(Kitco News) – Gold prices are modestly higher and trading near Monday’s three-week high in early dealings Tuesday. Some more safe-haven buying and short covering in the futures market are featured, following decent gains posted Monday. Unrest in the Middle East and weak Chinese economic data released Monday are working in favor of the yellow metal. February Comex gold was last up $4.70 at $1,079.90 an ounce. March Comex silver was last up $0.174 at $14.015 an ounce.
There is still some anxiety in the marketplace Tuesday, but not as much as Monday. China’s central bank on Tuesday injected 130 billion yuan in short-term funds into its banking system and also intervened in the foreign exchange market to support the yuan. This helped to somewhat stabilize Asian stock markets following Monday’s strong selling pressure. Still, Chinese and world stock indexes were feeling a bit more selling pressure Tuesday.
What has been a surprising development this week is the inability of crude oil prices to rally in the face of significantly heightened tensions in the Middle East. In recent years, such developments would have quickly popped the price of crude oil by at least several dollars a barrel. However, this week the worries about a worldwide oil glut and slowing worldwide economic growth (meaning less demand for oil) are trumping the Middle East friction to keep oil prices from rallying. It’s somewhat ironical that crude oil prices seeing some selling pressure Monday also helped to pressure the U.S. stock market.
In other overnight news, inflation in the Euro zone remains stubbornly low. The European Union statistics agency on Tuesday reported consumer prices in December were up 0.2%, year-on-year. A rise of 0.3% was forecast. The European Central Bank wants to see an annual inflation rate of 2.0%.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the ISM New York report on business, and domestic auto industry sales.
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Wyckoff’s Daily Risk Rating: 3.0 (Trader and investor market risk aversion is somewhat 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, gold bears still have the firm overall near-term technical advantage. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the December high of $1,088.30. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at the contract low of $1,045.40. First resistance is seen at Monday’s high of $1,083.00 and then at $1,088.30. First support is seen at the overnight low of $1,071.90 and then at Monday’s low of $1,061.00. Wyckoff’s Market Rating: 2.0
Silver bears have the firm overall near-term technical advantage. Bulls’ next upside price breakout objective is closing December futures prices above solid technical resistance at the December high of $14.64 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $13.62. First resistance is at Monday’s high of $14.195 and then at $14.425. Next support is seen at the overnight low of $13.845 and then at last week’s low of $13.75. Wyckoff’s Market Rating: 2.0.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
