Gold Upward Momentum Continues for Fourth Straight Session
Gold Ended Sharply Lower: “Sell the News” Kicks In as QE2 Approaches Closer
28 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1339 1354 1364
1st support 2nd support 3rd support
Today’s support US$ 1315 1304 1290
Today’s pivot point US$ 1329
The Day’s Story:
Spot gold ended sharply lower as U.S dollar continued to bounce back from its recent losses and pace of profit taking picked up after metal’s sharp gains in recent months. Most of the losses in precious metal were due to dollar’s strength as market has started to realise that QE2 may not be as large as previously thought and FED may employ its next monetary easing in a way that it stretched over several months with lot less amount compared to QE1 of 2 Trillion dollars. This view was confirmed by a report in Walls Street Journal that the Fed Reserve could be more cautious than previously expected in its stance on quantitative easing. Gold is still up by 22% this year and looks set to record its tenth annual gain and despite recent U.S dollar short covering rally, gold’s medium to long term outlook remain bullish according to many market analysts.
Major U.S. stock indices were mixed at the end of their Wednesday session with DOW and S&P500 marginally down while NASDAQ ended in green mainly due to some positive earnings from Tech sector. Stronger than positive earnings from Broadcom Corp, JDA Software Inc. and Compellent Technologies Inc. helped NASDAQ to rally in the final hours of trading and lead the broader market to retrace from its low points before the end of the session. Better than expected data in which U.S manufactured durable goods orders rose by 3.3% against expected 2.5% and September new home sales rose by 6.6% against market expectation of 4.2% could not convince traders to buy stocks. The reason for sell off was mainly because of market tamping down its expectations of next week’s QE2 announcement. Analysts also believe various markets have gone up too far too quick in recent weeks at the back of the news of new stimulus package and much of it have already been priced in and market is due for a healthy correction as a result. Oil prices suffered as data revealed that U.S oil inventories rose by 5 million barrels. Declines in Crude Oil also affected the commodities across the board. In Europe stocks also ended lower for second day in a row mainly due to the weakness in the mining sector.
U.S dollar stole the show once again in yesterday’s trading as it continued to bounce back after sharp losses in recent months as market expects much smaller stimulus package in next week’s FED meeting than its earlier
expectations. Better than expected U.S home-sale report also lifted the dollar index up later in the U.S session. Despite recent gains by greenback, it’s near term technical outlook remains bearish and that is a bullish factor for price of gold which moves in opposite direction to dollar due to their inverse correlation relationship as a weaker dollar makes dollar denominated assets more appealing to holder of other currencies. Gold losses were mainly due to dollar gains in yesterday’s trading although some profit taking also contributed to the demise as traders locked their profits after strong gains in recent months. Gold has been consolidating at current levels for last few sessions and expect sideways movement until FED releases details about much anticipated fresh round of monetary easing package. U.S Q3 GDP is to be released on Friday and that could move the prices of U.S dollar and Gold as a result, in which direction will largely depend on the data and market interpretation to those numbers. Further declines could be expected if gold manages to break below $1314 level until then but $1300 level will provide a strong support to gold prices at least for now.
Gold price came under selling pressure right from the start after peaking to its intraday high of $1343.4 very early in the session. Gold quickly gave away its minor gains during Asian session and fell deep into red territory during Asian trading hours. Gold found some support early during European session and pared some of its losses. Gold extended its losses soon after mid European session and just before the U.S economic data filtered in before markets in U.S opened for their trading day. Yellow metal was not favored with North American market open and fell deeper to its intraday low of $1318.8 an ounce in the morning session of U.S trade. Gold however, managed to erase some of its intraday losses during remainder of U.S session and closed at $1324.9 an ounce for the day.
Other Metals:
Silver futures for December delivery closed down 43.0 cent to $23.40 an ounce on Wednesday.
Platinum futures for January delivery fell $25.90 to $1,678.10 an ounce on NYMEX.
