Morning Gold Fix – November 9, 2011
FMX | Connect – www.fmxconnect.com - (Reported 11/9/2011)
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 $1,799.20 per troy ounce on Tuesday, a gain of $8.10 for the day.
December gold was down $0.1 to $1799.1 per 100 troy ounces as of 8:25 am EST this morning. The December U.S. dollar index was up 0.994 to $77.745. January platinum was down 15.0 to $1658.1 per 50 troy ounces. December silver was down 20.8 cents to 34.945.
Market Recap
Gold extended above 1800 on Tuesday on continuing bullish sentiment and political restructuring in Greece and Italy. Italy has been under intense focus the past couple of days and Prime Minister Silvio Berlusconi has offered to step down if Parliament approves the austerity measures the EU is seeking.
December Gold traded to 1799.90 on the highs yesterday and one got the sense that it was a matter of when, not if, the metal was going to push over 1800. Gold achieved this objective late morning but was not able to hold its gains for long, as profit-taking rebuffed earlier advances. Despite booking only an $8 gain on the day, volatility was firm, with back months outperforming the fronts. There was a frenzy of December Call trading, with calls, call spreads, and the 1800/1850/1900 butterfly all seeing sizeable volume. Back month options also continue to see interest, including straddle buyers in April and June.
Market Prices
In the News
Bloomberg (Reported 11/9/2011)
The biggest decline in aluminum prices since the global recession means at least 25 percent of the world’s smelters may be unprofitable. The metal fell 23 percent to $2,121 a metric ton on the London Metal Exchange since May 1 and energy costs gained 15 percent in the past month. Twenty-five percent of production loses money below $2,350 and 50 percent under $2,000, according to estimates by Bloomberg Industries. About 10 percent of output may be shut by the first quarter, said Jochen Hitzfeld, the analyst at UniCredit SpA in Munich ranked by Bloomberg as the most-accurate price forecaster over two years. Aluminum Slump Means 25% of Smelters Losing Money: Commodities
Reuters (Reported 11/9/2011)
Gold edged higher on Wednesday on persistent doubts about Italy's ability to tackle its debt crisis as political uncertainty and soaring Italian bond yields prompted caution among investors. Italian Prime Minister Silvio Berlusconi, viewed by many in the markets as an obstacle to economic change, has pledged to resign after parliament passes budget reforms but his exit as leader of the euro zone's third-largest economy raised questions about a successor and possible political instability. Gold nudges higher as Italy debt fears grow
Kitco (Reported 11/9/2011)
The European Union financial and sovereign debt crisis has been ratcheted up several notches Wednesday as Italian government bond yields have pushed above the critical 7% level, which calls into question Italy’s ability to service its debt. (As if such was not already in question by the market place!) Italy’s prime minister resigned Tuesday. On top of all this, the Greek government is in disarray. This is making for a keen “risk-off” day in the market place Wednesday. While not evident Wednesday morning for gold and silver, the heightened uncertainty remains an overall bullish underlying factor for the precious metals markets, and especially gold. Comex Gold Sees Modest Selling Pressure As EU Debt Crisis Escalates
Technical Overview DEC GOLD
The market is bullish, but rallies are up against previous downturn levels associated with the 1789-1808 area. A close over 1803 is bullish and could extend out rallies to 184450. Further blunted rallies against 1803+ alerts for a possible swing high and we should be prepared for a pullback into congestion around 1760+/-. A drop under 174980 is negative, but only a close under 172810* marks a reversing turn to start a sustained corrective phase.
DEC SILVER
The market is remains in a short term bull upturn. A surge back over last week’s high or close over 3515 should spark a bull leg reaching for 3700. Trade may hang in additional sideways flagging congestion for 1-2 days. View sideways trade as a staging level to attempt further rallies. A roll off through 3310 could drive selling to again test key 32135* support, but only a close under 32135* marks a lasting turn back to negative trade.
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