Gold Ends Slightly Lower as Better Risk Appetite, Strong U.S. Dollar Limit Buying Interest

P.M. Kitco Metals Roundup: Gold Ends Slightly Lower as Better Risk Appetite, Strong U.S. Dollar Limit Buying Interest

Gold prices ended the U.S. day session down slightly Thursday. Gold buyers were scarce as more risk appetite returned to the market place late this week. The competing asset class, equities, posted solid rebounds from strong selling pressure seen earlier this week. A sharply higher U.S. dollar index was also a negative outside market force working against the precious metals again Thursday. February Comex gold was last down $1.70 at $1,209.00 an ounce. Spot gold was last down $2.60 at $1,209.00. March Comex silver last traded down $0.154 at $16.39 an ounce. Gold prices did push to moderately higher levels in late-morning trading Thursday on some short covering from the shorter-term futures traders and bargain-hunting buying interest in the cash market. Reports said Federal Reserve Bank of Chicago president Charles Evans said he does not advocate the Fed raising interest rates in 2015. Evans is a voting member of the FOMC, and his remarks were deemed dovish by the market place. His remarks were supportive for the gold and silver markets, but the modest gains were eroded by early afternoon.
World stock markets have rebounded from this week’s sharp sell offs. It seems that on one day stock traders and investors are worried about the economic and financial ills of the European Union, Russia and even other countries, and are in a selling mood.  However, on another day they reckon that with a world awash in cash from recent central bank monetary policy stimulation, they had better snap up equities because they are the best asset game in town at present. On this day the market place appears to be embracing the latter. This higher volatility in the stock indexes, at higher price levels, is a bearish warning signal that the stock indexes are topping out.
The U.S. dollar index continues on its strong bull market run, hitting another 10-year high today. The Euro currency slumped to another nine-year low versus the greenback Wednesday. The surging greenback remains a major, bearish underlying factor working against the raw commodity markets, including gold and silver.
Crude oil prices are slightly lower in afternoon trading. Prices Wednesday hit a 5.5-year low of $46.83 a barrel, basis nearby Nymex futures. It’s my bias there is not strong downside price pressure left in the crude oil market. The main reason for my thinking is that now too many crude oil market bears have moved to one side of the boat. Being short the crude oil market at present is a very crowded trade. That suggests a market bottom is not far off.
Traders are awaiting arguably the most important U.S. economic data point of the month—the U.S. employment situation report due out Friday morning. The key non-farm payrolls number is expected to have risen by 240,000 workers in December.
U.S. economic data out Thursday includes the weekly jobless claims report, the Challenger job cuts report, and ICSC chain store sales trends.
The London P.M. gold fix is $1,215.50 versus the previous A.M. fixing of $1,206.50.
Technically,  February gold futures prices closed nearer the session low  and saw some chart consolidation. Recent sideways and choppy price action in gold suggests a market bottom is in place. The gold bears do still have the overall near-term technical advantage. Their next upside near-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 today’s high of $1,216.80 and then at Wednesday’s high of $1,219.40. First support is seen at today’s low of $1,204.20 and then at $1,200.00. Wyckoff’s Market Rating: 3.5
March silver futures prices closed near the session low today. Recent price action suggests a market bottom is in place for silver. Silver bears do still have the overall near-term technical advantage. 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 $16.50 and then at this week’s high of $16.74. Next support is seen at $16.30 and then at Tuesday’s low of $16.115. Wyckoff's Market Rating: 3.0.
March N.Y. copper closed up 70 points at 276.55 cents today. Prices closed nearer the session low today. The strong U.S. dollar index today again limited buying interest in copper. The copper bears have the strong overall near-term technical advantage as prices hover just above the contract low. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 290.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 270.00 cents. First resistance is seen at 278.20 cents and then at today’s high of 279.40 cents. First support is seen at this week’s contract low of 274.40 cents and then at 272.50 cents. Wyckoff's Market Rating: 1.0.
By Jim Wyckoff