Morning Gold Fix – October 13, 2011
FMX | Connect – www.fmxconnect.com - (Reported 10/13/2011)
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 $1,682.60 per troy ounce on Wednesday, a gain of $21.60 for the day.
December gold was down $14.1 to $1668.5 per 100 troy ounces as of 9:00 am EST this morning. The Dec U.S. dollar index was up 0.281 to $77.555. January platinum was down 17.4 to $1537.0 per 50 troy ounces. Dec silver was down 69.9 cents to 32.090.
Market Recap
Gold launched to fresh weekly highs on Thursday, drawing support from a weakened dollar. That the risk-on trade was back on the table speaks to the fundamental ambiguity of the markets right now and for many, an increased likelihood of a QE3. Slovakia rejected a vote to approve additional EFSF funding last night, but the overwhelming consensus is that it will be approved shortly and should be no cause for additional anxiety.
Bullion is observing a modest influx of speculative interest as it approaches $1,700 an ounce. While the pace of the rally has been orderly so far, gold is approaching a potential break-out area and many market participants are eager to see a departure from the range-bound trading of late. Today puts were offered and calls were bought across the breadth of the term structure, and in some cases quite literally. For instance, December 1550 puts were sold to allay the cost of the December 2012 2000 Call. There was also some speculative call buying in the front months (the November 1770 Call, for one). Volatility was in more than 1% on the day.
Market Prices
In the News
Bloomberg (Reported 10/13/2011)
Gold fell in New York as gains in the dollar may curb demand for the metal as an alternative asset. Before today, gold climbed 18 percent this year while the dollar dropped 2.6 percent against a basket of six currencies. Gold exchange-traded-product holdings have dropped 3.8 percent from the record on Aug. 8, Bloomberg data show. Gold Retreats as Strengthening Dollar May Cut Into Demand From Investors
Reuters (Reported 10/13/2011)
Gold held near four-week highs on Thursday, as support from further evidence of consumer demand in Asia was offset by the strength of the dollar, although investor nerves over the euro zone should insulate the price from any steep declines. China's trade surplus narrowed for a second month in a row in September, driven by a contraction in imports and exports that reflected the slowing global economy and also a softer domestic market, which put pressure on industrial commodities. Gold eases as dollar offsets consumer boost
Kitco (Reported 10/13/2011)
The U.S. dollar index is trading firmer Thursday morning and did hit another fresh three-week low overnight. The dollar index bulls have faded and near-term chart damage has been inflicted to suggest the index has put in a near-term market top. This is a significantly bullish development for the precious metals market bulls. Meantime, crude oil futures prices are trading lower Thursday morning. Crude oil bulls still have some upside technical momentum to suggest prices can trade sideways to higher in the near term. That is also a bullish scenario for the precious metals. Comex Gold Weaker Amid Firmer U.S. Dollar Index, Weaker Crude Oil
Technical Overview
DEC GOLD
Overall the market is bearish. Yesterday’s push up from congestion calls for climbing trade action to reach over 1700+. A close over 169180* will help boost rallies, but be alert for a setback from 171590*. A close over 171590* is needed for a lasting bottom. A slip back through 1654 is negative, but a close under 163370* is needed to drive trade into secondary declines under 1600-. A close under 159570* is bearish.
DEC SILVER
The market is bearish and may roll into secondary selloffs. A drop under Monday’s low cautions for dips. A close under 30215* renews bear forces and could drive a secondary break to test 28085* monthly support. Current sideways higher trade suggests a near term positive shift that may produce recovery action. A pop over 33585 could boost rallies, possibly sending a run to test 3519*.
DEC COPPER
The market is bearish. A close under 31530* should renew selloffs to reach under the recent low. Last week’s surge higher is still calling for near term rallies and may stretch for a test of 34635* resistance. A close over 34635* is needed to start a bottoming turn and sustained corrections. A rejection from 34635* calls for a slip back to defensive congestion along the low 320’s.
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