Gold Rebounds from Sharp Sell-Off in Asian Trading
New York (Dec 1) Gold futures prices are moderately higher and spot prices are moderately lower in early U.S. trading Monday. Prices have bounced well up from their overnight lows on short-covering and bargain hunting after hitting a three-week low in Asian trading. A weaker U.S. dollar index Monday and some safe-haven demand are also featured to start the trading week and the first trading day of the month. February Comex gold was last up $6.20 at $1,182.10 an ounce. Spot gold was last down $7.10 at $1,183.00. March Comex silver last traded up $0.319 at $15.88 an ounce.
World stock and commodity markets were under pressure early Monday following Friday’s major collapse in crude oil prices—the day after an OPEC meeting that failed to produce production cuts by member nations. January Nymex crude oil prices dropped to a five-year low of $63.72 a barrel in overnight trading. However, as the U.S. day session begins many markets have recovered from their lowest price levels seen in overnight trading.
The Swiss “Save our Gold” referendum was handily defeated by voters Sunday. The measure would have required the Swiss National Bank to hold 20% of its assets in gold. The referendum was not expected to pass. The gold market did see selling pressure following the vote. However, the yellow metal made a solid recovery from its lows, in part due to reports major gold consumer India has lifted its import restrictions on gold, effective immediately.
In other overnight news, the Euro Zone’s manufacturing purchasing managers index (PMI) came in at 50.1 in November from 50.6 in October. A reading of 50.4 was expected. A reading below 50.0 suggests contraction. Focus of the market place is on Thursday’s regular monthly meeting of the European Central Bank. The ECB says its read to implement further monetary stimulus measures to boost the ailing EU economy. The central bank could make a move at Thursday’s meeting.
Meantime, China’s manufacturing PMI came in weaker than expected in November, at 50.3 versus 50.8 in October, which is an eight-month low. This report also helped to pressure Asian markets.
The Russian ruble fell to another record low against the U.S. dollar overnight, dropping by another 5%. Reports said the Russian central bank intervened in the currency markets to support the ruble. The U.S. dollar index is trading lower after posting gains in Asian trading. The greenback is still hovering near a four-year high.
U.S. economic data due for release Monday includes the U.S. manufacturing purchasing managers index (PMI), the ISM manufacturing report on business, and the global manufacturing PMI,.
Wyckoff’s Daily Risk Rating: 6.0 (While geopolitical risks have been moved to the back burner of the market place, the plunging crude oil market has somewhat rattled the market place.)
(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.
The London A.M. gold fixing is $1,178.75 versus the previous P.M. fixing of $1,182.75.
Technically, February gold bears have the solid overall near-term technical advantage. However, the strong rebound from the overnight low as the U.S. day session begins does suggest the bears have become exhausted. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the November high of $1,208.20. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the November low of $1,132.00. First resistance is seen at $1,190.00 and then at $1,200.00. First support is seen at $1,170.00 and then at $1,163.90.
March Comex silver futures bears have the solid near-term technical advantage as prices hit a five-year low of $14.155 overnight. However, the big rebound from the overnight low has produced what could be a bullish selling “exhaustion tail” on the daily bar chart. This suggests the bears became exhausted at the lower price levels and a near-term bottom could be in place. However, bulls need to show some follow-through strength early this week to better suggest such. Prices are in a five-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the November high of $16.755 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the overnight low of $14.155. First resistance is seen at the overnight high of $16.37 and then at $16.50. Next support is seen at $15.75 and then at this week’s low of $15.41