Palladium futures for December delivery fell $6.30 to $619.15 an ounce.
December N.Y. Copper closed down 9 cent $3.77 a pound on Wednesday.
Gold (News and Views):
December Comex gold closed down $16.00 at $1,322.60 an ounce on Wednesday.
The London P.M. gold fixing was $1,324.50 on Wednesday compared to its previous P.M fixing $1,329.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings stood at 1299.177 tons on October 26 unchanged from previous day.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.42 to 78.07 on Wednesday.
Crude Oil for October delivery rose by $0.61 to settle at $81.94 on Wednesday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Assets of the metal in exchange-traded-products declined 0.28 metric ton to 2,096.13 tons yesterday, the eighth straight drop, according to data compiled by Bloomberg from 10 providers. Holdings are up 17 percent this year and reached a record 2,104.65 tons on Oct. 14.
Analysts cited metals weakness related to concerns among U.S. regulators about market manipulation. The U.S. Commodity Futures Trading Commission said there had been attempts to influence silver prices, but gave no detail on the status of a probe into price manipulation in silver that started in 2008. (Reuters)
Factors Affecting Gold Price Yesterday:
The greenback is holding strong, and there is little other news (for gold)," said Andrey Kryuchenkov, analyst at VTB Capital.
U.S. GDP data on Friday will be key for the dollar and consequently for gold, he said, "but it is really down to the FOMC".
Global equities and dollar-based commodities are undergoing a collective profit-taking retracement in direct correlation to a bounce in the U.S. dollar against most other currencies, says Janet Mirasola, managing director of metals trading with R.J. O'Brien & Associates. “Much debate is likely to follow as to why the dollar has regained friends, but the fact is that the ‘short’ was both crowded and fashionable and had run its fundamental course. A corrective bounce should not be a surprise to any investors who understand the risk of market action over-extending reality. Commodities are swooning as profit-takers start to look now towards month-end and all-important U.S. GDP data due on Friday.” Gold, copper and crude oil are all softer, with psychological support levels of $1,300 an ounce, $8,000 per metric ton and $80 a barrel, respectively.
"Despite better than forecast consumer confidence and Richmond manufacturing data, the recovering dollar weighed on risk sentiment over the course of the day as U.S. equities swung between positive and negative," Fast Markets research analyst James Moore said in a daily note.
“The strength in the dollar is causing people to sell first and ask questions later,” said Adam Klopfenstein, senior marketing strategist at Lind Waldock in Chicago.
Wall Street may have “overplayed” its expectations of quantitative easing judging by Wednesday’s swift negative reaction to The Wall Street Journal report, analysts at MF Global said in a note to clients Wednesday.
The expectation of a more gradualist approach on quantitative easing by the Fed has led to this pullback," said James Steel, chief commodity analyst at HSBC.
Gold Future Outlook:
A report in the Wall Street Journal, suggesting that U.S. quantitative easing may not be as great as some expected, is playing a role in the bounce in the U.S. dollar, which in turn is behind some of the weakness in commodities such as crude oil and metals, says MF Global analyst Edward Meir. The Journal article suggests
that the Fed is likely to unveil a Treasury-bond purchase worth a few hundred billion dollars spread out over several months, far less than nearly $2 trillion during the financial crisis. “Judging from the negative reaction thus far, it is fair to assume that prevailing quantitative-easing parameters may have been overplayed in recent weeks, as both the amount and the phased-in nature of the current proposal is falling somewhat short of expectations,” Meir says. He notes that MF Global is not surprised by the turn of events, after cautioning that a “sell-the-news” type of action may have been imminent. “We suspect that the selling may have somewhat more room to run now that it has started, but just as we saw in the aftermath of the China rate hike, the correction may prove to be relatively short-lived.”
“The longer-term question will be on how much of the Fed’s action has already been priced in,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.
“With the Fed poised to print more money, we expect dips will be viewed favorably by investors, with longer-term concerns about inflation and debasing of fiat currencies,” said James Moore, an analyst at TheBullionDesk.com in London.
