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P.M. Kitco Metals Roundup: Comex Gold Ends Weaker in Choppy Trading; Stronger U.S. Dollar Bearish

Wednesday March 13, 2013 2:31 PM

(Kitco News) - Gold prices ended a very choppy U.S. trading session with modest losses Wednesday. A stronger U.S. dollar index that hit a fresh 7.5-month Wednesday pressured most commodity markets on the day, including gold and silver. April Comex gold last traded down $4.20 at $1,587.50 an ounce. Spot gold was last quoted up $5.20 at $1,598.50. May Comex silver last traded down $0.256 at $28.915 an ounce.

U.S. retail sales were released Wednesday morning and showed a stronger-than-expected rise of 1.1% in February, which was about double the rise that the market place expected. That news boosted the U.S. stock indexes and in turn put some downside price pressure on gold and silver prices. If economic data coming from the U.S. starts to trend in a stronger fashion it would also lead to ideas the Federal Reserve would have to begin to back off on its aggressive easy monetary policy. That, too, would be at least initially bearish for the precious metals markets.

Gold and silver traders and investors were digesting news Wednesday that the U.S. Commodity Futures Trading Commission is looking into whether major banks are manipulating London gold and silver market prices via the London gold and silver morning and afternoon fixes. Meantime, the World Gold Council said Wednesday that world central banks continue to put their reserves into gold and are moving away from U.S. dollars and Euros.

In overnight news, a German two-year note auction saw the notes (also called Schatz) fetch strong demand with a yield of only 0.06%. This suggests there is a bit keener risk aversion in the European market place, likely due to the uncertainty regarding Italy’s recent elections and due to recent downbeat economic data coming out of the European Union. On Wednesday it was reported that factory output in the 17 EU countries declined by 0.4% in January from December. There is also an Italian bond auction set for Wednesday, which will be closely monitored as a test of investor appetite for the troubled country’s debt. The Fitch credit ratings agency last week downgraded Italy’s credit rating.

The U.S. dollar index was stronger Wednesday and hit a fresh 7.5-month high amid the stronger U.S. retail sales data issued in the morning. The U.S. dollar bulls have solid technical strength to suggest the dollar index can continue to trend higher in the near term. That continues to be a bearish underlying factor for gold and silver. Meantime, Nymex crude oil futures prices were slightly lower Wednesday afternoon. The crude oil bulls have gained some upside near-term technical momentum recently, and that is a supportive factor for the precious metals markets.

The London P.M. gold fixing is $1,589.25 versus the previous London P.M. fixing of $1,594.00.

Technically, April gold futures prices closed nearer the session low Wednesday. The bears have the overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,600.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the February low of $1,554.40. First resistance is seen at Wednesday’s high of $1,598.80 and then at $1,600.00. First support is seen at Wednesday’s low of $1,584.40 and then at this week’s low of $1,574.50. Wyckoff’s Market Rating: 3.5

May silver futures prices closed nearer the session low Wednesday. Silver bears have the near-term technical advantage. However, prices have been trading sideways to higher for the past week as the bulls try to stabilize the market. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $29.495 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the March low of $27.925. First resistance is seen at this week’s high of $29.35 and then at $29.495. Next support is seen at this week’s low of $28.705 and then at $28.50. Wyckoff's Market Rating: 3.5.

May N.Y. copper closed down 240 points at 353.05 cents Wednesday. Prices closed nearer the session low and were also pressured by a stronger U.S. dollar index. Copper bears have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 360.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the March low of 347.25 cents. First resistance is seen at 355.00 cents and then at Wednesday’s high of 356.70 cents. First support is seen at 352.00 cents and then at 350.00 cents. Wyckoff's Market Rating: 3.0.

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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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