FB: Comex Gold Weaker on Corrective Pullback, Chart Consolidation
By Jim Wyckoff Of Kitco News
Comex gold futures prices are modestly lower in early U.S. trading Monday. The market is seeing downside technical correction from recent gains and is also digesting Sunday’s Greek elections. The market place now looks forward to this week’s FOMC meeting. August gold last traded down $4.30 at $1,623.80 an ounce. Spot gold was last quoted down $3.60 an ounce at $1,623.50. July Comex silver last traded down $0.30 at $28.44 an ounce.
The Sunday Greek elections went pretty much as expected as the pro-bailout more conservative party barely won. However, a coalition government still needs to be formed in Greece. German government officials applauded Greek elections and said Greece is moving in the right direction. European stocks were narrowly mixed on the Greek election news, which is not a ringing endorsement from European investors. Spain and Italy are now in focus. Spanish 10-year bond yields rose to above 7% on Monday. A
G-20 meeting in Mexico Monday and Tuesday will be watched closely for any fresh pronouncements on the EU debt crisis.
The positive that the gold market bulls can take away from Monday’s weaker start for the gold market is that their yellow metal has been acting more like a safe-haven asset. Had the market place bee more roiled on Monday, it’s likely gold prices would have been trading solidly higher.
With the Greek elections past, attention of the market place quickly turns to this week’s meeting of the U.S. Federal Reserve’s Federal Open Market Committee, which will determine the next course of U.S. monetary policy. The meeting starts Tuesday and ends early Wednesday afternoon. The recent generally downbeat U.S. data has led to growing expectations for further easing of U.S. monetary policy—nicknamed “QE3.” Most reckon the Fed will implement some form of fresh easing of U.S. monetary policy at this week’s meeting.
The U.S. dollar index is trading slightly higher Monday morning but did hit a fresh four-week low overnight as the greenback bulls are fading a bit. Meantime, Nymex crude oil futures prices are weaker Monday morning. Crude oil remains in an overall bearish fundamental and technical posture.
The London A.M. gold fix is $1,623.50 versus the previous London P.M. fixing of $1,627.25.
U.S. economic data due for release Monday is light and includes the NAHB housing market index.
Technically, gold futures bulls were able to produce a bullish weekly high close on Friday and still have some upside momentum on their side. Bulls have the slight overall near-term technical advantage. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the June high of $1,642.40. Bears’ next near-term downside price objective is closing prices below solid technical support at $1,556.40. First resistance is seen at the overnight high of $1,631.30 and then at last week’s high of $1,635.40. First support is seen at the overnight low of $1,606.90 and then at $1,600.00.
July silver futures bulls and bears are doing near-term technical battle amid choppy trading, with neither gaining much headway. Bears still have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above major psychological resistance at $30.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $27.17. First resistance is seen at last week’s high of $29.095 and then at $29.50. Next support is seen at last week’s low of $28.15 and then at $27.91.
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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