Earlier, bullion received a boost after a newspaper run by China's Ministry of Commerce said the country should significantly boost state gold reserves to a level equal to that held by the United States, citing a local researcher.
"While the implications of potential QE and its size have monopolized market attention, the China report reminds us that the current mood amongst central banks, particularly in Asia, is to increase exposures to gold," UBS said in a note.
Chart support could be found at $1,319, around spot gold's three-month rising trendline, said Rick Bensignor, chief market analyst at Execution Noble. Prices are further supported around $1,313-14, at the bottom of the Bollinger Band, he said.
Technical Analysis (by Jim Wyckoff):
Technically, gold bulls are fading on a near-term basis and need to show some good price strength yet this week to begin to repair the near-term chart damage that was inflicted last week. Bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close in December Comex futures above solid technical resistance at this week's high of $1,349.50.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at $1,330.00 and then at $1,340.00.
Support is seen at Wednesday's low of $1,318.60 and then at last week's low of $1,315.60.
Wyckoff's Market Rating: 6.5.
Daily Gold and Silver Expected Range:
Gold: US$1308- $1344
Silver: US$23.12 - $24.05
Chart of the Day:
Chart below shows gold prices finding support at rising trendline. A breach of these level will call for 1305-08 level, at lower Bollinger band.
RSI is sitting at 50 level and have much room to travel south before entering to oversold conditions.
MACD study which favored the bullish move until few days ago and was well established in bullish zone indicates a trend reversal and heading towards Zero line. Trend reversal can also been seen by reduced histograms.
Slow Stochastics which broke down badly and gave false signals while at the top of the trend in last few months are approaching towards oversold territory. Stochastics which are more sensitive to price action than RSI and rather lagging MACD indicator appears to signal that current correction may be over soon painting a rather conflicting picture.
Keep an eye on dollar move for further clues as inverse correlation between gold and dollar has been te strongest in a year.
Oct 28, 2010
Gold Forecast
Gold slipped sharply downwards, closing below 23.6% Fibonacci level of the CD leg for the efficient bearish harmonic AB=CD pattern as seen on the provided chart. The bearish channel of the descending actions from the historical high still dominates the metal's trend. In result, the way is cleared towards 38.2% of CD leg at 1299.00 and we keep our bearish anticipations unchanged over intraday basis. AROON shows a clear negative sign, supporting our outlook.
The trading range for today is among the key support at 1291.00 and key resistance now at 1355.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain
Support 1320.00 1314.00 1307.00 1299.00 1294.00
Resistance 1332.00 1339.00 1345.00 1348.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1332.00 targeting 1299.00 and stop loss above 1355.00 might be appropriate.
The trading range for today is among the key support at 1291.00 and key resistance now at 1355.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain
Support 1320.00 1314.00 1307.00 1299.00 1294.00
Resistance 1332.00 1339.00 1345.00 1348.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1332.00 targeting 1299.00 and stop loss above 1355.00 might be appropriate.
News and gold strategy
Gold Flat as Dollar Rebound Capped Gains
27 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1346 1353 1362
1st support 2nd support 3rd support
Today’s support US$ 1331 1322 1315
Today’s pivot point US$ 1337
The Day’s Story:
Spot Gold ended flat on Tuesday after falling down by more than 1% earlier during the session. Gold came under pressure at the back of strong rebound in U.S dollar which rose against basket of six major currencies. Gold recovered from its earlier losses as bargain hunters once again came into rescue and took benefit of lower prices maintaining “buy at dip” psychology. Gold which has risen to record level for 17 times in last seven weeks has been in consolidation as market awaits result of FED’s next week meeting and details of expected fresh round of Quantitative Easing. The speculation has caused a significant downside pressure for Greenback as more money in circulation will depreciate the currency value boosting the demand for alternative assets such as gold. Most of QE2 news has already been priced in the bullion and many analysts expect U.S dollar to stabilize in near future.
