40 at $1,369.25. September Comex silver last traded up $0.179 at $23.25 an ounce.
Not surprisingly, the FOMC minutes revealed no clear consensus from FOMC members on when to start to wind down the Fed's monthly bond-buying program, also known as quantitative easing. And the minutes were not all that different from the last minutes of the FOMC that were released several weeks ago.
So the market place quickly focuses upon the next major data point: Thursday's manufacturing data coming out of China. China is the world's second-largest economy, but the leading worldwide importer of many key raw commodities.
There is also a world central bankers meeting in Wyoming that began Wednesday. However, Fed Chairman Ben Bernanke will not attend it and no major proclamations are expected to come out of that event.
The recent turmoil in Asian currency and financial markets has somewhat stabilized, at least for the moment. The Indian Rupee and the Indonesian Rupiah currencies have been hardest hit. Indian and Indonesian central bank officials are taking action to stabilize their currencies, but likely with only very limited success. There are still worries about an "Asian contagion" situation that has in the past spooked markets worldwide. Rising interest rates in the major world economies have put pressure on the periphery currencies. The higher rates in the major economies have started to reverse the flows of investor monies that had been moving into the periphery country markets the past few years. Just Wednesday, a German government bond auction fetched the highest yields in a year and a half. U.S. government bond and note yields are also on the rise this week. An Asian currency contagion would likely prompt keen safe-haven demand for gold.
Traders and investors are still watching the Egypt unrest, which continues to see violence between citizens and government militia. This situation has appeared to not worsen this week, which has allowed traders to focus on other matters. Any escalation in violence is likely to impact the market place, and could also prompt a rise in demand for safe-haven assets, including gold.
Reports Wednesday said Syria has used chemical weapons against its civilians, with hundreds killed. This matter will be closely monitored by the market place, and is yet another geopolitical hotspot that could flare up to become a major markets factor.
The key "outside markets" were in a bearish daily posture for the precious metals markets Wednesday. The U.S. dollar index was solidly higher on short covering. The greenback bears still have the overall near-term chart advantage. Nymex crude oil futures prices were solidly lower. The crude oil bulls still have the overall near-term technical advantage.
The London P.M. gold fix is $1,363.00 versus the previous P.M. fixing of $1,372.50.
Technically, December gold futures prices closed near mid-range Wednesday. The gold market bulls and bears are on a level near-term technical playing field. A seven-week-old uptrend is in place on the daily bar chart. The gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,400.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at this week's high of $1,384.10 and then at $1,390.00. First support is seen at Wednesday's low of $1,359.20 and then at this week's low of $1,351.60. Wyckoff's Market Rating: 5.0
September silver futures prices closed near mid-range Wednesday and saw more mild profit taking and chart consolidation from recent good gains. Silver bulls still have the near-term technical advantage. Bulls' next upside price breakout objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $22.00. First resistance is seen at Tuesday's high of $23.34 and then at this week's high of $23.605. Next support is seen at Wednesday's low of $22.755 and then at $22.50. Wyckoff's Market Rating: 6.0.
September N.Y. copper closed down 215 points at 331.60 cents Wednesday. Prices closed near mid-range today. The key "outside markets" were bearish for copper as the U.S. dollar index was solidly higher and crude oil prices were solidly lower. Copper bulls still have the overall near-term technical advantage. Prices are in a seven-week-old uptrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the June high of 341.25 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 317.50 cents. First resistance is seen at Wednesday's high of 333.20 cents and then at 335.00 cents. First support is seen at 330.00 cents and then at Wednesday's low of 328.70 cents. Wyckoff's Market Rating: 6.0.
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By Jim Wyckoff, contributing to Kitco News; firstname.lastname@example.org