Morning Gold Fix – October 12, 2011
FMX | Connect – www.fmxconnect.com - (Reported 10/12/2011)
The following is a summary of yesterday’s US gold activity and a recap of Asia & European markets overnight. It includes our proprietary options analytics and news stories from industry professionals.
Summary
December Gold settled at $1,661.00 per troy ounce on Tuesday, a loss of $9.80 for the day.
December gold was up $28.2 to $1689.2 per 100 troy ounces as of 8:30 am EST this morning. The Dec U.S. dollar index was down 0.533 to $77.375. January platinum was up 35.1 to $1553.9 per 50 troy ounces. Dec silver was up 91.7 cents to 32.915.
Market Recap
Gold prices drifted lower on Tuesday, with financial markets eagerly awaiting the results of Slovakia’s vote to approve additional EFSF funding. The current expectation is that Parliament will approve it in the next couple of days, even if the present governing coalition unravels.
Yesterday we noted low trading volumes as a cautionary signal for gold buyers, and today saw a small improvement for both futures and options. Volatility is continuing to regress lower on decreasing European anxiety and bullion remains tethered in a trading range. Options activity was mostly limited to the November and December contracts, and calls were offered aggressively. November call skew is firmly negative two weeks from expiration, presenting a bleak outlook for the immediate future. On balance, market sentiment is somewhere between slightly bearish and flat. Puts remain well bid compared to the relative lack of movement, so it probably shouldn’t come as a surprise that the December 1500 and 1450 puts were sold earlier. Slovakia may reach a decision on the EFSF overnight and could provide impetus to this market.
Market Prices
In the News
Bloomberg (Reported 10/12/2011)
Alcoa Inc. (AA), the largest U.S. aluminum producer, may report a slowdown in its earnings recovery after the lightweight metal used in beverage cans and aircraft erased all this year’s price gains. Third-quarter net income will be 22 cents a share, compared with 9 cents a year earlier, according the average of 15 analysts’ estimates compiled by Bloomberg. That’s 21 percent less than analysts estimated a month ago. Alcoa’s Earnings Recovery Slows on Aluminum Price ‘Headwind’
Reuters (Reported 10/12/2011)
Gold rose 1 percent on Wednesday as the dollar slid to a four-week low against the euro, with the single currency benefiting from hopes that European authorities will successfully agree on a plan to solve the euro zone debt crisis. Physical demand for the precious metal has also been buoyant in Asia, dealers said, and is expected to remain so as the Indian festival season gets underway. Gold climbs as dollar weakens; Slovak vote supports
Kitco (Reported 10/12/2011)
The U.S. dollar index is trading lower Wednesday and hit a fresh three-week low overnight. The dollar index bulls are fading and near-term chart damage has now been inflicted to suggest the index has put in a near-term market top. This is a significantly bullish development for the precious metals market bulls. Crude oil futures prices are trading slightly higher Wednesday morning. Crude oil bulls still have good upside technical momentum to suggest that prices can trade sideways to higher in the near term. This is also a bullish scenario for the precious metals. Comex Gold Solidly Higher, at 3-Week High, As U.S. Dollar Index Slumps
Technical Overview
DEC GOLD
Overall the market is bearish. If trade stays capped by last Tuesday’s outside bear day high, the market will slip lower for sideways congestion at 1630-1605. A close under 1593* will send selloffs to test 1560/154850 support for a larger downturn. However, trade remains lined up to attack over 168150. A surge or close over 168150 signals a breakout and should boost recovery moves to 169180* and 171590*.
DEC SILVER
The market is bearish and may again slip to test 28085* monthly support. A close 3012* is needed to start secondary declines to attack 28085* and the recent swing low. Last week’s sideways higher trade suggests a near term shift back to recovery action and favors additional recovery rallies. A close over 3285 marks a stronger near term upturn and could fuel retracements to test 3519*.
DEC COPPER
The market is bearish. A close under 31455* should renew selloffs to reach under the recent low. Last week’s surge higher is still calling for near term rallies and may stretch for a test of 34635* resistance. A close over 34635* is needed to start a bottoming turn and sustained corrections. A rejection from 34635* calls for a slip back to defensive congestion along the low 320’s.
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