Gold is trading higher in early morning trading on fresh technically related buying interest. Metals are also seeing fresh demand following bullish comments from US Federal Reserve Chairman Ben Bernanke. Gold last traded up to $1,679.30 and silver traded up $31.13.
By Jim Wyckoff
1/15/2013 @ 8:25AM
Forbes
Comex gold futures prices are moderately higher in early U.S. trading Tuesday. The yellow metal is seeing some fresh technically related buying interest as the near-term chart posture is improving. The precious metals are also seeing some fresh demand following bullish comments from U.S. Federal Reserve Chairman Ben Bernanke. February gold last traded up $9.90 an ounce at $1,679.30. Spot gold was last quoted up $11.70 at $1,680.00. March Comex silver last traded up $0.025 at $31.135 an ounce.
Fed Chairman Bernanke late Monday said the U.S. economic recovery is still fragile and strongly hinted that the Fed’s monthly bond-buying program will not end any time soon. That was a bullish development for the raw commodity markets, including the precious metals. The most recent FOMC minutes had shown some Fed officials were in favor of ending the bond-buying program at year end.
European and U.S. stock markets were pressured a bit overnight on a warning from the U.S. Treasury Secretary Geithner that the U.S. cannot skirt its debt ceiling, while the Fitch credit rating agency said it could downgrade the U.S.’s credit rating if the U.S. delays raising its debt ceiling. If this situation deteriorates in the coming weeks, it could at times be bearish and bullish for the gold market—bearish if gold decides to act like just another raw commodity on a given day, and bullish if gold decides to act like a safe-haven asset.
European Union economic data released Tuesday was a mixed bag. Germany’s GDP contracted by 0.5% in the fourth quarter of last year. However, Euro zone exports showed a record large trade surplus in November. There were also strong government bond sales in Italy and Spain, which is a clue that European investor sentiment toward the EU continues on the upswing. The Euro currency has been pushed to a multi-month high this week on the upbeat sentiment regarding the EU.
The market place is awaiting Friday’s report from China on its fourth-quarter gross domestic product growth rate.
The U.S. dollar index is slightly firmer early Tuesday, on a corrective, short-covering bounce from recent strong losses. The greenback bears still have some downside near-term technical momentum and that’s an underlying supportive factor for the precious metals. Meantime, Nymex crude oil futures prices are slightly lower Tuesday morning. The crude oil bulls still have some upside near-term technical momentum. That, too, is a bullish underlying factor for the metals markets.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the producer price index, retail sales, the Empire State manufacturing survey, and manufacturing and trade inventories.
The London A.M. gold fixing is $1,681.00 versus the previous London P.M. fixing of $1,666.50.
Technically, February gold futures still see a three-month-old downtrend in place on the daily bar chart—but now just barely. Gold bears still have the overall near-term technical advantage. However, recent price action suggests the bulls are working on forging a near-term low, but they have more work to do to confirm such. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the January high of $1,695.40. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at the January low of $1,626.00. First resistance is seen at the overnight high of $1,683.80 and then at $1,690.00. First support is seen at the overnight low of $1,666.20 and then at this week’s low of $1,659.50.
March silver has seen price action recently that suggests the market has put in a near-term bottom. Bulls and bears are presently on a level near-term technical playing field. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the January high of $31.535 an ounce. The next downside price breakout objective for the bears is closing prices below major psychological support at $30.00. First resistance is seen at the overnight high of $31.405 and then at $31.535. Next support is seen at the overnight low of $30.965 and then at $30.79.
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