(Kitco News) - Gold prices are moderately up and scored a two-week high in early U.S. trading Wednesday. Some chart-based buying is seen as prices scored an upside “breakout” from a near-term trading range on the daily chart. The key “outside markets” are also bullish for the precious metals today, as the U.S. dollar index is lower and crude oil prices are higher. December Comex gold was last up $9.90 an ounce at $1,272.80. December Comex silver was last up $0.132 at $17.77 an ounce.
There as some mostly upbeat economic data coming out of China Wednesday and that’s also friendly for the precious metals. China is a major importer of commodities, including metals. China’s economy grew by 6.7% in the third quarter, year-on-year, which was in line with market expectations. The figure was also the same as the second quarter. China also reported its retail sales increased by 10.7% in September, from a year earlier. That number was also in line with expectations. China’s industrial production was up 6.1% in September, year-on-year. That number was a miss to the downside. Overall, the data from the world’s second-largest economy was deemed upbeat. Indeed, other major world economies’ economic growth numbers don’t come anywhere close to China’s.
The World Gold Council said Wednesday that the recent decline in gold prices should spur more demand for physical gold from China.
Higher crude oil prices Wednesday are bullish for the raw commodity sector in general, including the precious metals. Nymex crude is trading above $51.00 a barrel. One analyst says that OPEC’s decision to curb its collective oil production is a sign that OPEC’s original strategy of all-out oil production in order to defeat U.S. shale oil production was a failure. The other key “outside market” finds the U.S. dollar index trading lower Wednesday on a corrective pullback after hitting a seven-month high on Monday. The weaker greenback on this day is also a bullish element for the raw commodity sector.
Two U.S. Federal Reserve officials give speeches Wednesday. Those talks will be closely monitored for any clues on the future direction of U.S. monetary policy.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction, the Federal Reserve’s beige book, and the weekly DOE liquid energy stocks report.
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Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated today.)
(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 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).
Technically, December gold futures bears have the overall near-term technical advantage but bulls are having a good week. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the October low of $1,243.20. First resistance is seen at $1,280.00 and then at $1,290.00. First support is seen at the overnight low of $1,261.10 and then at $1,255.90. Wyckoff’s Market Rating: 4.0
December silver bears have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $18.46 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is at last week’s high of $17.855 and then at $18.04. Next support is seen at the overnight low of $17.60 and then at last week’s low of $17.315. Wyckoff's Market Rating: 3.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
