Gold Firmer On Short-Covering, Bargain Hunting; BOJ, FOMC On Deck

(Kitco News) - Gold and silver prices ended the U.S. day session higher in Monday, with silver posting solid gains. Short covering in the futures markets and perceived bargain hunting in the cash markets were featured, after recent selling pressure. December Comex gold was last up $7.10 an ounce at $1,317.20. December Comex silver was last up $0.438 at $19.305 an ounce.

The key “outside markets” were also in a daily bullish posture for the precious metals Monday, as the U.S. dollar index was lower and crude oil prices were higher. However, the greenback bulls still have some upside technical momentum and the crude oil bears still have the overall near-term technical advantage, which could work against the metals markets as the week progresses.

Traders and investors worldwide are growing somewhat more confident this week’s meeting of the Federal Reserve’s Open Market Committee (FOMC) will not produce an interest rate increase, and that is also friendly for the precious metals bulls. The FOMC meeting begins Tuesday morning and ends Wednesday afternoon. The more likely date of any U.S. rate hike would be in December, according to the marketplace.

Possibly just as market-sensitive as the FOMC meeting, the Bank of Japan also meets this week to discuss its monetary policy. Unlike the FOMC meeting, there is not a clear consensus on what the BOJ will do on monetary policy: stand pat or initiate still more stimulus. The uncertainty ahead of the BOJ meeting could make its outcome a bigger markets event than the FOMC meeting. The BOJ meeting results should be out sometime early Wednesday.

Several suspected terror incidents in the U.S. the past three days have not seriously rattled world markets. No deaths have been reported by many were injured in the incidents. A suspect in the New York area bombings was apprehended Monday.

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Technically, December gold futures prices closed near mid-range today. The gold bulls have the slight near-term technical advantage, as prices are not that far below this year’s high. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the September high of $1,357.60. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at today’s high of $1,321.80 and then at $1,325.00. First support is seen at last week’s low of $1,309.20 and then at the September low of $1,305.50. Wyckoff’s Market Rating: 5.5

December silver futures prices closed near the session high. The silver market bulls have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the September high of $20.235 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the August low of $18.46. First resistance is seen at $19.50 and then at $19.75. Next support is seen at $19.00 and then at last week’s low of $18.715. Wyckoff's Market Rating: 6.0.

December N.Y. copper closed down 35 points at 215.65 cents today. Prices closed nearer the session high today. The copper bears still have the slight overall near-term technical advantage, but the bulls still have some upside momentum to suggest a market bottom is in place. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 225.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at this week’s low of 206.40 cents. First resistance is seen at last week’s high of 216.80 cents and then at 218.00 cents. First support is seen at today’s low of 213.90 cents and then at 212.00 cents. Wyckoff's Market Rating: 4.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com