Major U.S. stock indices ended flat on Tuesday as stronger than expected 3rd quarter results from Ford Motors and Coach along with better than expected consumer confidence numbers outweighed the losses in Material sector. Before the market open, it was reported that the S&P/Case-Shiller 20-city August home price index increased by 1.7% from August 2009, which was below the 2.1% growth predicted by economists. The market trading at six-month highs moved sideways, is looking ahead to next week’s heavy schedule of long-awaited events: FED meeting in which the central bank is expected to announce a fresh round of monetary easing measures, midterm congressional elections and October Non-Farm payroll report. Recently some positive economic data has surprised the traders and improved economic outlook has calmed fears of double dip recession. Much depends on next week’s Job report because market argues despite better economic data; job market has been on the slide. Unless labour market improves economy cannot be considered on the path to a sustained recovery. If economy starts showing true signs of improvement, demand for safe haven assets takes a hit and gold will be its biggest victim as economic stability takes the shine away from precious metal. Main European markets edged lower, weighed by disappointment with earnings from Swiss bank UBS AG.
U.S dollar stole the show in yesterday’s trading as it bounced back from moderate losses a day earlier and rose
by 0.7% against basket of six major currencies. A stronger dollar is usually a negative for commodities such as gold because it makes them more expensive to holders of other currencies, diminishing their investment appeal. Gold-dollar inverse correlation was slightly damaged yesterday as a significant rise in greenback could not hurt gold prices although it did put a lid on bullion’s gains. Gold recovery was mainly due to “Buy at Dip” mentality as bargain hunters once again came into play. According to Newswire report physical demand for bullion remains strong in Asian countries which has also limited any downside in gold prices. As mentioned above, analysts believe greenback may stabilize in near term and that could trigger a deep correction in gold prices due to negative correlation between the two which has been at its strongest level in a year. We will have a clear picture of gold’s next move after FED’s next meeting. Until then expect a sideways movement with prices trading mainly in the range of 1300-1360.
Gold price started its Tuesday session with a spike to intraday high of $1343.5 an ounce but quickly gave away its slight gains and headed down towards south. Gold remained under selling pressure throughout Asian session and continued to extend losses during earlier European session. Gold fell to its intraday low of $1327.9 an ounce just before markets in North America started their trading day. Bullion found some support in early hours of U.S session and pared almost all its losses in the final session of the day. Gold finished its day a tad above its previous close of $1339.5 at $1340.1 an ounce.
Other Metals:
Silver futures for December delivery closed up 29.0 cent to $23.83 an ounce on Tuesday.
Platinum futures for January delivery rose by $7.00 to $1,704.00 an ounce on NYMEX.
Palladium futures for December delivery rose by $16.65 to $625.45 an ounce.
December N.Y. Copper closed up 1 cent $3.87 a pound on Tuesday.
Gold (News and Views):
December Comex gold closed down $0.30 at $1,338.60 an ounce on Tuesday.
The London P.M. gold fixing was $1,329.50 on Tuesday compared to its previous P.M fixing $1,337.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings stood at 1299.177 tons on October 26 unchanged from previous day.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.52 to 77.65 on Tuesday.
Crude Oil for October delivery rose by $0.03 to settle at $82.55 on Tuesday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Indian jewelry demand appears to be holding up even with gold at historically high prices, says a research note from Commerzbank. Analysts cite reports from the Bombay Bullion Association saying that imports into the key consuming nation of India could top 40 tons in October and that imports for the full year could
reach last year’s level of 340. “Jewelry demand is evidently accustomed to the higher price level,” Commerzbank says. “Slight drops in prices are being used as buying opportunities even at the current high level.” This is reflected in a strong demand for gold in India in the run-up to the early-November Diwali festival, the bank says.
Gold assets in exchange-traded products fell 1.63 metric tons to 2,096.41 tons yesterday, the seventh straight decline, according to data compiled by Bloomberg from 10 providers.
