Morning Gold Fix – September 22, 2011
FMX | Connect – www.fmxconnect.com - (Reported 9/22/2011)
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 $1,808.10 per troy ounce on Wednesday, a loss of $1.00 for the day.
December gold was down $71.2 to $1736.9 per 100 troy ounces as of 8:25 am EST this morning. The Dec U.S. dollar index was up 1.261 to $79.120. October platinum was down 68.5 to $1719.7 per 50 troy ounces. Dec silver was down 330.9 cents to 37.160.
Market Recap
After two days of suspense, the Federal Open Market Committee concluded its meeting much as expected:
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities. The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative.
If anything, the market may have been disappointed that the Federal Reserve didn’t go far enough, with the dollar rallying and equities selling off in the immediate aftermath. Absent further hints of a QE3, investors will return their focus to the specter of a Greek default, and the faltering economic indicators out of the U.S. Today’s existing-home sales were a welcome surprise however, rising from a seasonally-adjusted 4.67 million homes in July to 5.03 million in August.
Gold traded unchanged most of the day before selling off the in the wake of the FOMC press release this afternoon. While options were sold ahead of the new, most notable the October 1850 Call and December 1850 straddle, the full effect of the selling didn’t really resolve itself until after the meeting. Volatility was lower on the day and continued to contract going into the Globex close.
Market Prices
In the News
Bloomberg (Reported 9/22/2011)
South Korea, Asia’s third-biggest consumer of copper, plans to boost metals purchases to build up stockpiles after prices dropped, according to the state purchasing agency. The Public Procurement Service, which manages strategic commodities, bought about 26,000 metric tons including copper and aluminum between January and August, falling short of an original plan, Im Byeong Cheol, director of commodity stockpile division, said in an interview yesterday. The agency’s full-year target is 56,000 tons, he said, without elaborating. Metal Price Drop Attracts Buying by South Korea State Agency
Reuters (Reported 9/22/2011)
Spot gold slipped on Thursday under the weight of a rallying dollar, after falling more than 1 percent in the previous session when the U.S. Federal Reserve announced its plan to load up long-term securities and offered a grim economic outlook. Warning of "significant" downside economic risks, the U.S. central bank said it would launch a $400 billion program to shift its $2.85 trillion balance sheet more heavily toward longer-term debt. Gold weakens on dollar rally after Fed decision
Kitco (Reported 9/22/2011)
Comex December gold futures prices are trading sharply lower Thursday and hit a fresh five-week low overnight. A sharply higher U.S. dollar index and sharply lower crude oil prices are putting strong selling pressure on the precious metals markets. The general market place is not reacting well to the results of the meeting of the U.S. Federal Open Market Committee. Weak economic data coming out of Europe and China is adding to the investor unease in the market place Thursday. Comex Gold Sharply Lower as U.S. Dollar Index Soars, Crude Oil Slumps following FOMC
Technical Overview
DEC GOLD
The sideways lower trade warns for topping action with declines indicating a momentum shift lower. A close below 176540 could propel declines to 1740-1730. Any rebounds held within Monday’s range will bear flag into sideways congestion around 1800+/-. A push over 183290 will boost near term rallies, but a close over 186690* 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. Near term action is trying to hold trade in sideways congestion around 4000+/-, but narrow congestion will bear flag. A close over 41935* is needed to rekindle the bull trend.
DEC COPPER
The market is bearish, targeting declines to 36065. The weekly target is near 345. Sideways congestion days will setup for follow through selloffs. Suspect support in the 360’s that could prompt modest corrective congestion back inside Monday’s range. Sideways inside days within Monday’s range will bear flag to prepare for selloffs. A close over 39185* signals a bull reversal.
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