Gold Weaker On Profit Taking, Bearish Outside Markets; FOMC On Deck

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Gold prices ended the U.S. day session moderately lower Tuesday. A lack of fresh, bullish fundamental news and a looming FOMC statement kept buyers on the sidelines. Some profit taking from recent gains was also featured Tuesday. The key “outside markets” were in a bearish daily posture for the precious metals Tuesday—a firmer U.S. dollar index and weaker crude oil prices. December Comex gold was last down $6.50 at $1,345.70 an ounce. Spot gold was last quoted down $7.20 at $1346.50. December Comex silver last traded down $0.023 at $22.515 an ounce.

The market place awaits the results of the U.S. Federal Reserve’s Open Market Committee meeting, which began Tuesday morning and ends early Wednesday afternoon. There will be no press conference by Fed Chairman Bernanke after this meeting. The FOMC is expected to leave U.S. monetary policy unchanged, but as usual traders and investors will be closely parsing the FOMC statement, looking for any clues on the timing of upcoming changes in policy.

Most in the market place presently believe the Fed will not start to cut back on its monthly bond purchases until early next year—most likely the second quarter at the earliest. This scenario favors the raw commodity market bulls, including the precious metals markets. Any hints at this week’s FOMC meeting that the “tapering” of monetary policy could come sooner than the second quarter of 2014 would likely be bearish for most markets.

There was a heavy slate of U.S. economic data released Tuesday and it was a mixed bag for markets. The highlight was a weaker consumer confidence index for October, amid the U.S. government shutdown. The confidence data did give the gold market a brief lift, but it did not last long.
The U.S. dollar index was firmer Tuesday on more short covering after hitting a 10.5-month low last Friday. Meantime, Nymex crude oil futures were lower and hovering not far above the recent two-month low.

The London P.M. gold fix is $1,346.75 versus the previous P.M. fixing of $1,361.00.
Technically, December gold futures prices closed nearer the session low Tuesday. The gold market bulls and bears are still on a level near-term technical playing field. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,375.40. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,361.80 and then at $1,375.40. First support is seen at Tuesday’s low of $1,339.80 and then at $1,300.00.

December silver futures prices closed near mid-range Tuesday amid chart consolidation. The silver bulls and bears are on a level near-term technical playing field. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $23.445 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $21.00. First resistance is seen at this week’s high of $22.715 and then at last week’s high of $21.91. Next support is seen at Tuesday’s low of $22.30 and then at $22.00.


December N.Y. copper closed up 75 points at 327.70 cents Tuesday. Prices closed near mid-range. Bulls and bears are on a level near-term technical playing field. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 335.50 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of 321.50 cents. First resistance is seen at 328.55 cents and then at 330.00 cents. First support is seen at Tuesday’s low of 324.60 cents and then at last week’s low of 323.40 cents.

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Gold And Silver Subject To The FOMC Minutes...

It’s the Fed and the Fed and the Fed again. With traders are holiday around the globe and data light, the Federal Reserve is the main event. Although the FOMC minutes are a top tier event and are usually on center stage, they will have more importance to traders today as trading volume is down, news is light with politicians and traders on summer vacation and little data scheduled on the global economics calendar. This puts the FOMC minutes in the center ring under the big top. Regardless of the reading of the minutes markets should be volatile. Traders are now positioning themselves ahead of the release. Gold prices pared the initial losses as a stronger dollar and easing bond yields supported prices. Uncertainty regarding the Fed’s bond buying program also swung gold prices between gains and losses.

 Demand for US gold coins has eased in recent weeks as buying from retail investors slowed down amid recovering gold prices. Russia increased its gold reserves to 32.2 million troy ounces in July from 32 million troy ounces in June. Gold prices internationally are expected to remain in range as investors would await the FOMC meeting minutes to get cues on the future course of Fed’s bond buying program.


A recent survey showed that a majority of economists expect the Fed to announce a tapering plan in September and suggest that the Fed will cut back their asset purchases by 10 billion US dollars. Gold is trading at 1367.70 down by $4.90 in the Asian session. Gold futures recovered yesterday to close higher on COMEX, as investors were encouraged by prospects for seasonal demand from Asia as the market awaited release of the latest US Federal Reserve policy-meeting minutes.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, increased to 914.12 tons, as on August 20. Silver holdings of ishares silver trust, the largest ETF backed by the metal, increased to 10,555.7 tons, as on August 20. Silver has taken a major tumble as trader’s book profits. Silver is down by 81 pips this morning trading at 22.99 after holding this week above the $23 price level.