Factors Affecting Gold Price Yesterday:
A stronger tone in the dollar exerted some pressure on gold and silver in London trading, say analysts with GoldCore. “Physical demand remains robust with buyers continuing to accumulate on the dips. With monetary easing set to continue and indeed deepen in the coming months, this is likely to continue,” GoldCore says.
That gold and other commodities managed to at times move higher on a day the dollar is stronger sent a very powerful message about demand, said Richard Ross, a technical analyst at Auerbach & Grayson in New York.
“There’s general demand for commodities, the story is more than the dollar” even though the U.S. currency remains a critical aspect of commodity price movements, he said.
Frank McGhee, head precious metals trader of Chicago-based Integrated Brokerage Services, said gold's positive turnaround was aided by technical buying as the metal shrugged off a stronger dollar.
"At this point, it's all technicals. Gold had originally gotten back to trade lock-step with the euro/dollar, but that was disconnected after gold did not confirm a breakdown ...," McGhee said.
There was consumer confidence data ... it failed to weaken the dollar," said analyst Eugen Weinberg of Commerzbank. "It is maybe helping a little bit as well -- otherwise gold is vulnerable to further profit taking."
In a daily note, EverBank World Markets president Chuck Butler surmised that Tuesday's dollar gain could be attributable to U.S. traders not being pleased with the G20 results on the premises that the FOMC may not carry out as much quantitative easing as the market has expected. "So why are the U.S. traders thinking this way, when the foreign markets traders and me believe the amount of the QE will be larger than $1 trillion? ... I really don't have an answer for you on why here in the U.S. traders are buying dollars."
Gold Future Outlook:
Newsletter writer Dennis Gartman says gold’s recent correction has taken the metal from “over-extended back toward long-term technical health.” He describes himself as remaining “steadfastly bullish of gold in non-U.S. dollar terms.” He describes silver’s fundamentals are “demonstrably more powerful” than those for gold, but adds that he tends to focus on gold due to silver’s volatility. “But can we imagine why one might wish to be long of silver as well as long of gold? Of course we can, and we shall simply suggest that owning silver in sterling terms is as wise as owning gold in those same terms; the volatility is actually reduced and the trend is perhaps even more clearly defined.”
Goldcore puts chart support for spot gold at $1,317 an ounce, with resistance at $1,348 and $1,385.
"At the moment this (QE) is the most important factor," said Commerzbank's Weinberg. "By now, it should have been priced in to a greater extent. At the moment the market is buying the rumor and I wouldn't be surprised if it sells the fact when it comes."
The gold rally has “gone too far, too fast,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago. “Such breakouts are usually indicative of a market engine that surges forward on its last fumes before eventually exhausting its fuel supply.”
Earlier, gold rose as much as 0.4 percent on bets the greenback will resume a slide, said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
“Metal traders believe the dollar is going to continue downward, and they’re positioning for the outcome after the Fed meeting,” Lesh said. “The dollar is inherently weak, and so far, we’ve had a very minor corrective bounce. The trend hasn’t changed by any means.”
Technical Analysis (by Jim Wyckoff):
From an important technical perspective, December gold futures closed nearer the session high Tuesday. Bulls need to show some good price strength this week to repair the near-term chart damage that was inflicted last week. Bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at Tuesday's high of $1,343.80 and then at this week's high of $1,349.50.
Support is seen at Tuesday's low of $1,328.10 and then at $1,325.00.
Wyckoff's Market Rating: 7.0.
Daily Gold and Silver Expected Range:
Gold: US$1318- $1358
Silver: US$23.05 - $24.10
Chart of the Day (by Phil Smith):
Gold has pulled back a bit from its very overbought condition.
Gold had accelerated away from the uptrend line but then bounced nicely off the Fibonacci Projection target of 1,378 we drew on a while ago. See chart two. The target for this correction is 1,293 as a first stop.
