Kitco Metals Roundup: Weaker Technical Chart Picture Pressures Gold, Silver

By Debbie Carlson of Kitco News
Wednesday February 13, 2013 02:05 PM

(Kitco News) – Gold prices continued to decay on Wednesday, as the market continues to hold in a tight range which is discouraging new buying interest, analysts said.

A slightly higher U.S. dollar put mild pressure on precious metals earlier in the day, but overall the influence of the dollar was light, they added.

Most-active April gold on the Comex division of the Nymex settled at $1,645.10, down $7.10, and March silver settled at $30.869, down 20.9 cents.

Gold prices held in a slight range, kept in check by a lack of influencing factors. With little fresh news to push the market, the yellow metal continues to trade off technical chart signals.

Frank Lesh, broker and futures analyst with FuturePath Trading, said the technical charts look weak for gold. However, charts aren’t so weak that bears would see an opportunity to sell. “It’s a trader’s market right now,” he said.

Part of what’s keeping gold in a tight range is a relatively calm trading atmosphere in general. “There’s not a lot of fear out there for the moment” that would drive investors into gold for safe-haven reasons, he said.

On the other hand, gold has also broken its correlation with stocks. In 2012, gold and stocks were trading lock-step, but now equity indexes are nearing record highs and gold is wallowing.

Another hang-up for gold is the lack of interest in general by non-traditional market players for the yellow metal and commodities in general. Pension funds and other types of non-traditional users had come into the commodity markets in recent years, but lackluster returns are causing them to rethink those ideas, he said.

Analysts at Triland Metals said while the market is finding support at $1,642, gold seems to have trouble moving higher from support floors. “A breakout of the $1,640 – $1,655 fifteen-dollar range should dictate the next substantial move,” they said.

Gold might try to test support at the $1,626 level, which they said was key support. It’s possible gold might try to make one shot at trying to take out $1,660 before testing the downside, they added.  “Trading activity towards the close today (Wednesday) suggests that the metals could grind lower first. Fundamental reasons to own gold continue to languish,” they said.

Silver prices were also weaker, following gold, Lesh said.

In silver news, HSBC raised its forecast for silver prices, lifting the 2013 outlook by $1 to $33. The bank cited growing industrial demand on ideas of a growing Asian and U.S. economy and investor interest driven by loose monetary policy.

Data-wise, the calendar for economic news is light Thursday, with weekly jobless claims the only U.S. report slated for release.

Lesh said it’s possible market participants are waiting for the Group of 20 meeting later this week for price direction. Talk of “currency wars” has heated up again with Japan seeking to weaken the yen to kick-start their economy. Despite the talk of “currency wars,” Lesh said there’s been little reaction by precious metals markets or markets in general over concerns about countries trying to lower their currencies to make their exports more competitive.

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By Debbie Carlson of Kitco News


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