Comex Gold Sharply Higher amid Bullish “Outside Market” Forces Wednesday
Comex gold futures prices are trading solidly higher Wednesday morning on continued strong investor safe-haven demand and on bullishly postured key “outside markets”–a sharply lower U.S. dollar index and sharply higher crude oil prices. Bulls also remain in firm overall technical command in gold. December gold last traded up $26.30 at $1,769.30 an ounce. Spot gold last traded up $22.90 an ounce at $1,767.50. December Comex silver last traded up $0.482 at $38.40 an ounce.
The market place is still digesting the surprise move by the U.S. Federal Reserve to proclaim that U.S. interest rates will remain very low for at least the next two years and admitting the U.S. economy is sputtering again. The market place, at least at present, is deeming the Fed statement as stock and commodity market bullish and U.S. dollar bearish. So that’s bullish for the precious metals–even though some could argue that if the U.S. and world economies do “double-dip,” the specter of commodity-bearish deflation could come into play.
The U.S. stock indexes are under modest selling pressure Wednesday morning, but the stock market has at least temporarily stabilized. It was impressive from a gold bull’s perspective to see gold and the U.S. stock indexes rally strong Tuesday afternoon. However, if the stock indexes continue to rally, that would suggest better investor risk appetite in the market place, which could pull away some safe-haven demand for gold and silver.
The European Union sovereign debt crisis has temporarily taken a back seat in the business news headlines, following the Federal Reserve FOMC meeting Tuesday. However, look for the EU debt problems to be back on the front burner soon. That situation remains an underlying bullish factor for gold.
Crude oil prices are trading sharply higher Wednesday morning, on short covering in a bear market. However, Tuesday’s and Wednesday morning’s price action do hint the crude oil market has put in a bottom. The crude oil market will continue to be a major “outside market” force for the precious metals.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage survey, the weekly DOE energy stocks report and the monthly Treasury budget statement.
The London A.M. gold fixing was $1,753.75 versus the previous P.M. fixing of $1,736.00.
Technically, gold futures bulls still have the very strong overall near-term technical advantage even though the market is due for a corrective pullback soon. There are still no early technical warning signals to suggest a market top is close at hand and the path of least resistance for prices remains sideways to higher overall. Bulls’ next near-term upside technical objective is to produce a close above psychological resistance at $1,800.00. Bears’ next near-term downside price objective is closing prices below psychological support at $1,700.00. First resistance is seen at the record high of $1,782.50 and then at $1,800.00. First support is seen at the overnight low of $1,740.20 and then at Tuesday’s low of $1,717.70,
December silver futures are moderately higher Wednesday. I’ve received a lot of email recently asking why silver is not following gold’s recent strong price ascent. In my opinion, silver, while a precious metal that has some safe-haven appeal, is not nearly the perceived safe-haven investment asset that is gold. When push comes to shove in tense and uncertain times, gold rises to the top. Also, silver has shown a stronger tendency than gold to be negatively influenced by the value of the U.S. dollar and by crude oil prices.
Technically, silver bulls still have the overall near-term and longer-term technical advantage but trading has turned choppy on the daily chart recently and the bulls have faded. Importantly, the silver bulls are not nearly in the powerfully bullish technical posture that gold now enjoys. Silver bulls’ next upside price objective is producing a close above solid technical resistance at this week’s high of $40.405 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $37.00. First resistance is seen at $39.00 and then at Tuesday’s high of $39.67. Next support is seen at $38.00 and then at the overnight low of $37.70.