Turnover has come down and now the MACD on the daily has actually crossed to the downside so we could be into a new intermediate trend down.
The rise has, until now, been backed up by the MACD study but the Slow Stochastic broke down badly and
gave us some false signals.
The correlations for gold are actually normalizing at the moment but this may be temporary. Nevertheless the usual negative correlation with the dollar is back in place and the dollar is moving steadily to the downside.
I’m still watching for the beginnings of a large topping pattern at these levels. When the turnover in the market falls there is likely a lot of ‘air’ under this price. Watch the turnover very carefully.
27 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1346 1353 1362
1st support 2nd support 3rd support
Today’s support US$ 1331 1322 1315
Today’s pivot point US$ 1337
The Day’s Story:
Spot Gold ended flat on Tuesday after falling down by more than 1% earlier during the session. Gold came under pressure at the back of strong rebound in U.S dollar which rose against basket of six major currencies. Gold recovered from its earlier losses as bargain hunters once again came into rescue and took benefit of lower prices maintaining “buy at dip” psychology. Gold which has risen to record level for 17 times in last seven weeks has been in consolidation as market awaits result of FED’s next week meeting and details of expected fresh round of Quantitative Easing. The speculation has caused a significant downside pressure for Greenback as more money in circulation will depreciate the currency value boosting the demand for alternative assets such as gold. Most of QE2 news has already been priced in the bullion and many analysts expect U.S dollar to stabilize in near future.
Major U.S. stock indices ended flat on Tuesday as stronger than expected 3rd quarter results from Ford Motors and Coach along with better than expected consumer confidence numbers outweighed the losses in Material sector. Before the market open, it was reported that the S&P/Case-Shiller 20-city August home price index increased by 1.7% from August 2009, which was below the 2.1% growth predicted by economists. The market trading at six-month highs moved sideways, is looking ahead to next week’s heavy schedule of long-awaited events: FED meeting in which the central bank is expected to announce a fresh round of monetary easing measures, midterm congressional elections and October Non-Farm payroll report. Recently some positive economic data has surprised the traders and improved economic outlook has calmed fears of double dip recession. Much depends on next week’s Job report because market argues despite better economic data; job market has been on the slide. Unless labour market improves economy cannot be considered on the path to a sustained recovery. If economy starts showing true signs of improvement, demand for safe haven assets takes a hit and gold will be its biggest victim as economic stability takes the shine away from precious metal. Main European markets edged lower, weighed by disappointment with earnings from Swiss bank UBS AG.
U.S dollar stole the show in yesterday’s trading as it bounced back from moderate losses a day earlier and rose
by 0.7% against basket of six major currencies. A stronger dollar is usually a negative for commodities such as gold because it makes them more expensive to holders of other currencies, diminishing their investment appeal. Gold-dollar inverse correlation was slightly damaged yesterday as a significant rise in greenback could not hurt gold prices although it did put a lid on bullion’s gains. Gold recovery was mainly due to “Buy at Dip” mentality as bargain hunters once again came into play. According to Newswire report physical demand for bullion remains strong in Asian countries which has also limited any downside in gold prices. As mentioned above, analysts believe greenback may stabilize in near term and that could trigger a deep correction in gold prices due to negative correlation between the two which has been at its strongest level in a year. We will have a clear picture of gold’s next move after FED’s next meeting. Until then expect a sideways movement with prices trading mainly in the range of 1300-1360.
Gold price started its Tuesday session with a spike to intraday high of $1343.5 an ounce but quickly gave away its slight gains and headed down towards south. Gold remained under selling pressure throughout Asian session and continued to extend losses during earlier European session. Gold fell to its intraday low of $1327.9 an ounce just before markets in North America started their trading day. Bullion found some support in early hours of U.S session and pared almost all its losses in the final session of the day. Gold finished its day a tad above its previous close of $1339.5 at $1340.1 an ounce.
Other Metals:
Silver futures for December delivery closed up 29.0 cent to $23.83 an ounce on Tuesday.
