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A.M. Kitco Metals Roundup: Comex Gold Solidly Lower, Below $1,600, amid General Commodity Market Weakness

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By Jim Wyckoff

Comex gold futures prices are solidly lower in early U.S. trading Thursday, as the overall raw commodity sector sees selling pressure following the downbeat FOMC results and after fresh, weak economic data coming out of China overnight. The gold market bulls have quickly faded after briefly gaining some fresh upside technical momentum. Traders and investors will scrutinize a heavy slate of U.S. economic data due for release Thursday. August gold last traded down $19.20 at $1,596.70 an ounce. Spot gold was last quoted down $12.10 an ounce at $1,595.25.  July Comex silver last traded down $0.559 at $27.83 an ounce.

The market place was disappointed with the results of the U.S. Federal Reserve’s Federal Open Market Committee meeting that ended Wednesday afternoon. While most expected the “Twist” operation would be extended, the significantly more downbeat assessment of the U.S. economy from the Fed was a bit of a surprise and sent fresh shudders through the market place. Then overnight China announced weaker manufacturing activity to further depress the market place.

Asian and European stock markets were weaker overnight. Most commodity markets are also under selling pressure early Thursday, led by Nymex crude oil dropping below $80.00 a barrel.

The FOMC and China manufacturing news have, for the moment, overshadowed the festering European Union sovereign debt crisis. Spanish bonds that were auctioned Thursday saw EU era record-high yields fetched. It won’t be long before the EU debt crisis is back on the front burner of the market place—and that could be just what the doctor ordered for the gold market bulls. There has been fresh safe-haven buying interest surface in gold recently when the EU debt crisis escalates.

The U.S. dollar index is near steady Thursday morning but the greenback bulls are fading. The dollar index has been trending lower for three weeks. Meantime, Nymex crude oil futures prices are weaker Thursday morning and slumped to a fresh 8.5-month low of $79.92 a barrel overnight. Crude oil remains in an overall bearish fundamental and technical posture.

The London A.M. gold fix is $1,600.00 versus the previous London P.M. fixing of $1,601.00.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash manufacturing PMI, existing home sales, leading economic indicators, the Philadelphia Fed business survey, and the monthly house price index.

Technically, gold futures bulls have faded. Bulls and bears are back on a level near-term technical playing field. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the June high of $1,642.40. Bears’ next near-term downside price objective is closing prices below solid technical support at $1,556.40. First resistance is seen at the overnight high of $1,608.20 and then at the April low of $1,616.30. First support is seen at Wednesday’s low of $1,590.50 and then at $1,580.00.

July silver futures bears have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above major psychological resistance at $30.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $27.17. First resistance is seen at the overnight high of $28.07 and then at Wednesday’s high of $28.595. Next support is seen at Wednesday’s low of $27.63 and then at $27.17.