Morning Gold Fix – November 17, 2011
FMX | Connect – www.fmxconnect.com - (Reported 11/17/2011)
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 $1,774.30 per troy ounce on Wednesday, a loss of $7.90 for the day.
December gold was down $26.9 to $1747.4 per 100 troy ounces as of 8:35 am EST this morning. The December U.S. dollar index was up 0.044 to $78.250. January platinum was down $23.1 to $1608.1 per 50 troy ounces. December silver was down 66.2 cents to $33.160.
Market Recap:
Trading volumes were higher after a slow start to the week, but December Gold was resolute: The metal has spent most of the month trading between 1750 and 1800 and today was no different. Moody’s downgraded 10 German banks today and while many investors do like owning the metal as a hedge for currency risk (printing money) others have no choice but to liquidate to cover margin calls for other assets. The dollar is one of the major drivers right now, but we are well aware of how quickly this can change. Gold and the Dollar moved much more closely in tandem during the last great rally, and this trend may return (margin requirements are of course a part of this equation).
December options expiration was the first item on the agenda for traders today, with the 1800 and 1850 Call continuing to experience heavy sales. The front months saw a fresh spate of interest in puts. Both the January 1680 put and February 1650 put realized buy-side demand. Looking farther into 2012, calls performed stronger. Investors are more optimistic on the metal’s long term prospects and this can be seen through such trades as the purchase of the December 2012 3000/4000 Call Spread. Volatility was largely unchanged on the day.
Market Prices
In the News
Bloomberg (Reported 11/17/2011)
Gold will lead a rally in commodities in 2012 as Europe’s sovereign-debt crisis continues to roil financial markets, spurring demand for the metal as a haven asset, according to Morgan Stanley. “There’s a very strong chance that gold will re-challenge successfully the all-time high,” said Peter Richardson, chief metals economist at Morgan Stanley Australia Ltd., who has studied the metals markets for more than two decades. Bullion may climb to a record $2,200 an ounce in the first half, he said in an interview. He also backed copper. Gold Top Pick at Morgan Stanley as Europe Debt Spurs Demand
Reuters (Reported 11/17/2011)
Gold fell slightly on Thursday as worries of a contagion of the Euro zone debt crisis from peripheral to core economies kept investors nervous and made some liquidate profitable gold positions to cover losses in other asset classes. The cost of insuring French and Spanish 5-year government debt against default rose to record highs and the spread between French 10-year government bonds and their German equivalents jumped to a fresh euro-era high on fears the debt crisis was deepening and spreading to the larger euro zone economies. Gold slips on Euro debt contagion worries
KITCO (Reported 11/17/2011)
The U.S. dollar index is again trading firmer Thursday morning and hit another fresh five-week high overnight, on safe-haven demand due to the EU debt crisis. The dollar index bulls have gained fresh upside near-term technical momentum this week and that is bearish for the precious metals. Comex Gold Lower On Firmer U.S. Dollar Index, Weaker Crude Oil Prices
Technical Overview
DEC GOLD
In general the market is still bullish, but rallies have been stopped against previous downturn levels / resistance associated with the 1789-1808 area. A close over 1803 is needed to extend rallies to 184450. The blunted advance against 1803+ alerts for a possible swing high. Look for further pullbacks with a drop under last Thursday’s low propelling declines to attack 172810* for a reversing turn into a sustained correction phase.
DEC SILVER
The market remains in a short term bull upturn. A surge back over recent weekly highs or close over 3515 should spark a bull leg reaching for 3700. Recent setbacks caution for additional flagging congestion. View sideways trade over 3305+ as a staging level to attempt further rallies. A roll off through 3305-3273 should drive selloffs to test 32135* support. A close under 32135* marks a lasting turn back to negative trade.
DEC COPPER
The market is trying to rebound off 33055* support, but trade will need a pop over 360 or close over 35850* to rekindle bull forces. If trade struggles in the 350’s and rejected by 35850*, be ready for follow through selloffs. A slip under 33840 is negative. A close under 33055* is bearish and could add to selloffs into the low 320’s. If trade holds 33840, then we may see bull flagging days.
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