A.M. Kitco Metals Roundup: Gold Sha

A.M. Kitco Metals Roundup: Gold Sharply Lower On Technical Selling, Less Risk Aversion
Thursday September 12, 2013 8:40 AM

(Kitco News) - Gold prices are absorbing sharp losses and hit a three-week low in early U.S. trading Thursday. Deteriorating near-term chart postures for both gold and silver markets are leading to fresh technical selling pressure. More risk appetite in the market place this week has also been a bearish factor for safe-haven gold. A much better showing for the latest U.S. weekly jobless claims data added to the selling pressure in gold and silver. December Comex gold was last down $29.90 at $1,334.00 an ounce. Spot gold was last quoted down $31.90 at $1334.25. December Comex silver last traded down $0.712 at $22.46 an ounce.

Weekly U.S. jobless claims dropped a surprising 31,000 in the latest reporting week. That was the lowest number since 2006. However, a Labor Department official said that number is flawed due to state reporting errors—two states did not report their claims and they were not included in the overall report. Nonetheless, the selling pressure in gold and silver did increase following the weekly jobless numbers.

Improved investor risk appetite is the feature in the market place this week. The specter of a U.S. military strike against Syria has receded significantly this week, amid a Russian plan to have Syria’s chemical weapons placed under international control. U.S. Secretary of State Kerry will meet with his Russian counterpart Thursday in Geneva, Switzerland, to discuss the matter. Asian stock markets were lifted Thursday on the increased investor risk appetite.

In overnight news, there was weaker-than-expected economic data coming out of the European Union Thursday, which pressured European stock markets. Euro zone industrial production fell by 1.5% from June to July, for the steepest one-month decline in a year. Year-on-year the July decline in industrial production was 2.1%, which put Euro zone industrial production at a three-year low. This important piece of economic data now calls into question the ability of the European Union’s collective economy to pull out of recession.

Many traders and investors are looking ahead to next week’s meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC). A slight majority of the market place believes the U.S. central bank at next week’s meeting will announce it will begin to scale back, or “taper” its monthly bond-buying program. For the past several weeks the market place has been fixated on what the U.S. central bank will announce at the conclusion of next week’s FOMC meeting.

Other U.S. economic data due for release Thursday includes import and export price indexes and the monthly Treasury budget statement.

The London A.M. gold fix is $1,340.25 versus the previous P.M. fixing of $1,363.75.

Technically, December gold futures bulls have lost their slight overall near-term technical advantage as prices hit a three-week low overnight. A two-month-old uptrend on the daily bar chart has been at least temporarily negated. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,400.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,325.00. First resistance is seen at $1,350.00 and then at $1,360.00. First support is seen at the overnight low of $1,331.90 and then at $1,325.00.

December silver futures hit a three-week low overnight. Bulls have lost their slight overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $24.25 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $22.32. First resistance is seen at $23.00 and then at the overnight high of $23.265. Next support is seen at the overnight low of $22.37 and then at $22.32.
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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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