P.M. Kitco Metals Roundup: Gold Soars to 5-Mo. High on Bernanke Boost and on Fresh Upside Technical Momentum by Kitco News | Friday
August 31, 2012 2:24 PM
Comex gold futures prices on Friday rallied
sharply, hit a fresh five-month high and are now within
easy striking distance of $1,700.00. The precious metals
markets took flight late Friday morning following the much-anticipated
remarks by Federal Reserve Chairman Ben Bernanke at a Fed
symposium in Jackson Hole, Wyoming. The Fed chief strongly
hinted fresh, unconventional U.S. monetary policy stimulus
will be implemented at some point. Indeed, he left the door
wide open for a fresh quantitative easing initiative to
be unveiled at the September FOMC meeting, or at some point
in the not-too-distant future. December gold last traded
up $32.00 an ounce at $1,689.00. Spot gold last traded up
$31.70 at $1,687.50. December silver last traded up $1.05
an ounce at $31.49.
The heightened expectations for fresh quantitative
easing (QE3) are music to most commodity market bulls’
ears, including gold and silver. It’s also stock-market-bullish
and U.S. dollar-bearish.
Friday is the last trading day of the month,
which makes it an extra important trading day from a technical
perspective—and the gold and silver bulls even took
full advantage of that by pushing prices to multi-month
highs. The gold and silver bulls gained fresh, solid upside
technical momentum Friday, to suggest that prices can continue
to trend sideways to higher for at least the near term.
In other overnight news, there was more
weak economic data coming out of the European Union. The
EU unemployment rate rose to 11.3% in July, while inflation
checked in at 2.6% in August, on an annualized rate, which
was higher than expected. There were also rumors and rumblings
in the market place that a German finance official was going
to resign, which led to further speculation that European
Union monetary policy will soon be eased further. We’ll
find out more next Thursday when the monthly meeting of
the European Central Bank occurs, including a highly awaited
press conference from ECB head Mario Draghi. The market
place does expect the ECB to announce a fresh monetary stimulus
package soon.
The U.S. dollar index was solidly lower
Friday. Prices hit a fresh 3.5-month low and closed at a
technically bearish weekly and monthly low close. The greenback
bears have the near-term technical advantage and gained
more downside momentum Friday as a five-week-old downtrend
line is in place on the daily bar chart. Meantime, crude
oil prices were solidly higher Friday on the QE3 hopes.
Oil bulls still have the near-term technical advantage.
The precious metals markets will continue to look closely
at how these two key “outside markets” trade
on a daily basis.
(NOTE: My mission at Kitco is not only to
provide you, my valued reader, with market analysis and
perspective, but to also help you become a better-educated
investor/trader. To that end I will soon be producing unique
analytical/technical charts on the major world FOREX currency
pairs. These charts will be very similar to the precious
metals charts I now produce for Kitco. Holders of precious
metals or other major tradable (fungible) assets worldwide
need to monitor the foreign exchange rate of the currency
in which their asset is held. Also, the precious metals
market prices are impacted on a day-to-day basis by currency
movements. If you have a better handle on what the major
currencies are doing (or where they may be headed), then
you will have more market knowledge and will likely become
a more profitable investor or trader. Importantly, understanding
the FOREX market may seem too complicated to many. However,
I will make it my job to simplify it with my easy-to-understand
analysis and with continuing education via Kitco.—Jim)
The London P.M. gold fixing is $1,648.50
versus the previous P.M. fixing of $1,660.50.
Technically, December gold futures bulls
had a big field day today and gained solid technical power.
Prices hit a fresh five-month high, scored a big and bullish
“outside day” up on the daily bar chart, closed
at a bullish weekly and monthly high close--and last but
not least saw a big upside “breakout” from a
bull flag pattern that had formed on the daily chart, which
I had pointed out to you all week long. Gold prices are
in a two-month-old uptrend on the daily bar chart. The gold
market bulls have the solid overall near-term technical
advantage. The gold bulls’ next upside price breakout
objective is to produce a close above psychological resistance
at $1,700.00. Bears' next near-term downside price objective
is closing prices below solid technical support at today’s
low of $1,647.10. First resistance is seen at $1,700.00
and then at $1,704.50. First support is seen at $1,679.30
and then at $1,675.00. Wyckoff’s Market Rating: 7.5
December silver futures prices closed sharply
higher, near the session high and hit a fresh four-month
high Friday. Prices also closed at a bullish weekly and
monthly high close--and last but not least saw a big upside
“breakout” from a bullish pennant pattern that
had formed on the daily chart, which I had pointed out to
you all week long. Silver bulls have the overall near-term
technical advantage and gained more technical power today.
Bulls’ next upside price breakout objective is closing
prices above solid technical resistance at $32.50 an ounce.
The next downside price breakout objective for the bears
is closing prices below major psychological support at $30.00.
First resistance is seen at Friday’s high of $31.59
and then at $32.00. Next support is seen at $31.315 and
then at $31.00. Wyckoff's Market Rating: 7.5.