US GOLD - Gold gains technical support from short-covering, weaker dollar

print Print this document.  Post this story to Facebook.
Tom Jennemanntom.jennemann@fastmarkets.comSenior North American Correspondent973-204-3383

New York 31/10/2012 - Gold futures opened higher in the US on Wednesday on some month-end short-covering and in concert with equities and other commodities.

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $6.10 at $1,718.20 per ounce. Trade has ranged from $1,709.80 to $1,722.50.

The Nymex physical floor in Lower Manhattan reopened this morning and is operating as normal after being closed for two days due to Hurricane Sandy.

“Perhaps gold is garnering some technical short-covering buying after a month-long decline and perhaps gold is simply catching a risk-on lift from a moderation of the storm impact,” CME Group said in a market commentary.

“In addition to higher equities and favourable currency market action, gold is also seeing mostly positive price action in a long list of physical commodity markets,” CME added.

In wider markets, the euro was about a third of a cent stronger at 1.30 against the dollar, while Germany's DAX and France's CAC-40 were up 0.55 percent and 0.16 percent respectively.

In the US, the New York Stock Exchange and Nasdaq both reopened for normal operations today after being closed for two sessions. The Dow Jones industrial average was last up 0.41 percent.

Light sweet crude (WTI) oil futures for December delivery on Nymex were up 61 cents at $86.29 per barrel and the most actively traded Comex copper contract was at $3.5420 per pound, up 3.65 cents.

Gold also garnered a lift from expectations that the government and/or the Federal Reserve might provide direct funding and stimulus to aid in the rebuilding process following the hugely destructive storm that ravaged the US Eastern seaboard, RBC Capital Markets analyst George Gero said.

“All of this still in a diminished trading participation so markets will continue to be thin and subject to sudden moves,” Gero said.

Still, gold remains precariously close to $1,700 and a break lower could lead to significant selling pressure, sources said.

“We remain concerned about the 'siren-song' nature of $1,700 and 1,300 euros both of which seem vulnerable. From a purely technical, chartist’s perspective, the recent 'consolidations' at or near $1,705 and 1,320 euros seem to be mid-points in a downward trend,” Dennis Gartman, editor of the Gartman Letter, said.

“That is ominous, for if these consolidations do prove to be mid-points on the chart, it means that $1600 and 1,260 euros are possible, even perhaps likely,” Gartman added.

Comex silver for December delivery was up 35.9 cents at $32.175 per ounce. Trade has ranged from $31.755 to $32.325.

Platinum futures for January delivery on Nymex were up $18.10 at $1,571.70 per ounce and the December palladium contract at $606.75 was $10.60 higher.

In data, the Chicago PMI edged up in October to 49.9 from 49.7 in the prior month but remained below the key 50 level.

(Editing by Mark Shaw)
8 Bouverie Street, London, EC4Y 8AX, UK
+44 (0)845 241 9949