Gold Price Firms Up on Short Covering & Bargain Hunting
New York (July 8) Gold is modestly higher in early U.S. trading Wednesday, on modest short covering in the futures market and bargain hunting in the cash, following recent selling pressure that saw prices hit a 3.5-month low overnight. There may even be a touch of safe-haven demand for the yellow metal. August Comex gold was last up $3.30 at $1,155.90 an ounce. September Comex silver was last down $0.029 at $14.95 an ounce.
Negotiations between Greece and the EU/IMF are continuing this week with still no deal reached. Now there is yet another deadline for a deal to occur—Greece must come up with a credible plan by Sunday, says the EU. The Germans are reportedly taking a harder line with Greece implementing new austerity measures. European stock markets are near steady and the Euro currency is firmer Wednesday as European investors are numb to the daily machinations of the Greece debt crisis.
There is still some moderate risk aversion in the world market place at mid-week. U.S. Treasuries prices are higher Wednesday, but the U.S. dollar index is seeing a corrective pullback from recent gains. Now the focus of unsettled traders and investors is also on China.
China’s stock market dropped again Wednesday and is down over 30% in just three weeks’ time. The Chinese government is trying to stem the tide of selling pressure via various measures, but is not having much success. On Wednesday Chinese officials called their stock market sell-off “irrational.” It appears the Chinese government is getting a lesson in free market capitalism, as even its heavy-handed approach to market intervention can’t stop the selling pressure in China equities.
It is likely upcoming economic and financial developments in China will have more worldwide markets significance than will developments in Greece. Copper and crude oil prices have plunged this week, partly on China economic worries. China is the world’s largest raw commodity importer. China’s economic worries have already spilled over into Australia and Japan, as the Australian dollar has plunged to a six-year low versus the U.S. dollar this week and Japan’s stock market is feeling selling pressure. If China markets continue to seriously melt down, then the fears arise of a worldwide financial and stock market contagion. That’s a real scary scenario and could be prompted some safe-haven demand for gold.
Traders and investors are awaiting Wednesday afternoon’s FOMC minutes release, from the June 16-17 meeting. As always, the market place wants to see if the minutes provide any fresh insight to just when the Federal Reserve will raise U.S. interest rates for the first time in years.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
The London A.M. gold fix is $1,154.25 versus the previous P.M. fix of $1,156.25.
Technically, August gold futures bears still have the solid overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,174.40. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the March low of $1,143.80. First resistance is seen at $1,162.10 and then at Tuesday’s high of $1,170.00. First support is seen at the overnight low of $1,145.90 and then at $1,143.80. Wyckoff’s Market Rating: 1.5
September silver futures bears have the solid near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. Prices Tuesday hit a seven-month low. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $15.82 an ounce.
Source: KitcoNews
