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P.M. Kitco Metals Roundup: Comex Gold Ends Modestly Up on Short Covering, Bargain Hunting and Some Fresh Safe-Haven Demand

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By Jim Wyckoff

Comex gold futures ended the U.S. day session Wednesday modestly higher in choppy and somewhat subdued trading. Prices did move up from early, modestly lower levels on a general rally in the raw commodity sector Wednesday. Short covering and bargain hunting were featured in gold, and there was also some fresh safe-haven demand surfacing ahead of the European Union summit that begins on Thursday. August gold last traded up $2.80 an ounce at $1,577.70. Spot gold was last quoted up $4.70 an ounce at $1,578.25.  July Comex silver last traded down $0.138 at $26.90 an ounce.

It’s a bit of a subdued market place Wednesday, heading into European Union summit meeting on Thursday and Friday. The focus of the EU summit is the bloc’s debt crisis. There are low expectations for concrete results coming out of this latest gathering of EU officials.

Gold did get a modest boost when wire reports said a European Central Bank official said the ECB could indeed still lower its interest rates. That notion was bolstered when some fresh economic data coming out of Germany showed lower inflationary pressures. The ECB lower interest rates would theoretically heighten the specter of commodity price inflation.

In other EU news overnight, Spain’s prime minister said his country cannot endure high borrowing costs much longer. He said “urgent mechanisms” are needed for debt refinancing. The Spanish 10-year bond yield was at 6.8% Wednesday.

German leader Angela Merkel’s hawkish comments on EU country bailouts this week have helped to set the tone of a potentially divisive and unproductive summit. For the past two years the EU debt crisis has been on or near the front burner of the market place, with little progress made by EU leaders during that time.

The smart money in the market place reckons the EU cannot survive in its present form and function. What is more in question is how the EU debt debacle will impact the other major economies of the world in the coming months, with the worry being a worldwide debt contagion emanating from the EU.

The U.S. dollar index was higher Wednesday on safe-haven demand. The greenback bulls have some upside near-term technical momentum. Meantime, Nymex crude oil futures prices were higher on short covering in a bear market. Crude oil remains in a solid overall bearish fundamental and technical posture.

The London P.M. gold fix is $1,573.50 versus the previous London P.M. fixing of $1,576.00.

Technically, August gold futures prices closed nearer the session high Wednesday. Gold market bears still have the overall near-term technical advantage. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears’ next near-term downside price objective is closing prices below solid technical support at the May low of $1,529.30. First resistance is seen at Wednesday’s high of $1,584.60 and then at this week’s high of $1,589.00. First support is seen at Wednesday’s low of $1,563.10 and then at last week’s low of $1,558.60. Wyckoff’s Market Rating: 4.0

July silver futures prices closed near mid-range Wednesday. Bears have the solid overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $29.095 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last October’s low of $26.20. First resistance is seen at Wednesday’s high of $27.275 and then at this week’s high of $27.59. Next support is seen at Wednesday’s low of $26.60 and then at last week’s low of $26.51. Wyckoff’s Market Rating: 3.0.

July N.Y. copper closed up 315 points 334.45 cents Wednesday. Prices closed nearer the session high on short covering and some perceived bargain hunting. Copper bears still have the solid overall near-term technical advantage. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 347.75 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of 323.80 cents. First resistance is seen at Wednesday’s high of 335.50 cents and then at 337.50 cents. First support is seen at 330.00 cents and then at this week’s low of 327.85 cents. Wyckoff’s Market Rating: 3.0.