Gold Up, Hits 3-Week High, Amid Safe-Haven Demand
New York (Jan 6) Gold prices ended the U.S. day session higher and scored a three-week high Tuesday. Keener risk aversion in the market place early this week has prompted safe-haven demand for gold. Short covering in the futures market and bargain hunting in the cash market were also featured, after prices last Friday dropped to a four-week low. February Comex gold was last up $12.10 at $1,216.10 an ounce. Spot gold was last up $10.90 at $1,216.50. March Comex silver last traded up $0.332 at $16.545 an ounce.
Most world stock markets saw follow-through selling pressure Tuesday, following solid losses suffered on Monday. Worries about plunging crude oil prices leading to general price deflation and concerns about the financial, political and economic health of the European Union are the main factors producing a “risk-off” attitude in the market place so far this week. The risk aversion has hit the stock markets hard, but benefited the safe-haven markets, including gold, the U.S. dollar and U.S. Treasuries.
There’s an old stock market adage that says as go stock prices in early January, so go stock prices for the entire year. So far, the bears are way ahead in that race. If the equities sector continues to erode, such would be a bullish development for hard assets, including the precious metals markets.
Crude oil prices fell to another 5.5-year low of $47.55 a barrel Tuesday, basis nearby Nymex futures. It now appears crude prices will at least dip into the lower $40 in the not-too-distant future. Meantime, the U.S. dollar index is hovering near this week’s 10-year high. Gold and silver bulls are impressed their markets are weathering well this week’s bearish “outside market” forces.
The Euro currency has this week dropped to a nine-year low against the greenback, mainly due to ideas the European Central Bank will act soon to stimulate European Union monetary policy. In overnight news, the EU got another dour economic report Tuesday. The Markit composite purchasing managers index (PMI) came in at 51.4 in December from 51.1 in November. However, the December figure did not meet market expectations. A reading above 50.0 suggests expansion in the sector. The recent string of weaker EU economic data suggests the European Central Bank could act to stimulate its monetary policy at its next regular meeting on January 22.
There was a heavier slate of U.S. economic data released Tuesday that included the U.S. services purchasing managers’ index (PMI), the global services PMI, manufacturers’ shipments and orders, and the ISM non-manufacturing report on business. That data was a mixed bag and had little impact on the markets.
The London P.M. gold fix is $1,210.25 versus the previous A.M. fixing of $1,211.00.
Technically, February gold futures prices closed nearer the session high and hit a three-week high today. Recent price action suggests a market bottom is in place for the gold market. The gold bears do still have the overall near-term technical advantage. Their next upside near-term price breakout objective is to produce a close above solid technical resistance at the December high of $1,239.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,184.80. First resistance is seen at today’s high of $1,223.30 and then at $1,230.00. First support is seen at $1,210.00 and then at today’s low of $1,201.60. Wyckoff’s Market Rating: 4.0
March silver futures closed up $0.347 at $16.56 today. Prices closed nearer the session high today and hit a fresh three-week high on more short covering and bargain hunting. Recent price action suggests a market bottom is in place for silver. Silver bears do still have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 an ounce.
Source: KitcoNews
