Gold Firmer in Active Trading; Higher Anxiety Prompts Safe-Haven Demand Tuesday December 16, 2014 8:36 AM (Kitco News) - Gold prices are solidly higher in the spot market and modestly up in Comex futures--but down from their morning highs in nervous dealings Tuesday. As the U.S. day session is set to begin, a plunging Russian ruble and slumping crude oil prices have traders and investors on edge. This has prompted some safe-haven demand for gold. February Comex gold was last up $2.20 at $1,210.00 an ounce. Spot gold was last up $15.90 at $1,209.75. March Comex silver last traded down $0.203 at $16.36 an ounce. As the U.S. trading day gets under way, it has become a keen “risk-off” trading day in the world market place Tuesday. U.S. stock indexes and world stock markets have fallen to lower levels after posting moderate gains overnight. There were several worrisome developments overnight but the main concern is the Russian ruble has plunged and hit another record low versus the U.S. dollar—despite the Russian central bank on Tuesday implementing an emergency interest rate increase from 10.5%, to 17%. Traders and investors are wondering what Russian president Vladimir Putin will do now. His economy is in shambles from falling oil prices and western sanctions. But he still controls the world’s second or third most powerful military, and he has shown in recent months he will use that military power to attain his objectives. Crude oil prices overnight sunk to a five year low of below $54.00 a barrel, basis January Nymex futures. In stunning fashion, crude oil prices have lost half of their value since June. That’s a very rare feat in any commodity market. While it’s good news at the gasoline pumps, the market place has been spooked by crude oil’s steep downdraft. There are also reports that the Taliban terrorists have attached a school in Pakistan and killed over 100 students. This comes after a terrorist in Australia captured world attention Monday by holding hostages in a Sydney café. In other dour news, China reported its HSBC purchasing managers’ index (PMI) fell to a seven-month low of 49.5 in December from 50.0 in November. A reading below 50.0 suggests contraction in the sector. This news was another bearish element pushing crude oil prices still lower Tuesday. Meantime, the Markit data firm reported the European Union composite PMI came in at 51.7 in December from 51.1 in November. However, in Germany, the EU’s largest economy, the composite PMI fell to 51.4 in December versus 71.7 in November. All of the above is prompting safe-haven demand for gold and U.S. Treasuries Tuesday. Surprisingly, the U.S. dollar index is under strong selling pressure Tuesday morning. Traders and investors are also looking to Tuesdays’ start of the Federal Reserve Open Market Committee (FOMC) meeting to discuss U.S. monetary policy. Many believe the Fed meeting will slightly change statement wording to favor the monetary policy hawks. The FOMC could also further elaborate on a timeline for raising interest rates. The Fed has not raised interest rates in six years. U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, new residential construction, the U.S. flash manufacturing PMI. (Note: Follow me on Twitter--@jimwyckoff--for breaking market news.) Wyckoff’s Daily Risk Rating: 8.0 (Geopolitical risks are back on the front burner of the market place Tuesday. Traders and investors are spooked, which is making for higher volatility in for safe-haven demand in markets like gold, T-bonds and T-notes.) (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 $1,199.25 versus the previous P.M. fixing of $1,209.25. Technically, February gold futures have seen sideways to lower chart consolidation following recent gains. Bears still possess the overall near-term technical advantage. 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 $1,184.80. First resistance is seen at the overnight high of $1,223.90 and then at $1,230.00. First support is seen at $1,200.00 and then at Monday’s low of $1,191.30. March silver futures bears still have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $17.825 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at last week’s low of $16.165. First resistance is seen at the overnight high of $16.665 and then at $17.00. Next support is seen at $16.00 and then at $15.75. By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco
Posted on: Tue, 16 Dec 2014 15:43:27 +0000
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