[Au Price]Gold Hits 3-Week High, Pushes Above $1,100, on Short Covering, Bargain Hunting, Bullish Markets

By Paul Ploumis 11 Aug 2015  Last updated at 06:16:17 GMT

Gold prices managed to trade above the psychological resistance of $1,100 per Oz on US day session Monday.

(Kitco News) - Gold prices ended the U.S. day session moderately higher, moved above the psychological resistance barrier of $1,100.00 and hit a three-week high Monday. Short covering in the futures markets and bargain hunting in the spot market were featured. Buy stop orders were also triggered as prices pushed above the technically important $1,100 level.  The yellow metal had been trading sideways at lower levels for the past three weeks, after hitting a 5.5-year low in mid-July. This suggests the sellers have become exhausted. Monday’s price gains did slightly improve the technical postures for both gold and silver markets. However, the gold and silver market bulls still have some very heavy lifting to do in the near term to suggest price uptrends can be sustained. December Comex gold was last up $10.50 at $1,104.60 an ounce. September Comex silver was last up $0.469 at $15.29 an ounce.

The two key “outside markets early Monday saw the Nymex crude oil market hit a new four-month low below $44.00 a barrel. Crude oil is leading a major prices slump in the raw commodity sector that has worsened over the summer and is leading to fresh worries about the dreaded price deflation gripping world economies. However, crude oil recovered in late-morning trading and the U.S. dollar index moved from lower levels to higher levels, which further encouraged the raw commodity market bulls, including gold and silver bulls, on this day.

In overnight news, there was another downbeat economic report coming out of the world’s second-largest economy. China’s exports in July were down 8.3%, year-on-year, while imports were down 8.1% in the same period. Also, China’s consumer price index was up 1.6% in July from last year, but producer prices were down 5.4% in the same period. This news helped to pressure European stock markets Monday. However, China’s own stock market rallied on ideas the Chinese government will continue to prop up its equities market. Monday’s economic data from China did lead to ideas China will have to implement further monetary policy and economic stimulus measures in the coming weeks and months, which many raw commodity traders deemed bullish—despite the fact today’s report, itself, was bearish.

The Federal Reserve’s number-two official Stanley Fischer said in a Bloomberg TV interview Monday morning that the U.S. economy is nearing full employment and although inflation is presently low, that’s just temporary due to falling commodity prices. He said the Fed should still be vigilant on inflation. He said the Fed has been extremely expansionary in its monetary policy. These remarks were initially read as falling into the camp of the U.S. monetary policy hawks. However, other market watchers said Fischer’s overall tone of his comments could actually be read as neutral.

The London P.M. gold fix is $1,097.00 versus the previous A.M. fix of $1,094.80.

Courtesy: Kitco News