Gold Weaker On Corrective Pullback, Profit Taking
New York (Oct 22) Gold prices are modestly lower in early U.S. trading Wednesday, on a mild corrective pullback and chart consolidation from recent gains that saw prices Tuesday hit a six-week high. Some profit taking from the shorter-term futures traders is also featured following the recent advance. A firmer U.S. dollar index on this day is also a negative “outside market” force working against the precious metals. December Comex gold was last down $3.60 at $1,248.10 an ounce. Spot gold was last quoted down $1.60 at $1,248.25. December Comex silver last traded down $0.154 at $17.395 an ounce.
The feature in the market place this week has been the sharp rebound in the U.S. stock market, following last week’s big downside debacle. Several pundits are now proclaiming market bottoms are in place for the U.S. stock indexes. Mostly upbeat U.S. corporate earnings reports are adding to a “risk-on” mentality among traders and investors this week. Short covering in the stock index futures and bargain hunting in the individual stocks have been the themes so far this week. The rally in equities is also a bearish underlying factor for safe-haven gold.
Asian and European stock markets have also rebounded this week, following the lead of the U.S. equities and also on speculation a major injection of liquidity is coming soon for the European Union, via new quantitative easing measures from the European Central Bank.
A German government 30-year bond auction Wednesday fetched a record low yield, averaging 1.77%. The falling German bond yields are a signal of a lack of confidence among European investors in the collective European Union economic and financial conditions. Many market watchers reckon the fragile European Union periphery country economies will be the next big, front-burner worry for the market place.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the consumer price index, and the weekly DOE liquid energy stocks report.
Wyckoff’s Daily Risk Rating: 6.0 (The market place is less anxious this week. However, the matters that unnerved markets last week are still lurking and could quickly move to the front burner.)
(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.
The London A.M. gold fixing is $1,246.75 versus the previous P.M. fixing of $1,250.25.
Technically, gold bears still have the overall near-term technical advantage. However, the bulls still have some momentum and have shown enough power recently to suggest a market bottom is in place. Prices are in a three-week-old uptrend on the daily bar chart.
The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,280.00. Bears' next near-term downside breakout price objective is closing prices below solid longer-term technical support at last week’s low of $1,222.00. First resistance is seen at this week’s high of $1,255.60 and then at $1,260.00. First support is seen at the overnight low of $1,245.20 and then at $1,240.00.
December silver futures bears still have the firm near-term technical advantage. The recent “collapse in volatility” in the silver market suggests a bigger price move is on the horizon. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of $16.64. First resistance is seen at the overnight high of $17.535 and then at this week’s high of $17.655. Next support is seen at $17.20 and then at $17.00.
Source: KitcoNews
