By: Jim Wyckoff
September 11, 2013
Gold prices are modestly lower and hit a two-week low in early U.S. trading Wednesday. More risk appetite in the market place this week has been a bearish weight on safe-haven gold. The near-term technical posture for gold has also deteriorated a bit, which is also prompting some chart-based selling pressure in both gold and silver markets. December Comex gold was last down $3.70 at $1,360.30 an ounce. Spot gold was last quoted down $3.20 at $1360.50. December Comex silver last traded down $0.006 at $23.01 an ounce.
The likelihood of a U.S. military attack on the Syrian regime continues to decrease this week, which has boosted investor risk appetite worldwide. That’s bullish for world stock markets and most other markets—but bearish for safe-haven assets such as gold, U.S. Treasuries and German bonds. President Obama said in a speech to U.S. citizens Tuesday night that he has asked the Congress to postpone a vote on using military force against Syria, and said he has asked Secretary of State Kerry to meet with Russian officials, regarding the Russian overture to put Syria’s chemical weapons under international control. U.S. polls are showing U.S. citizens are becoming less and less in favor of a U.S. military operation against Syria’s regime.
However, in the volatile Middle East there always seems to be trouble brewing—if not one place then another. The market place is again watching Egypt. In the Sinai Peninsula, three Egyptian soldiers were killed in two bomb explosions Wednesday. That news gave crude oil prices a brief, modest boost overnight.
On the economic front, in another sign of rising world interest rates, German 10-year bond yields on Wednesday rose above 2.0% for the first time in nearly two years. A new bond auction saw the German 10-year yield hit 2.06%.
The next important piece of U.S. economic news on the docket this week will be Thursday morning’s weekly jobless claims report. Many traders and investors are looking ahead to next week’s meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC). A slight majority of the market place believes the U.S. central bank at next week’s meeting will announce it will begin to scale back, or “taper” its monthly bond-buying program. For the past several weeks the market place has been fixated on what the U.S. central bank will announce at the conclusion of next week’s FOMC meeting.
U.S. economic data due for release Wednesday includes the weekly mortgage applications survey, monthly wholesale trade, and the weekly DOE liquid energy stocks report.
The London A.M. gold fix is $1,365.25 versus the previous P.M. fixing of $1,358.25.
Technically, December gold futures bulls have the slight overall near-term technical advantage, but are fading and need to show fresh power soon to keep it. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,400.00. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at $1,350.00. First resistance is seen at the overnight high of $1,368.70 and then at $1,373.60. First support is seen at the overnight low of $1,356.00 and then at $1,350.00.
December silver futures hit a two-week low overnight. Bulls still have the slight overall near-term technical advantage, but are fading and need to show fresh power soon to keep their edge. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the August high of $25.16 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $22.32. First resistance is seen at the overnight high of $23.25 and then at $23.50. Next support is seen at the overnight low of $22.785 and then at $22.50
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