The dollar index, which measures the US unit against six rivals, edged down to 81.238 from 81.255 on late Monday, after swinging between losses and gains. The dollar nose dives late yesterday to trade in the upper 80 range and rebounded this morning to trade at 81.00 Copper futures traded steadily on Tuesday but eased this morning to trade at 3.323, with traders reluctant to place large bets ahead of the release of Chinese manufacturing data and details from the Federal Reserve’s most recent policy meeting. Copper prices rose on Tuesday as a weaker dollar supported prices. However, fears of bond tapering by Fed limited the upside in prices. The global nickel market was in surplus by 74,200 tonnes in the first six months of the year, according to the International Nickel Study Group. Base metals are likely to go down on caution ahead of FOMC meeting minutes and Chinese and Euro zone manufacturing numbers tomorrow.

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Gold Likely To Crash As ETF’s Pull Out...

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Gold is trading at 1333.70 flat in the Asian session as traders sell off to book profits after gold rallied. Gold prices in the futures markets are likely to be range-bound with a bias towards the downside in line with the global market. As it has been happening this year, the yellow metal once again is facing selling pressure. Investors are opting to sell at every rise and Monday’s over one per cent rise in the precious metal has given them an opportunity to cash in their investments. Data showed a climb in ETF purchases for the first time since June trader’s responded push up gold prices to recent highs. The market seems bent on hammering gold and that is one of the reasons why even data showing lower than expected growth are unable to drive it higher. The rise in gold holdings in exchange-traded funds did not happen on Monday as they were unchanged at 911.13 tonnes on SPDR Trust, world’s largest for gold.


Gold is taking a breather today after four days of gains but is holding near three-week highs on hopes that physical buyers and investors will return to the market.  The recent rally was sparked by the release of strong Chinese factory data on Friday which pushed up metals prices. The metal has gained over 4 per cent in the last four sessions through Monday, also profiting from US dollar weakness and a surprise rise in holdings of gold exchange-traded funds (ETFs). Gold rose nearly 2 per cent in the previous session on strong Chinese gold consumption and an inflow to SPDR Gold Trust, the world’s biggest gold ETF. The top eight gold ETFs have recorded outflows of about $US26 billion so far this year, hurting gold prices. A reversal in the trend will aid a price recovery.

China’s consumption of gold in the first six months of the year surged by more than half as sliding prices of the metal lured buyers, data showed, reinforcing expectations that the nation will overtake India as the world’s top gold consumer this year. Gold prices have lost about a fifth of their value this year after 12 years of gains, releasing pent-up demand across the world and particularly in India and China.

China consumed 706.36 tonnes of gold in the first half of 2013, up 54 per cent from the year-ago period, the China Gold Association said in a statement on its website.


Silver eased by close to 10 cents this morning after skyrocketing above the 21 price level on industrial demand and a rise in precious metals over the last few sessions. Silver is trading at 21.243 remaining strong against the gaining US dollar, which is trading at 81.44 this morning. Copper slipped while aluminum extended gains on Monday as signs of a pickup in top metals consumer China and expectations of encouraging eurozone data came up against a rise in the dollar.

 The U.S. commodities market regulator has subpoenaed a number of major metals warehousing firms, including Switzerland based commodities giant Glencore, seeking documents and communications from the last three years as an inquiry into complaints about inflated metals prices gathers steam. The metals warehousing scandal is weighing heavily on major US investment banks which control the prices and costs.

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Gold Ends Higher, Gets Additional Boost After FOMC Minutes...

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Comex gold futures prices ended the U.S. day session with slight gains Wednesday, but then rallied to near the daily high after the release of the U.S. Federal Reserve Open Market Committee meeting minutes. Gold saw a relief rally as the FOMC minutes contained no new, hawkish information. The key “outside markets” were also in a bullish posture for the precious metals on this day: a solidly lower U.S. dollar index and sharp price gains in crude oil futures. August gold was last up $16.70 at $1,262.50 an ounce. Spot gold was last quoted up $13.40 at $1,264.50. September Comex silver last traded up $0.232 at $19.37 an ounce.

The market place was just a bit surprised by the FOMC minutes reporting that around half of the 19 committee members are in favor of starting to wind down or “taper” its monthly bond-buying program, also known as quantitative easing, by the end of this year. While that could be read as somewhat more hawkish, the minutes also said most FOMC members want to see more economic data before making any firm conclusions on ending QE. The minutes mainly discussed how Fed Chairman Ben Bernanke should articulate the Fed’s monetary policy to the public. The consensus in the market place at present is that the Fed will start to cut back its bond purchases sometime later this year. Fed Chairman Ben Bernanke will also give a speech later Wednesday, which could also be market-sensitive.

