P.M. Kitco Metals Roundup: Comex Gold Slumps as Stock Markets, Euro Rally; Technical Selling Also Fe

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06 July 2010, 02:03 p.m.
By Jim Wyckoff
Of Kitco News www.kitco.com
Comex gold futures prices closed lower, nearer the session low and hit a fresh six-week low Tuesday. Rallying U.S. and European stock markets and a stronger Euro currency helped to pressure the precious yellow metal. Technically related selling was also seen Tuesday. August gold closed down $13.60 at $1,194.10 an ounce. Spot gold was last quoted down $14.70 at $1,194.50.
European and U.S. stock markets on Tuesday saw corrective rallies after recent selling pressure. Meantime, the Euro currency also saw a short-covering bounce amid a slight increase in investor risk appetite that did pull money away from the gold market. Gold had been supported in recent weeks and months by safe-have buying interest amid weakening European currencies due to the European Union's sovereign debt problems. A report from the Australian central bank on Monday that was upbeat on Australian and Asian economic growth going forward was credited with jump-starting the rallies in the U.S. and European stock markets.
Reports overnight did say that physical demand for gold remains solid despite the recent sell off in futures prices. Many traders and investors are still viewing the recent decline as a bargain-hunting buying opportunity.
The posture of the U.S. Treasury markets on Tuesday still suggests some risk aversion, as T-bond and T-note yields hover near record lows. The low bond and note yields also raise the specter of commodity price deflation, which is the archenemy of all commodity market bulls, including gold.
The latest weekly commitments of traders report from the U.S. Commodity Futures Trading Commission shows managed money accounts reducing net long gold positions by 3,309 contracts, to 222,663 contracts. Meantime, short-selling of gold futures by the managed accounts rose by 1,859 contracts in the latest week.
The London P.M. fixing was $1,195.00 compared to the previous P.M. fixing of $1,208.00.
Technically, August Comex gold futures closed nearer the session low and hit a fresh six-week low Tuesday. Prices also scored a bearish "outside day" down on the daily bar chart--whereby the high was higher and the low was lower than the previous day's trading range, with a lower close. Near-term technical damage has been inflicted in gold futures recently, as a five-month-old uptrend on the daily bar chart has been penetrated on the downside and negated. However, no longer-term technical damage has occurred in the gold market.
Bulls' next upside technical objective is to produce a close above solid chart resistance at $1,230.00 in August futures. Bears' next downside price objective is closing prices below solid technical support at $1,168.00. First resistance is seen at $1,200.00 and then at $1,210.00. Support is seen at Tuesday's low of $1,189.50 and then at $1,185.00. Wyckoff's Market Rating: 6.5.
December silver futures closed up 14.0 cents at $17.92 an ounce Tuesday. Prices closed near mid-range after poking to a fresh four-week low early on. Short covering was featured in silver Tuesday. Near-term chart damage has been inflicted recently. Prices are in a three-week-old downtrend on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at the June low of $17.335. Bulls' next upside price objective is closing prices above solid technical resistance at $18.88 an ounce. First resistance is seen at $18.00 and then at $18.145. Next support is seen at Tuesday's low of $17.68 and then at $17.50. Wyckoff's Market Rating: 6.0.
December N.Y. copper closed up 560 points at 299.35 cents Tuesday. Prices closed near mid-range and saw short covering in a bear market. Higher U.S. and world stock markets Tuesday did help to lift copper prices. Copper bears do still have the overall near-term technical advantage. The next downside price objective for the bears is closing prices below solid technical support at the June low of 277.00 cents. Bulls' next upside objective is pushing and closing prices above solid technical resistance at last week's high of 313.75 cents. First resistance is seen at Tuesday's high of 304.20 cents and then at 307.50 cents. First support is seen at 295.00 cents and then at Tuesday's low of 292.75 cents. Wyckoff's Market Rating: 3.0.
 
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