Morning Gold Fix – November 22, 2011

FMX | Connect – www.fmxconnect.com - (Reported 11/22/2011)

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.

December Gold settled at $1,678.60 per troy ounce on Monday, a loss of $46.50 for the day.

December gold was up $9.4 to $1688.0 per 100 troy ounces as of 8:45 am EST this morning. The December U.S. dollar index was up 0.092 to $78.366. January platinum was up $8.3 to $1552.1 50 troy ounces. December silver was up 44.9 cents to $31.565.

Market Recap:

Markets opened on a grim note Monday morning; not only were risk assets systematically devastated by concerns out of Europe, the Super Committee went ahead and reminded the world that the largest economy has almost as large a lack of political leadership. The Super Committee's failure to find compromise over a budget could trigger a 1.2 trillion dollar spending cut across a wide swathe of government programs (including the military) starting January 2013. While expectations of the Committee were never particularly high to begin with the sheer scope of the cuts certainly does cast a shadow over other economic data, including better than expected U.S. existing home sales. Tomorrow, market participants can also expect revisions to the 2nd Quarter GDP as well as minutes from the last FOMC meeting.

December Gold traded lower overnight, and trended lower still during the day. December options expiration is tomorrow, and market participants have had their hands full managing the open interest with the aggressive sell-off. A week ago investors were thinking about whether to hold on to the 1800 Call or not. Who would have guessed that now even the 1700 Call may expire worthless? December calls, conversions, puts and put spreads were all heavily traded. Calls were offered and puts were bid across the term structure. As one might expect, volatility was also bid on the day. February straddles closed $8-10 higher than they opened.

Market Prices

In the News

Bloomberg (Reported 11/22/2011)

Gold rebounded from the lowest level in almost four weeks in London as debt concerns in the U.S. and Europe spurred demand for the metal as a protection of wealth. A U.S. Congress budget supercommittee failed to reach agreement on reducing the budget deficit and data today may show European consumer confidence sank to a two-year low, according to a Bloomberg News survey of economists. Holdings in exchange- traded products backed by gold climbed to a record yesterday as prices dropped 2.7 percent, the most in eight weeks.  Gold Rebounds From One-Month Low as Fund Holdings Gain to Record on Demand


Reuters (Reported 11/22/2011)

Gold recovered strongly on Tuesday as buyers from China saw value in lower prices and as panic over western world debt subsided in the wider financial markets, lessening the need to sell gold to raise dollar funding. But the respite was seen as temporary, with investors rattled by the continuing stress on euro zone debt markets, and also by the apparent inability of U.S. officials to come to grips with debt in their own economy. Gold rallies but debt woes dominate


Kitco (Reported 11/22/2011)

The so-called super committee of U.S. congress members failed to agree on U.S. spending cuts, which was confirmed by congressional leaders Monday. Meantime, the EU debt crisis has stabilized just a wee bit Tuesday following a somewhat well-subscribed Italian bond auction. The market place was also relieved after key ratings agencies said they would not immediately downgrade the U.S. credit rating after the super committee failed to reach agreement on spending cuts. There are key EU economic reports out later this week, and with the U.S. Thanksgiving holiday on Thursday, many U.S. traders and investors are a bit worried that with U.S. markets closed on Thursday, the world market place may be able to get the jump on the U.S., regarding any fresh, major EU developments that could occur on Thursday. Comex Gold Higher On Corrective Bounce, Rebound in Commodity Sector 

The market is signaling a peaking turnover and dropping selloffs to a 1667 objective. Trade is poised for follow through selloffs and a close under 1667 could add to selloffs around 1650 as well as 163650. If trade is reluctant to extend under 1667, be ready for modest corrective action within Monday’s selloff. Trade contained by Friday’s sideways congestion will stay bearish. A close over 17190* is needed to boost a recovery to test 1752* resistance.

DEC SILVER

The market is showing a negative turnover, suggesting the past two month recovery was a larger bear flag. Be alert for selloffs to 2980*. A close under 2980* alerts for a larger unfolding break against the late September spike. Any corrections trapped within last Thursday’s downturn under 33285* will quickly bear flag and return to selloffs. A close over 3377* is needed for a turnaround.

DEC COPPER

The market is signaling for another bear wave and testing 33055* support. A close under 33055* is bearish and could add to selloffs into the 322-315 area. If trade holds a close over 33055*, then we may see a couple rebounding days, but trade will likely hang in sideways consolidation under 34545*. A close over 35675* is needed to rekindle bull forces.

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