Gold Up, Hits 3-Week High, Amid Safe-Haven Demand Monday January 06, 2015 8:16 AM (Kitco News) - Gold prices are higher and scored a three-week high in early U.S. trading 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 are also featured, after prices last Friday dropped to a four-week low. February Comex gold was last up $9.20 at $1,213.10 an ounce. Spot gold was last up $8.00 at $1,213.60. March Comex silver last traded up $0.107 at $16.315 an ounce. Most world stock markets saw follow-through selling pressure Tuesday, following solid losses suffered on Monday. However, U.S. stock indexes have stabilized in pre-market electronic trading. 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 $48.47 a barrel overnight, 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 is a heavier slate of U.S. economic data due for release Tuesday that includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the U.S. services purchasing managers’ index (PMI), the global services PMI, manufacturers’ shipments and orders, and the ISM non-manufacturing report on business. (Note: Follow me on Twitter--@jimwyckoff--for breaking market news.) Wyckoff’s Daily Risk Rating: 6.5 (Geopolitical risk assessment has up-ticked this week, with focus being on troubles in the European Union periphery countries, and especially Greece. (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 $1,211.00 versus the previous P.M. fixing of $1,200.00. Technically, gold bears still have the overall near-term technical advantage. However, recent choppy and sideways price action does suggest gold has put in at least a near-term low, if not a major low. The gold bulls’ next upside ear-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 last week’s low of $1,167.30. First resistance is seen at the overnight high of $1,214.40 and then at $1,221.00. First support is seen at the overnight low of $1,201.60 and then at $1,200.00. March silver futures bears have the overall near-term technical advantage. However, the recent sideways and choppy price action at lower levels does hint at a market bottom being in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at the overnight high of $16.375 and then at last week’s high of $16.48. Next support is seen at the overnight low of $16.115 and then at $16.00. By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco
Posted on: Tue, 06 Jan 2015 15:08:05 +0000
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