Gold Steady-Weak on Chart Consolidation; U.S. Jobs Report on Deck

Gold prices ended the U.S. day session steady to slightly lower Thursday, on some technical chart consolidation. After an early-morning flurry of activity, gold trading settled down as market watchers began to focus on Friday’s U.S. employment report. February Comex gold was last down $0.50 at $1,208.20 an ounce. Spot gold was last down $0.90 at $1,209.30. March Comex silver last traded up $0.148 at $16.56 an ounce.

Gold prices pushed to their daily highs Thursday morning, in the immediate aftermath of dovish comments from European Central Bank president Mario Draghi, during his monthly press conference following the ECB monthly meeting. The Euro currency rallied and the U.S. dollar index sold off on Draghi’s remarks, which was bullish for the gold market. However, gold prices quickly backed down to trade modestly lower, and where they were before the Draghi press conference began. Draghi did mention that gold would not be part of any new monetary policy stimulus measures, but most traders and investors reckoned that to be the case, anyway.  The European Central Bank held interest rates steady at its monthly meeting Thursday, as most expected. Draghi indicated Thursday the ECB will make its move in the first quarter of 2015.

The Bank of England Thursday kept its monetary policy steady, as expected, at its regular monthly meeting. The BOE mentioned the very low inflationary environment in Europe as reason for not raising rates.

In other overnight news, Russian president Vladimir Putin is striking a more defiant tone as he feels the bite of Western sanctions and falling crude oil prices. This week the Russian central bank moved to intervene in the foreign exchange market in an effort to support the flagging ruble, which has fallen to a record low versus the U.S. dollar. Reports Thursday said Putin has accused the West of creating the Ukrainian crisis and also warned speculators betting against the ruble. In a speech to Russian government officials Putin reminded everyone of the military strength of Russia.

Traders and investors are awaiting what is arguably the most important U.S. economic data point of the month: Friday’s employment situation report from the U.S. Labor Department. The key non-farm payrolls figure is expected to rise by around 230,000 in November. Any non-farms number that is significantly out of line with expectations will likely at least temporarily rattle the markets.

The London P.M. gold fix was $1,209.00 versus the previous London A.M. fixing of $1,204.00.

Technically, February gold futures prices closed near mid-range. Chart consolidation was featured. Bears still have the overall near-term technical advantage. However, this week’s price action hints of a near-term market low being in place. But the bulls need to show more power soon to suggest a price uptrend can develop. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,221.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,163.90. First resistance is seen at $1,215.00 and then at $1,221.00. First support is seen at $1,200.00 and then at $1,193.50. Wyckoff’s Market Rating: 3.0

March silver futures prices closed near mid-range. Price action Monday scored a bullish “key reversal” up on the daily bar chart, which suggests the bears have become exhausted and a market bottom is in place. But the bulls still have work to do to suggest prices can sustain a near-term uptrend. The silver bears still have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at last week’s low of $15.41. First resistance is seen at today’s high of $16.68 and then at this week’s high of $16.81. Next support is seen at today’s low of $16.375 and then at $16.235. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed up 440 points at 291.60 cents today. Prices closed nearer the session high on short covering in a bear market. Prices Monday hit a contract and multi-year low. This week’s price action suggests the bears became exhausted at the lower price levels. But right now the bears have the solid near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at Monday’s contract low of 277.75 cents. First resistance is seen at today’s high of 293.00 cents and then at 295.00 cents. First support is seen at 2.9000 cents and today’s low of then at 286.70 cents. Wyckoff's Market Rating: 2.0.

By Jim Wyckoff