Comex Gold Sees Corrective Bounce As U.S. Dollar Index Backs Off, Crude Oil Gains
18 November 2011, 08:26 a.m.
By Jim Wyckoff
Of Kitco News
kitco.com
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(Kitco News) - Comex December gold futures prices are trading modestly higher in early U.S. trading Friday morning, on a corrective bounce following strong losses suffered on Thursday, which did produce some near-term chart damage. A lower U.S. dollar index and higher crude oil prices are bullish “outside markets” that are supporting the precious metals Friday morning. December gold last traded up $12.80 at $1,733.00 an ounce. Spot gold last traded up $10.80 an ounce at $1,731.50. December Comex silver last traded up $0.673 at $32.17 an ounce.
Some bargain hunting buying interest and a technical corrective bounce are seen Friday morning in the wake of $50-plus losses suffered in gold on Thursday. It was a “when in doubt, get out” day in the market place Thursday, as many markets saw heavy selling pressure amid keener uncertainty regarding the European Union sovereign debt crisis. The market place has stabilized in early U.S. trading Friday. However, the EU debt crisis is far from being resolved and could blow up again at any time.
The U.S. dollar index is trading lower Friday morning, on a corrective pullback after hitting a five-week high on Thursday. The dollar index bulls still have some upside near-term technical momentum and that is still a bearish underlying factor for the precious metals markets.
Crude oil prices are trading higher Friday morning and that’s also supportive for gold and silver. Crude prices on Thursday hit a five-month high of $103.37 a barrel. While crude oil prices remain in a near-term uptrend, this week’s higher volatility at higher price levels is a warning signal of a topping process in crude.
U.S. economic data due for release Friday is light and includes the leading economic indicators index.
The London A.M. gold fixing was $1,730.00 versus the previous P.M. fixing of $1,742.50.
Technically, December gold futures prices closed nearer the session low Thursday as the market lurched to a fresh two-week low. Some near-term technical damage was inflicted Thursday, as a seven-week-old uptrend on the daily bar chart was at least temporarily negated as prices dropped below what was solid technical support at the last “reaction low” on the daily chart, which is last week’s low of $1,736.60, to negate the near-term price uptrend. Bulls still have the slight overall near-term technical advantage but are fading fast and need to show fresh power soon. Bulls' next upside technical objective is to produce a close above solid technical resistance at the October high of $1,754.00. Bears' next near-term downside price objective is closing prices below psychological support at $1,700.00. First resistance is seen at the overnight high of $1,738.50 and then at 1,754.00. First support is seen at Thursday’s low of $1,711.00 and then at $1,700.00.
December silver futures prices closed nearer the session low Thursday and hit a fresh three-week low overnight. Some near-term technical damage was inflicted in silver Thursday, as a seven-week-old uptrend on the daily bar chart was negated. Bulls have faded badly and are now on a level near-term technical playing field with the bears. Silver bulls' next upside price objective is producing a close above solid technical resistance at this week’s high of $34.92 an ounce. The next downside price breakout objective for the bears is closing prices below major psychological support at $30.00. First resistance is seen at the overnight high of $32.50 and then at $33.00. Next support is seen at $31.50. |