Platinum futures for January delivery rose by $7.00 to $1,704.00 an ounce on NYMEX.
Palladium futures for December delivery rose by $16.65 to $625.45 an ounce.
December N.Y. Copper closed up 1 cent $3.87 a pound on Tuesday.
Gold (News and Views):
December Comex gold closed down $0.30 at $1,338.60 an ounce on Tuesday.
The London P.M. gold fixing was $1,329.50 on Tuesday compared to its previous P.M fixing $1,337.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings stood at 1299.177 tons on October 26 unchanged from previous day.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.52 to 77.65 on Tuesday.
Crude Oil for October delivery rose by $0.03 to settle at $82.55 on Tuesday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Indian jewelry demand appears to be holding up even with gold at historically high prices, says a research note from Commerzbank. Analysts cite reports from the Bombay Bullion Association saying that imports into the key consuming nation of India could top 40 tons in October and that imports for the full year could
reach last year’s level of 340. “Jewelry demand is evidently accustomed to the higher price level,” Commerzbank says. “Slight drops in prices are being used as buying opportunities even at the current high level.” This is reflected in a strong demand for gold in India in the run-up to the early-November Diwali festival, the bank says.
Gold assets in exchange-traded products fell 1.63 metric tons to 2,096.41 tons yesterday, the seventh straight decline, according to data compiled by Bloomberg from 10 providers.
Factors Affecting Gold Price Yesterday:
A stronger tone in the dollar exerted some pressure on gold and silver in London trading, say analysts with GoldCore. “Physical demand remains robust with buyers continuing to accumulate on the dips. With monetary easing set to continue and indeed deepen in the coming months, this is likely to continue,” GoldCore says.
That gold and other commodities managed to at times move higher on a day the dollar is stronger sent a very powerful message about demand, said Richard Ross, a technical analyst at Auerbach & Grayson in New York.
“There’s general demand for commodities, the story is more than the dollar” even though the U.S. currency remains a critical aspect of commodity price movements, he said.
Frank McGhee, head precious metals trader of Chicago-based Integrated Brokerage Services, said gold's positive turnaround was aided by technical buying as the metal shrugged off a stronger dollar.
"At this point, it's all technicals. Gold had originally gotten back to trade lock-step with the euro/dollar, but that was disconnected after gold did not confirm a breakdown ...," McGhee said.
There was consumer confidence data ... it failed to weaken the dollar," said analyst Eugen Weinberg of Commerzbank. "It is maybe helping a little bit as well -- otherwise gold is vulnerable to further profit taking."
In a daily note, EverBank World Markets president Chuck Butler surmised that Tuesday's dollar gain could be attributable to U.S. traders not being pleased with the G20 results on the premises that the FOMC may not carry out as much quantitative easing as the market has expected. "So why are the U.S. traders thinking this way, when the foreign markets traders and me believe the amount of the QE will be larger than $1 trillion? ... I really don't have an answer for you on why here in the U.S. traders are buying dollars."
Gold Future Outlook:
Newsletter writer Dennis Gartman says gold’s recent correction has taken the metal from “over-extended back toward long-term technical health.” He describes himself as remaining “steadfastly bullish of gold in non-U.S. dollar terms.” He describes silver’s fundamentals are “demonstrably more powerful” than those for gold, but adds that he tends to focus on gold due to silver’s volatility. “But can we imagine why one might wish to be long of silver as well as long of gold? Of course we can, and we shall simply suggest that owning silver in sterling terms is as wise as owning gold in those same terms; the volatility is actually reduced and the trend is perhaps even more clearly defined.”
Goldcore puts chart support for spot gold at $1,317 an ounce, with resistance at $1,348 and $1,385.
"At the moment this (QE) is the most important factor," said Commerzbank's Weinberg. "By now, it should have been priced in to a greater extent. At the moment the market is buying the rumor and I wouldn't be surprised if it sells the fact when it comes."
