Gold Ends Mixed, Hits 4-Week High; Gains Pared by Firmer U.S. Dollar, Lower Oil

Author: Paul Ploumis
15 Oct 2014 Last updated at 04:04:58 GMT
(Kitco News) - Gold futures prices ended the U.S. day session modestly higher, while the spot (cash) prices were modestly lower Tuesday. Prices hit another four-week high in early trading. Gold prices closed well down from the daily highs as the key “outside markets” were in a bearish posture for the precious metals—a firmer U.S. dollar index and solidly lower crude oil prices. The near-term technical posture for gold has improved to the point that a market low could be in place. December Comex gold was last up $3.50 at $1,233.60 an ounce. Spot gold was last quoted down $3.80 at $1,233.75. December Comex silver last traded up $0.05 at $17.395 an ounce.

A main feature in the market place recently has been the plunge in crude oil prices, with Nymex crude dropping to a two-year low. Prices Tuesday morning had again dipped below $85.00 a barrel. A report from the International Energy Agency (IEA) said world oil demand will remain weak. The steep downtrend in crude oil prices is a major underlying bearish factor for much of the raw commodity sector. While the drop in oil prices is good for the consumer buying gasoline at the pump, the macro-economic reverberations of lower crude oil prices are worrisome, including the specter of price deflation in the major economies of the world. The oil slump has been particularly hard on major oil producer Russia, as the Russian ruble fell to a record low against several currencies Tuesday. Economic sanctions have also beat down the ruble.

Another feature in the market place is the rise in volatility in the stock market. The CBOE volatility index, also called the VIX, is at a better-than-two-year high and has risen by around 80% since the start of this year, reports said. There are several factors credited with the recent sharp rise in the VIX, including the Ebola scare, the ISIS terrorists, slowing world economic growth and the Russia-Ukraine conflict. This added fear in the market place has benefitted safe-haven assets including gold, U.S. Treasuries and the U.S. dollar.

In overnight news, there were more dour economic reports coming out of the European Union and its leading economy, Germany. EU industrial output dropped by 1.8% in August, month-on-month, and fell by 1.9% year-on-year. Those figures were worse than market expectations. The German ZEW economic sentiment index fell to minus 3.6 in October, versus expectations of a reading of 0.8. The September figure was 6.9. These reports add to a string of mostly negative economic news coming out of the European Union the past few months.

The London P.M. gold fix was $1,229.00 versus the previous London A.M. fixing of $1,228.00.

Courtesy: Kitco News