Gold Up on Short Covering, Bargain Hunting and Safe-Haven Buying
New York (Jan 5) Gold prices ended the U.S. day session with solid gains Monday, boosted by short covering in the futures market and bargain hunting in the cash market—following a drop to a four-week low last Friday. Some safe-haven for demand for gold also surfaced Monday as U.S. and European stock markets sold off. February Comex gold was last up $15.90 at $1,202.10 an ounce. Spot gold was last up $12.70 at $1,203.00. March Comex silver last traded up $0.442 at $16.21 an ounce.
The gains in gold were especially impressive Monday, in the face of keenly bearish “outside market” forces. Nymex crude oil prices fell to a 5.5-year low of $49.95 a barrel. Meantime, the U.S. dollar index hit a 10-year high Monday. These two key markets continue to trend strongly in the opposite directions, and that continues to be a major negative force working against the raw commodity markets. However, many raw commodity markets, including gold and silver, have stabilized at lower levels and have begun to trade sideways on the daily charts. This is an early clue those commodity market prices may have bottomed out. It is my strong bias that 2015 will be a better year for the raw commodity market bulls than last year.
The Euro currency dropped to a nine-year low against the greenback Monday, mainly due to ideas the European Central Bank will act soon to stimulate European Union monetary policy. However, EU traders and investors are still worried about the debt situations of the smaller countries in the union--especially Greece and to a lesser degree Spain and Italy. European and U.S. stock markets were in part pressured on those concerns, which in turn prompted safe-haven demand for gold.
U.S. economic data due released Monday was light, but the pace picks up as the week progresses. The U.S. employment report for December is due out on Friday. This piece of economic data is arguably the most important report of the month. There are also other important U.S. economic reports out this week, and the U.S. Congress begins its new session.
The London P.M. gold fix is $1,200.00 versus the previous A.M. fixing of $1,192.00.
Technically, February gold futures prices closed near the session high today. Prices last Friday hit a four-week low. 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 last week’s high of $1,210.90. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,167.30. First resistance is seen at $1,210.90 and then at $1,221.00. First support is seen at $1,200.00 and then at $1,195.00. Wyckoff’s Market Rating: 3.5
March silver futures prices closed near the session high today on short covering and bargain hunting. Silver bears 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
