Morning Gold Fix – September 16, 2011
FMX | Connect – www.fmxconnect.com - (Reported 9/16/2011)
The following is a summary of yesterday’s US gold activity and a recap of Asia & European markets overnight. It includes our proprietary options analytics and news stories from industry professionals.
Summary
December Gold settled at $1,781.40 per troy ounce, a loss of $45.10 for the day.
December gold was up $8.7 to $1790.1 per 100 troy ounces as of 8:25 am EST this morning. The Sept U.S. dollar index was up 0.463 to $76.730. October platinum was up 22.6 to $1803.2 per 50 troy ounces. Dec silver was up 73.4 cents to 40.235.
Market Recap
Gold traded lower on Thursday, as Greece and the ECB took steps to mollify investors on the short-term stability of the European Union. Specifically, the ECB announced it would be able to ensure liquidity for endangered banks through the implementation of currency swaps and loans with central banks such as the Federal Reserve, the Bank of Japan, the Bank of England and the Swiss National Bank. The net result was a stronger euro and a weaker dollar, and while many of the underlying fundamental concerns will remain, it served as an effective deterrent for the time being. The U.S. economy is grappling with some issues of its own, including increasing jobless claims, a weaker manufacturing industry and varying degrees of political dysfunction. Again, expect the Federal Open Market Committee meeting next week to take on increased significance as it approaches.
Bullion traded lower with a weaker dollar, its appeal as a safe haven asset dissipating on the strong, coordinated message out of the world’s central banks this morning. Futures opened lower and traders expressed an immediate interest in downside protection, purchasing puts in October and across the term structure. On the day fences traded more than a dollar of premium toward the puts, and persistent call selling pushed volatility lower. Speculators disinvested from calls in October, November and December, with thousands of contracts changing hands across the 1800, 1900 and 2000 strikes. Gold has been showing signs of an atrophying rally and range-bound trading for nearly 2 weeks now. The market was waiting for this correction to happen. Now traders will have to decide how low prices will have to fall before the metal becomes a buy again.
Market Prices
In the News
Bloomberg (Reported 9/16/2011)
European stocks gained for a fourth day and the cost of insuring banks against default fell after central banks acted to provide dollar funding. The euro weakened and U.S. index futures fell as finance ministers gathered in Poland to tackle the region’s debt crisis. The Stoxx Europe 600 Index added 0.9 percent at 7:45 a.m. in New York. The Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 banks and insurers slid 14 basis points to a two-week low of 247. The euro depreciated 0.6 percent to $1.3797, while the Dollar Index advanced. Futures on the Standard & Poor’s 500 Index dropped 0.5 percent, paring earlier declines of as much as 0.8 percent. Stocks Rise in Europe as Debt Insurance Declines; Euro, U.S. Futures Drop
Reuters (Reported 9/16/2011)
Gold tumbled to a two-week low on Friday as diminishing liquidity concerns prompted a bout of selling, but lingering concern about financial stability and strong physical buying interest from Asia later helped it to recover. Spot gold hit $1,761.94 a troy ounce, its lowest since August 26. It was bid at $1,787.10 an ounce at 1058 GMT compared with $1,788.64 late in New York on Thursday. Physical buying helps gold bounce from 2-week low
Kitco News (Reported 9/16/2011)
Comex December gold futures prices are trading modestly higher in early U.S. trading Friday. Prices hit a fresh three-week low overnight. Some bargain-hunting buying interest is featured following sharp losses recorded on Thursday. This week has seen more of a "risk on" trader and investor mentality in the world market place, as evidenced by stabilizing world stock markets. That's still bearish for the safe-haven gold market. Importantly, the market place appears to be viewing, at least temporarily, the European Union debt crisis as de-escalating. Comex Gold Firmer on Bargain Hunting
Technical Overview
DEC GOLD
The break from the previous high warns for topping trade. The declines indicate a momentum shift lower and close under 178880* calls for declines to 1760-1740. If trade holds 178880*, then we may see modest rebounds that shift to sideways congestion around 1810-1844 to bear flag. A close over 187410* is needed to rekindle bull trend forces for a thrust over 1900+.
DEC SILVER
The market is suggesting a bear turnover and warns for retracement declines against the climbing moves of recent months. Trade is poised for selloffs to 3900-. A close under 3905 implies declines to 3815. We may see attempts to hold trade up in sideways congestion around 4000-4100 for a couple days, but narrow congestion will bear flag. A close over 41935** is needed to rekindle the bull trend.
DEC COPPER
The market is bearish and calls for selloffs against the August swing low. Trade is lined up for follow through selloffs and sustained action under 389- should help extend bearish trade to attack the 38420 August low. A close under 38420 is bearish. Any corrections trapped under this week’s high should bear flag. A close over 40550* voids bear forces and boosts retracements to 40940*.
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