Wednesday January 14, 2015 8:40 AM
(Kitco News) - Gold prices are moderately higher in early U.S. trading Wednesday, pushing to the daily high in the wake of a downbeat U.S. economic report. In overnight trading the yellow metal saw some mild profit taking and chart consolidation after prices Tuesday hit an 11-week high. February Comex gold was last up $3.70 at $1,238.00 an ounce. Spot gold was last up $7.40 at $1,238.75. March Comex silver last traded down $0.276 at $16.875 an ounce.
U.S. advance retail sales came in at down 0.9% in December. That “miss” to the downside boosted gold prices, U.S. Treasury prices and pressured the U.S. stock indexes. Retail sales were expected to have risen by 0.1% in December.
European stock markets and U.S. stock indexes are under pressure Wednesday, amid a “risk-off” trader and investor mentality, due to world economic growth worries. Such is limiting the downside price pressure in safe-haven gold. Late Tuesday the World Bank released its global economic outlook and said overall world growth would be 3% this year, up from 2.6% in 2014. However, the World Bank cut its 2015 forecast, which had earlier called for 3.4% world economic growth.
European stock markets were also pressured by a court ruling that ostensibly approved the quantitative easing move the European Central Bank will likely announce soon. However, selling pressure in European stocks was limited by an upbeat report on Euro zone industrial output released Wednesday.
In another worrisome development on the deflation front, copper prices fell to a 5.5-year low overnight. Copper futures prices this week have plunged. The fact this major industrial metal is in a free fall, along with crude oil prices, does not at all bode well for the raw commodity sector bulls—at least for the near term. Grain futures prices are also eroding this week.
Another U.S. Federal Reserve official said Tuesday it would be a bad idea for the Fed to raise interest rates in 2015. Minneapolis Fed president Narayana Kocherlakota said a U.S. rate hike would impede the U.S. jobs market recovery.
Crude oil prices are near steady early Wednesday, after falling to a nearly six-year low on Tuesday, at $44.20 a barrel basis February Nymex futures. The downdraft in crude oil has been unsettling to much of the market place, including the stock markets. The other key “outside market” on Wednesday finds the U.S. dollar index slightly lower but still not far below last week’s 10-year high.
The next major data point coming into focus for traders and investors is the January 22 meeting of the European Central Bank. The specter of price deflation and rhetoric coming from ECB officials suggest the central bank will soon initiate monetary stimulus in the forming of quantitative easing.
U.S. economic data out Wednesday includes the weekly MBA mortage applications survey, import and export price indexes, retail sales, manufacturing and trade inventories and sales, the weekly DOE liquid energy stock report, and the Federal Reserve’s beige book.
(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)
Wyckoff’s Daily Risk Rating: 6.0 (Market risk perceptions have up-ticked a bit due to the plunge in crude oil prices, and with attention still on troubles in the European Union.
(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.
The London A.M. gold fixing is $1,228.75 versus the previous P.M. fixing of $1,231.50.
Technically, gold bulls have the slight overall near-term technical advantage as prices hit an 11-week high Tuesday. The gold bulls’ next upside ear-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,256.20. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,200.00. First resistance is seen at $1,239.00 and then at Tuesday’s high of $1,244.50. First support is seen at the overnight low of $1,224.90 and then at $1,220.00.
March silver futures bears have the slight overall near-term technical advantage. However, prices hit a four-week high Tuesday and the bulls have gained a bit of upside momentum. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the January low of $15.51. First resistance is seen at the overnight high of $17.095 and then at Tuesday’s high of $17.215. Next support is seen at the overnight low of $16.56 and then at this week’s low of $16.43.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
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