(Kitco News) - Gold prices ended the U.S. day session solidly higher and scored a seven-week high Wednesday. A very busy day in the marketplace saw fresh geopolitical concerns fueling more safe-haven buying in the precious metal. More short covering in the gold futures market was also featured, as the rising price has forced the recent sellers to capitulate. February Comex gold was last up $16.10 at $1,094.70 an ounce. March Comex silver was last up $0.054 at $14.025 an ounce.
Gold slightly extended its gains Wednesday afternoon in the immediate aftermath of the release of the minutes of the latest Federal Open Market Committee (FOMC) meeting. While the minutes revealed nothing significantly new, the FOMC members did agree that any future rate hikes would be gradual. That falls into the camp of the monetary policy doves and the precious metals market bulls.
There was still anxiety in the world marketplace Wednesday and it came from several sources. North Korea said Wednesday it has tested a hydrogen bomb. However, western intelligence sources said the detected blast was not big enough to be an H-Bomb. Still, the world was reminded that North Korea’s rogue regime possesses nuclear weapons despite its world isolation.
There was more downbeat economic data coming out of China Wednesday. The Chinese Caixin services purchasing managers index came in at 50.2 in December from 51.2 in November. The December number was the lowest in 17 months. China’s stock market did see a rebound Wednesday from strong selling pressure seen earlier this week. The world currency markets are jittery as the Chinese yuan sank to a five-year low today, and fell to a record low versus some currencies.
European and U.S. stock markets were under pressure again Wednesday, to continue this week’s rout in the equities markets.
Falling crude oil prices and the deflationary implications continue to worry world markets. Brent crude oil futures fell to an 11-year low Wednesday. Nymex crude oil futures dropped to a seven-year low and fell below $34.00 a barrel on Wednesday.
And the tensions in the Middle East remain elevated this week as Iran and Saudi Arabia are in a stare-down after Saudi Arabia executed a cleric who was popular with Iranians.
There was also a heavy slate of U.S. economic data released Wednesday. However, the data had no major impact on the precious metals markets. Traders and investors are now looking ahead to Friday morning’s U.S. jobs report, which is arguably the most important report of the month.
Technically, February gold futures prices closed nearer the session high again today and hit a seven-week high on more safe-haven demand and short covering. A bullish double-bottom reversal pattern has developed on the daily bar chart and the price strength this week suggests that a market bottom is in place. But right now the gold bears still have the overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,100.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,070.00. First resistance is seen at today’s high of $1,092.60 and then at $1,100.00. First support is seen at $1,080.00 and then at today’s low of $1,074.40. Wyckoff’s Market Rating: 3.0
March silver futures prices closed near mid-range. The silver market bears still have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $14.64 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $13.64. First resistance is seen at this week’s high of $14.185 and then at $14.42. Next support is seen at today’s low of $13.855 and then at last week’s low of $13.75. Wyckoff's Market Rating: 2.0.
March N.Y. copper closed down 75 points at 208.80 cents today. Prices closed nearer the session high. The copper bears have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 220.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 200.00 cents. First resistance is seen at Tuesday’s high of 211.15 cents and then at this week’s high of 213.95 cents. First support is seen at this week’s low of 206.90 cents and then at 203.40 cents. Wyckoff's Market Rating: 2.0.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
