Comex gold futures prices ended the U.S. day session modestly higher Monday amid bullish “outside market” forces that included a weaker U.S. dollar index and higher crude oil prices. Short covering and bargain-hunting buying interest were also featured Monday, following Friday’s sharp losses. Trading has turned choppy and sideways in the gold market as the bulls and bears struggle for near-term control with neither able to maintain much of an edge. August gold last traded up $13.00 at $1,592.00 an ounce. Spot gold was last quoted up $9.40 an ounce at $1,592.25. September Comex silver last traded up $0.54 at $27.46 an ounce.
Attention of the market place is turning back to the European Union and its sovereign debt crisis. Eurozone finance ministers met Monday to try to figure out how to implement the recently agreed upon measures to stabilize the EU banking and financial system. There are growing doubts about a credible plan of action that can be agreed upon by the major EU countries.
In overnight news, China’s consumer price inflation dropped in June and is now at its lowest level in over two years. A German Treasury bill auction Monday fetched a record negative yield, following last week’s European Central Bank rate cut. The market place is now awaiting Wednesday’s FOMC minutes from the Federal Reserve for any clues on U.S. monetary policy actions upcoming. The recent dour world economic news, including last Friday’s U.S. jobs report and Monday’s fresh data from China and the EU, raises the specter of price deflation. Price deflation is the enemy of most markets, especially commodity markets and including gold and silver.
However, it’s important to point out there are many commodity markets presently trying to rebound from their lows and showing some strength, to begin to suggest the sector has bottomed out. Remember that markets will start to react to anticipated events before they actually occur. That means the raw commodity sector could start to rebound even though some more bad economic news may be coming in the near term.
The U.S. dollar index was weaker Monday on some profit taking, but did poked to a fresh five-week high overnight as the bulls still have some upside near-term technical momentum on their side. Meantime, Nymex crude oil futures prices were solidly higher on short covering and bargain hunting. There are some early clues the crude oil market has put in a bottom.
The London P.M. gold fix is $1,585.00 versus the previous London P.M. fixing of $1,587.00.
Technically, August gold futures prices closed near the session high Monday. The gold market bulls and bears are still on a level near-term technical playing field amid choppy trading conditions. 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 $1,547.60. First resistance is seen at $1,600.00 and then at Friday’s high of $1,610.60. First support is seen at Monday’s low of $1,576.00 and then at $1,565.00. Wyckoff’s Market Rating: 5.0
September silver futures prices closed near the session high Monday. Silver bears still have the overall near-term technical advantage but trading has been choppy recently. Prices are still in a four-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $28.445 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $26.105. First resistance is seen at Friday’s high of $27.795 and then at $28.00. Next support is seen at $27.00 and then at Monday’s low of $26.87. Wyckoff’s Market Rating: 3.5.
September N.Y. copper closed up 255 points 343.50 cents Monday. Prices closed near the session high on a short-covering bounce. The key “outside markets” were bullish for copper Monday as the U.S. dollar index was weaker and crude oil prices were higher. Copper bulls and bears are back on a level near-term technical playing field. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 355.65 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of 325.00 cents. First resistance is seen at 348.10 cents and then at 350.00 cents. First support is seen at Monday’s low of 339.65 cents and then at 337.50 cents. Wyckoff’s Market Rating: 5.0.