The gold rally has “gone too far, too fast,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago. “Such breakouts are usually indicative of a market engine that surges forward on its last fumes before eventually exhausting its fuel supply.”
Earlier, gold rose as much as 0.4 percent on bets the greenback will resume a slide, said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
“Metal traders believe the dollar is going to continue downward, and they’re positioning for the outcome after the Fed meeting,” Lesh said. “The dollar is inherently weak, and so far, we’ve had a very minor corrective bounce. The trend hasn’t changed by any means.”
Technical Analysis (by Jim Wyckoff):
From an important technical perspective, December gold futures closed nearer the session high Tuesday. Bulls need to show some good price strength this week to repair the near-term chart damage that was inflicted last week. Bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at Tuesday's high of $1,343.80 and then at this week's high of $1,349.50.
Support is seen at Tuesday's low of $1,328.10 and then at $1,325.00.
Wyckoff's Market Rating: 7.0.
Daily Gold and Silver Expected Range:
Gold: US$1318- $1358
Silver: US$23.05 - $24.10
Chart of the Day (by Phil Smith):
Gold has pulled back a bit from its very overbought condition.
Gold had accelerated away from the uptrend line but then bounced nicely off the Fibonacci Projection target of 1,378 we drew on a while ago. See chart two. The target for this correction is 1,293 as a first stop.
Turnover has come down and now the MACD on the daily has actually crossed to the downside so we could be into a new intermediate trend down.
The rise has, until now, been backed up by the MACD study but the Slow Stochastic broke down badly and
gave us some false signals.
The correlations for gold are actually normalizing at the moment but this may be temporary. Nevertheless the usual negative correlation with the dollar is back in place and the dollar is moving steadily to the downside.
I’m still watching for the beginnings of a large topping pattern at these levels. When the turnover in the market falls there is likely a lot of ‘air’ under this price. Watch the turnover very carefully.
gold and forex forecast
Crude Oil:
Support 81.35 80.80 80.30 79.50 79.00
Resistance 81.85 82.70 83.35 83.95 84.40
Recommendation Our morning expectation remains valid.
Gold:
Support 1325.00 1320.00 1314.00 1307.00 1299.00
Resistance 1339.00 1345.00 1348.00 1352.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1339.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
Silver:
Support 23.60 23.40 23.35 23.25 23.15
Resistance 23.85 23.95 24.15 24.30 24.40
Recommendation Our morning expectations remain valid.
Euro:
Support 1.3770 1.3725 1.3670 1.3630 1.3580
Resistance 1.3850 1.3890 1.3920 1.3980 1.4035
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.3850 targeting 1.3740 and stop loss above 1.3920, might be appropriate.
Great British Pound (GBP):
Support 1.5800 1.5725 1.5645 1.5620 1.5560
Resistance 1.5880 1.5940 1.6000 1.6040 1.6070
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.5880 targeting 1.5645 and stop loss above 1.6000, might be appropriate.
Support 81.35 80.80 80.30 79.50 79.00
Resistance 81.85 82.70 83.35 83.95 84.40
Recommendation Our morning expectation remains valid.
Gold:
Support 1325.00 1320.00 1314.00 1307.00 1299.00
Resistance 1339.00 1345.00 1348.00 1352.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1339.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
Silver:
Support 23.60 23.40 23.35 23.25 23.15
Resistance 23.85 23.95 24.15 24.30 24.40
Recommendation Our morning expectations remain valid.
Euro:
Support 1.3770 1.3725 1.3670 1.3630 1.3580
Resistance 1.3850 1.3890 1.3920 1.3980 1.4035
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.3850 targeting 1.3740 and stop loss above 1.3920, might be appropriate.
Great British Pound (GBP):
Support 1.5800 1.5725 1.5645 1.5620 1.5560
Resistance 1.5880 1.5940 1.6000 1.6040 1.6070
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.5880 targeting 1.5645 and stop loss above 1.6000, might be appropriate.
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