(Kitco News) -Comex gold and silver futures prices ended with solid gains Wednesday, on fresh safe-haven investment demand amid the ongoing European Union sovereign debt crisis. The precious metals shrugged off bearish “outside market” forces Wednesday (firmer U.S. dollar index and weaker crude oil prices) and also mild, early price weakness tied to news that China again raised its interest rates. August gold last traded up $17.10 at $1,529.80 an ounce. Spot gold last traded up $12.70 an ounce at $1,529.50. December Comex silver last traded up $0.67 at $36.10 an ounce.
It did not take long at all before another European Union sovereign debt issue hit the news headlines and moved back to the front burner of the market place. After the debacle in Greece last week, this week’s EU debt crisis issue is Portugal. Moody’s on Tuesday downgraded Portugal’s sovereign debt to junk status. This news was not a surprise, but did work to support fresh safe-haven investment demand for gold and silver. The Standard & Poors ratings agency this week reportedly said Greece could soon be technically in default on its loans if they are rolled over and extended. With the keen interest in the U.S. debt piling up and the congressional wrangling taking place on the U.S. national debt, the market place is extra sensitive to debt issues.
The U.S. dollar index traded firmer Wednesday on short covering in a bear market. The Portugal debt downgrade and overall EU debt crisis situation supported the dollar index as it pressured the Euro currency. The U.S. dollar index remains in an overall technically bearish posture, which is an underlying bullish factor for gold and silver.
News reports overnight that China’s central bank will raise its key interest rate by 0.25%, which is the third increase this year, did put some early downside price pressure on commodity markets, including crude oil. The move by the commodity-consuming juggernaut China was not a big surprise, as its monetary officials are working to control inflation by curtailing domestic consumption.
Crude oil prices were modestly lower Wednesday on the China rate hike news. However, crude oil bulls have recently gained upside near-term technical momentum to suggest that a market low is in place. If crude can continue to recover from the recent six-month low, that would also be a bullish underlying factor for the metals.
The London P.M. gold fixing was $1,527.25 versus the previous P.M. fixing of $1,510.00.
Technically, August gold futures prices closed nearer the session high again Wednesday. Gold bulls have the overall near-term technical advantage and this week have regained some upside momentum. Bulls’ next near-term upside technical objective is to produce a close above strong technical resistance at the June high of $1,559.30. Bears’ next near-term downside price objective is closing prices below major psychological support at $1,500.00. First resistance is seen at Wednesday’s high of $1,534.50 and then at $1,540.00. First support is seen at $1,520.00 and then at Wednesday’s low of $1,510.30. Wyckoff’s Market Rating: 6.5.
December silver futures prices closed nearer the session high Wednesday. A five-week-old downtrend line on the daily bar chart was penetrated on the upside Wednesday and would be negated with follow-through buying strength on Thursday. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $33.42. Bulls’ next upside price objective is producing a close above solid technical resistance at $36.80 an ounce. First resistance is seen at Wednesday’s high of $36.28 and then at $36.50. Next support is seen at $35.70 and then at $35.50.
December N.Y. copper closed down 190 points 434.30 cents Wednesday. Prices closed near mid-range and saw profit-taking pressure. Gains were also limited by the announced rise in Chinese interest rates. Prices Tuesday hit a fresh two-month high. The bulls still have upside technical momentum. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at 445.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 415.00 cents. First resistance is seen at Tuesday’s high of 436.75 cents and then at 440.00 cents. First support is seen at Wednesday’s low of 431.65 cents and then at 430.00 cents.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
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