PM Roundup: Gold Prices Fall For Second Straight Day; $1,625/Oz Area Eyed
By Debbie Carlson of Kitco News
Thursday February 14, 2013 2:25 PM
(Kitco News) - Gold futures prices fell for the second straight day Thursday, with losses accelerating late in the session as bears scratched out new lows ahead of pit settlement.
April gold futures on the Comex division of the New York Mercantile Exchange settled down $9.60 at $1,635.50 an ounce and March silver settled 51.6 cents lower at $30.353 an ounce.
The market was firmer earlier in the session, but had little momentum to sustain the gains. Market watchers said when gold took out the intraday low of $1,636.50, the sell-off picked up a little speed.
“The combination of (poor) European and Japanese economic numbers is near-term bearish for gold. There’s no real threat of inflation. Gold does not like recessions at all. There is some concern that the (economic weakness) will spread to the U.S. and that’s a valid concern as we do not have all that strong growth,” said Sterling Smith, futures specialist, Citibank Institutional Client Group.
The market continues to move in a very choppy pattern, rising to test support and resistance, but not settling on a definitive direction. Kevin Grady, owner, Phoenix Futures, said there wasn’t a particular piece of news that drove prices off their earlier highs.
“This market is so very jittery,” he said.
Grady said earlier in the session price popped higher when the daily open interest figures rose despite the lower price settlement on Wednesday. Open interest is the number of outstanding positions left at the end of the trading session. Higher open interest on a day when prices settle lower is a sign of sellers establishing new shorts. He said there might have been some short-term trading interest in trying to push the market higher to cause those shorts to cover and extend the gains.
Yet the gold market did not take out Wednesday’s high of $1,655 and instead probed below that day’s low of $1,640.50.
Charlie Nedoss, senior market strategist with Kingsview Financial, said short-term attitudes changed in the gold market. “People are lining up to sell rallies. The U.S. dollar is a little stronger. The people who were buying are throwing in the towel. I think that happened last week when we closed under the 200-day (moving average),” he said.
When gold was unable to hold above $1,650 that might have encouraged some bears to establish new short positions, Nedoss said.
Nedoss and Grady pointed out that there is key technical support that lies between $1,627 and $1,625. Nedoss added given the way gold is trading, it’s likely that bears will want to test $1,627.90, the 2013 low. If gold breaks through that level, several gold market watchers said it could uncover waves of sell stops, or pre-placed sell orders, that might encourage further selling.
Smith said given how close gold prices are to the mid-$1,620s, it’s likely the market could trade down there, but he’s cautious about taking out that level. “We’re coming into a long weekend and gold has a long track record of doing silly things,” he said.
The probability of gold taking out these key supports this week is low; however, he said, if gold breaks below $1,625, “the trip to $1,550 will be very quick.”
By Debbie Carlson of Kitco News
Thursday February 14, 2013 2:25 PM
(Kitco News) - Gold futures prices fell for the second straight day Thursday, with losses accelerating late in the session as bears scratched out new lows ahead of pit settlement.
April gold futures on the Comex division of the New York Mercantile Exchange settled down $9.60 at $1,635.50 an ounce and March silver settled 51.6 cents lower at $30.353 an ounce.
The market was firmer earlier in the session, but had little momentum to sustain the gains. Market watchers said when gold took out the intraday low of $1,636.50, the sell-off picked up a little speed.
“The combination of (poor) European and Japanese economic numbers is near-term bearish for gold. There’s no real threat of inflation. Gold does not like recessions at all. There is some concern that the (economic weakness) will spread to the U.S. and that’s a valid concern as we do not have all that strong growth,” said Sterling Smith, futures specialist, Citibank Institutional Client Group.
The market continues to move in a very choppy pattern, rising to test support and resistance, but not settling on a definitive direction. Kevin Grady, owner, Phoenix Futures, said there wasn’t a particular piece of news that drove prices off their earlier highs.
“This market is so very jittery,” he said.
Grady said earlier in the session price popped higher when the daily open interest figures rose despite the lower price settlement on Wednesday. Open interest is the number of outstanding positions left at the end of the trading session. Higher open interest on a day when prices settle lower is a sign of sellers establishing new shorts. He said there might have been some short-term trading interest in trying to push the market higher to cause those shorts to cover and extend the gains.
Yet the gold market did not take out Wednesday’s high of $1,655 and instead probed below that day’s low of $1,640.50.
Charlie Nedoss, senior market strategist with Kingsview Financial, said short-term attitudes changed in the gold market. “People are lining up to sell rallies. The U.S. dollar is a little stronger. The people who were buying are throwing in the towel. I think that happened last week when we closed under the 200-day (moving average),” he said.
When gold was unable to hold above $1,650 that might have encouraged some bears to establish new short positions, Nedoss said.
Nedoss and Grady pointed out that there is key technical support that lies between $1,627 and $1,625. Nedoss added given the way gold is trading, it’s likely that bears will want to test $1,627.90, the 2013 low. If gold breaks through that level, several gold market watchers said it could uncover waves of sell stops, or pre-placed sell orders, that might encourage further selling.
Smith said given how close gold prices are to the mid-$1,620s, it’s likely the market could trade down there, but he’s cautious about taking out that level. “We’re coming into a long weekend and gold has a long track record of doing silly things,” he said.
The probability of gold taking out these key supports this week is low; however, he said, if gold breaks below $1,625, “the trip to $1,550 will be very quick.”
