(Kitco News) - Gold prices ended the U.S. day session solidly higher, pushed well above the key $1,100.00 mark, and hit a two-month high Thursday. Safe-haven demand amid plunging world stock markets and geopolitical uncertainty has been featured all this week. Importantly, the near-term technical posture for gold has also improved markedly this week, which is prompting heavy short covering in the futures market and fresh chart-based buying interest. February Comex gold was last up $16.40 at $1,108.30 an ounce. March Comex silver was last up $0.119 at $14.095 an ounce.
World stock markets are under solid selling pressure this week as trader and investor anxiety in the world market place remains elevated. China’s stock market traded for only a half-hour Thursday, dropping 7%, and then circuit-breakers kicked in to halt trading for the rest of the session. It was the second time this week that trading in Chinese stocks was halted by circuit-breakers. Asian investors were also spooked when Chinese monetary authorities devalued the yuan again. The heavy selling in China quickly spread throughout Asia, including Japanese, Hong Kong and Australian stock markets. European stock markets also saw strong selling pressure Thursday.
U.S. stock indexes are also sharply lower Thursday and hit three-month lows. Nymex crude oil futures dropped to a 12-year low below $32.00 a barrel Thursday, to add to the fear and uncertainty in the marketplace. Brent crude oil futures also dropped to a 12-year low. The raw commodity sector has been hit hard this week by fears of slowing world economic growth sapping demand for many raw commodities. Weak economic data from China was reported earlier this week. China is the world’s largest raw commodity importer.
Other very worrisome matters for the markets this week include North Korea on Wednesday saying it had 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 isolation. The tensions in the Middle East remain high this week as Iran and Saudi Arabia are in a stare-down after Saudi Arabia executed a cleric who was popular with Iranians.
U.S. economic data released Thursday did not impact that precious metals appreciably, as has been the case all week. With all the other markets-moving events this week, traders and investors are less-focused on Friday’s U.S. jobs report, which is arguably the most important U.S. economic report of the month. Friday’s non-farm payrolls component of the Labor Department’s employment report is expected to show a 210,000 rise in December. Still, the jobs data is likely to have a significant impact on many markets.
Technically, February gold futures prices closed nearer the session high again today and hit a two-month high. Prices this week have seen a bullish upside “breakout” from the recent sideways trading range at lower levels. This suggests a market bottom is in place and that prices can continue to trend sideways to higher in the near term. 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 $1,125.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,080.00. First resistance is seen at today’s high of $1,108.90 and then at $1,120.00. First support is seen at $1,100.00 and then at today’s low of $1,091.90. Wyckoff’s Market Rating: 4.0
March silver futures prices closed nearer the session high and hit a two-week high today on short covering and on strength in the gold market. The silver market bears still have the firm 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 today’s high of $14.385 and then at $14.425. Next support is seen at $14.185 and then at $14.00. Wyckoff's Market Rating: 2.5.
March N.Y. copper closed down 675 points at 202.05 cents today. Prices closed nearer the session low and hit a contract and multi-year low today. The copper bears have the solid overall near-term technical advantage and gained more power today. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the December high of 216.35 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 190.00 cents. First resistance is seen at 205.00 cents and then at 207.50 cents. First support is seen at today’s contract low of 199.00 cents and then at 197.50 cents. Wyckoff's Market Rating: 1.0.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
