By: Jim Wyckoff
August 30, 2013
Gold prices are solidly lower in early U.S. trading Friday, on profit-taking pressure from the shorter-term traders, and as odds decrease the U.S. will very soon take military action against Syria. December Comex gold was last down $17.10 at $1,395.70 an ounce. Spot gold was last quoted down $10.90 at $1396.75. September Comex silver last traded down $0.38 at $23.71 an ounce.
Notions of an imminent U.S. military attack on Syria have receded significantly the past 48 hours, as U.S. allies are backing away from supporting or participating in such an endeavor. The U.S.’s staunchest ally, the U.K., saw its parliament late Thursday vote down U.K. use of force against the Syrian regime. Now, the U.S. must decide if it will go it alone on a military operation against Syria and risk the resulting consequences, or back off its threats and risk another set of consequences for doing nothing. This has the world market place a bit calmer than earlier this week, which in turn has put downside price pressure on safe-haven assets like gold and U.S. Treasuries.
There was a fresh batch of European Union economic data released overnight, most of which was upbeat. The number of unemployed in the Euro zone in July fell for the second month in a row. However, the overall unemployment rate in the region was still an all-time high of 12.1%. Meantime Euro zone consumer inflation fell to 1.3% in August from 1.6% in July, on an annual basis. Next week comes a slew of bond issuances from European Union countries. Those auctions will be closely scrutinized for investor demand.
The long U.S. Labor Day holiday weekend is approaching, so trading volumes in many markets Friday are likely to be light. Friday is the last trading day of the month, too. However, once U.S. traders come back to work next Tuesday they will have a full plate of matters upon which to ponder. There is an FOMC meeting in September, at which time many believe the U.S. Fed will decided to change its monetary policy. The important U.S. jobs report is out on Friday, September 6. There is a Group of 20 nations meeting next week. The U.S. congress returns from its summer recess in mid-September and will immediately have to deal with pressing budget matters. And, it’s likely that President Obama early this fall will name a new Federal Reserve chairman.
U.S. economic data due for release Friday includes personal income and outlays, the ISM Chicago business survey, and the University of Michigan consumer sentiment survey.
The London A.M. gold fix is $1,392.75 versus the previous P.M. fixing of $1,407.75.
Technically, December gold futures bulls still have the overall near-term technical advantage. A two-month-old uptrend is in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,450.00. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at $1,384.00. First resistance is seen at $1,400.00 and then at the overnight high of $1,411.50. First support is seen at the overnight low of $1,392.50 and then at $1,384.00.
September silver futures bulls have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $26.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $23.605. First resistance is seen at the overnight high of $24.015 and then at Thursday’s high of $24.415. Next support is seen at the overnight low of $23.445 and then at $23.00.