Tuesday October 15, 2013 2:18 PM
(Kitco News) - Comex gold prices ended the U.S. day session slightly lower Tuesday, but then rallied to moderately higher levels in late-afternoon trading. Short covering and some safe-haven demand were seen on the rebound in the afternoon and from the early-session low. Afternoon reports that U.S. House Republicans are again digging in their heels has spooked the market place…again. December Comex gold was last up $6.80 at $1,283.70 an ounce. Spot gold was last quoted up $10.40 at $1284.25. December Comex silver last traded up $0.006 at $21.35 an ounce.
In overnight and very early U.S. trading Tuesday it appeared U.S. lawmakers would reach a budget/debt ceiling bill as soon as today. However, a surprising move by House Republicans Tuesday morning to have a separate budget/debt bill introduced threw a monkey wrench into the process and somewhat spooked the market place a bit. More harsh rhetoric coming from both sides of the aisle Tuesday afternoon led many to believe a debt/budget deal is still not close.
The U.S. government's partial closure is in day 15. Also, the government will soon hit its overall debt ceiling on Thursday. Many still believe a U.S. budget/debt deal will be reached at the last minute, which is pretty much what the market place has expected all along. However, if no deal is reached by U.S. lawmakers before Thursday, serious strains in the markets will quickly surface, including keener safe-haven demand for gold. While that scenario appears unlikely, one can never be sure, what with this dysfunctional U.S. Congress.
The sharply higher U.S. dollar index and lower crude oil prices were bearish daily outside market factors for gold and silver markets Tuesday.
U.S. stock indexes and many other world stock markets had seen sharp rallies the past few days, not only on expectations that the U.S. lawmakers will reach a last-minute budget/debt agreement, but also on ideas the U.S. Federal Reserve will keep its very easy monetary policy (quantitative easing) in place for longer than what many had been expecting up until the U.S. government shutdown. With the government closure likely crimping the U.S. gross domestic product growth to a slight degree and also rattling investor confidence, it seems the Federal Reserve was prescient in leaving its monetary policies unchanged at its last FOMC meeting a few weeks ago. Add on top of that the nomination last week of perceived monetary policy dove Janet Yellen to head up the U.S. Federal Reserve next year, and most of the market place got a good dose of bullish tonic.
Important for gold and silver traders is that the aforementioned "tonic" is also bullish for the precious metals. It's just that at present the preferred path of the money flow is into world stock markets. But the direction of that money flow will not last indefinitely. And when these already very mature bull market runs in the equities run out of steam, money will then flow into other assets, likely including gold and other raw commodity markets.
The dearth of U.S. economic data the past two weeks has put a damper on many markets, which could account for the generally low volatility seen during the government shutdown. The next big unknown for the market place when the U.S. government does reopen its doors is when and how will all the backed-up U.S. economic data be released, or will some of the reports just be permanently cancelled. At present there is no consensus on how this matter will play out, mainly because the government stats officials have been on furlough and probably have not yet even discussed how and when to disseminate the backed-up U.S. economic data. If much of the backed-up economic data is released in a short timeframe it could make for higher volatility in the market place, at least for a short period of time.
The London P.M. gold fix is $1,270.50 versus the previous P.M. fixing of $1,285.50.
Technically, December gold futures prices closed nearer the session high and well off the daily low Tuesday, after hitting a fresh three-month low early on. The gold market bears have the firm overall near-term technical advantage. A seven-week-old downtrend 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 $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,250.00. First resistance is seen at this week's high of $1,291.60 and then at $1,300.00. First support is seen at last week's low of $1,259.60 and then at Tuesday's low of $1,251.00. Wyckoff's Market Rating: 3.0
December silver futures prices closed near the session high after hitting a fresh two-month low early on Tuesday. Silver 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 major technical support at $20.00. First resistance is seen at this week's high of $21.68 and then at $22.00. Next support is seen at $21.00 and then at Tuesday's low of $20.495. Wyckoff's Market Rating: 3.0.
December N.Y. copper closed up 10 points at 330.40 cents Tuesday. Prices closed nearer the session high. Copper bulls and bears are on a level near-term technical playing field. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 333.75 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the September low of 319.05 cents. First resistance is seen at this week's high of 331.75 cents and then at 333.75 cents. First support is seen at Tuesday's low of 328.10 cents and then at 326.00 cents. Wyckoff's Market Rating: 5.0.
Follow me on Twitter to immediately get the very latest market developments. If you are not on board, then you are not getting key analysis and perspective as fast or as often as you could! Follow me on Twitter to get my very timely intra-day and after-hours briefs on precious metals price action. The precious markets will remain very active. If you want market analysis fast, and in after-hours trading, then follow my up-to-the-second precious metals market perspective on Twitter. It's free, too. My account is @jimwyckoff.
Read the latest news in gold and precious metals markets at Kitco News.
By Jim Wyckoff, contributing to Kitco News; firstname.lastname@example.org
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.