Morning Gold Market Report 12/27

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December 28, 2012 1:43 AM EST

Compiled 12/27/12 6:00 AM (CT)

Statistics: London Gold Fix $1,655.25, -$7.25. LME Copper Stocks up 650 tons, and are now at 318,000 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) February gold started out this morning under moderate pressure. After twice failing to sustain a move above the $1,660.00 level on either side of the Christmas holiday, February gold may be taking a breather as the market waits for some fresh news out of Washington. Neither side seemed to come away from Wednesday's trading session with a definitive argument on the near term trend in gold prices. At times over the last two weeks, gold has showed signs of returning to its flight to quality standing, but at other times prices have clearly faltered in the face of classic signs of slowing, and that suggests that gold is still mostly behaving like a physical commodity. There will be a full slate of US economic data for the market to digest later on this morning, with gold likely to get a modest boost if the numbers maintain a positive tone. With three trading sessions left until the end of 2012, February gold may start to see noted amounts of short-covering over the next few sessions. The market may require some definitive signs of progress on a resolution to the fiscal cliff before a "risk on" attitude can fully develop and lift prices back towards their weekly highs. Comex Gold Stocks were 11.042 million ounces up 3,858. Stocks have increased 16 of the last 20 days.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Chinese equities were generally lower during overnight trading, with the Shanghai A Share Index down 0.60%, as China's housing ministry was expected to keep property curbs in place during 2013. Japanese share prices remain fairly strong, with the Nikkei 225 reaching a new 21-month high due to the extended weakness of the Yen. European stock markets are posting mixed results this morning, with Italian shares up more than 0.50% as their election season swings into high gear after the Christmas holiday. US fiscal cliff fears continue to impact sentiment in a number of markets. In US trading action today, the markets will see Initial and Ongoing Jobless Claims, Consumer Confidence and a new home sales release. While the main focus might be on the Initial Claims headline figure, the most important result of the day might be the Consumer Confidence report, as that effectively kicks off the cycle of US reports for the month of December.

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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

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