China’s latest manufacturing report was released Wednesday and it came in on the weak side. Exports fell 3.1% in June, on an annualized basis. A 3.3% gain was expected. Chinese imports were down 0.7% on the year, while a 5.5% increase was forecast. The news had a somewhat limited impact on the market place, as the Chinese premiere said Wednesday China will continue on its path of long-term reform.

European stock markets were pressured Wednesday after the Standard & Poors ratings agency lowered Italy’s sovereign credit rating. The European Union’s sovereign debt crisis has been on the back burner of the market place for several months, but the situation has never been fully cleared up and could at any time heat up to roil world markets.

The U.S. dollar index was lower Wednesday on profit taking after hitting a three-year high on Tuesday. Still, the overall strong technical posture of the dollar index remains a major bearish underlying factor for the metals. Nymex crude oil prices were sharply higher Wednesday and hit a 14-month high overnight. With Nymex crude trading over $105 a barrel, that is a bullish underlying factor for the raw commodity sector, including the precious metals.

The London P.M. gold fix is $1,256.00 versus the previous London P.M. fixing of $1,255.50.
Technically, August gold futures prices were nearer the session high late Wednesday. The gold bears still have the overall near-term technical advantage. Gold prices are still in an eight-month-old downtrend 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 $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the June low of $1,179.40. First resistance is seen at last week’s high of $1,267.00 and then at $1,277.50. First support is seen at Wednesday’s low of $1,242.20 and then at Tuesday’s low of $1,232.00. Wyckoff’s Market Rating: 2.5
September silver futures prices closed nearer the session high Wednesday and saw more short covering in a bear market. The key “outside markets” were bullish for the silver market today as the U.S. dollar index was lower and crude oil prices were sharply higher. Silver bears still have the solid overall near-term chart advantage.

Prices are in an eight-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $20.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $18.17. First resistance is seen at this week’s high of $19.485 and then at $19.83. Next support is seen at Tuesday’s low of $19.93 and then at Monday’s low of $18.67.


September N.Y. copper closed up 255 points at 309.00 cents Wednesday. Prices closed nearer the session high on short covering in a bear market. The key “outside markets” were bullish for the copper market as the U.S. dollar index was lower and crude oil prices were sharply higher. Copper bears still have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 317.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 298.55 cents. First resistance is seen at this week’s high of 311.60 cents and then at 315.00 cents. First support is seen at 305.00 cents and then at this week’s low of 302.50 cents.

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Sharp Gains For Gold Amid Better China Economic Data, Bullish "Outside Markets"

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Comex gold futures ended the U.S. day session with sharp gains Wednesday, boosted by upbeat economic data coming out of China and by bullish “outside market” forces—a lower U.S. dollar index and firmer crude oil prices. June Comex gold last traded up $24.20 at $1,473.00 an ounce. Spot gold was last quoted up $21.50 at $1,474.50.  July Comex silver last traded up $0.079 at $23.885 an ounce.
China on Wednesday reported a trade surplus of $18.2 billion in April compared to expectations of a $15.6 billion surplus. Both imports and exports exceeded market expectations. Asian stock markets were supported on the China news. Also, better-than-expected German industrial production data for April was reported, at up 1.2% when a 0.2% decline was expected. The better China and German data gave a boost to the raw commodity sector, including the precious metals.

The London P.M. gold fixing is $1,468.00 versus the previous P.M. fixing of $1,454.00.
Technically, June gold futures prices closed nearer the session high Wednesday as trading has become choppy. The gold bulls continue to show resilience, which is suggestive of a market bottom being in place. However, gold prices are still in a seven-month-old downtrend on the daily bar chart and the bears have the overall technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,500.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,439.70. First resistance is seen at this week’s high of $1,478.40 and then at last week’s high of $1,487.20. First support is seen at $1,460.00 and then at $1,450.00.

July silver futures prices closed near mid-range Wednesday. Silver bears are still in overall technical control. Prices are in a seven-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $23.00. First resistance is seen at Wednesday’s high of $24.095 and then at this week’s high of $24.42. Next support is seen at Wednesday’s low of $23.64 and then at this week’s low of $23.40.

May N.Y. copper closed up 635 points at 336.40 cents Wednesday. Prices closed nearer the session high and hit a fresh three-week high. Upbeat Chinese economic data released Wednesday also helped to boost copper prices. Copper bulls have gained upside momentum and are now on a level near-term technical playing field with the bears. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 345.25 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 320.00 cents. First resistance is seen at Wednesday’s high of 339.00 cents and then at 340.00 cents. First support is seen at 335.00 cents and then at 332.40 cents.

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News Source: www.bloomberg.com