Gold Correcting Ahead of FOMC


Reported by Kitco news, in early U.S. trading on Tuesday, Comex gold futures prices are moderately lower. In late trading Monday, the market is showing a downside technical correction following a higher rush. Also a negative side for the yellow metal market is the stronger U.S. dollar index on Tuesday. June Comex gold last trade fell by $11.90 at $1,371.80 an ounce. Spot gold was last cited down $22.10 at $1,372.50.

Whereas the gold bears are still controlling of their market, the rebounds in prices that was shown at late trading Monday are a sign these markets have bottomed out or are near to doing so. There have been many talks from the bears directed at gold the past few weeks, including the big loss of investor monies from gold-backed exchange-traded funds (ETF). Yet, it’s the market’s responsibility to very quickly indicate all known fundamental events into price structure.

The market is in anticipation of Federal Reserve Chairman Ben Bernanke’s speech on the economy and monetary policy before the Congress on Wednesday. The Fed’s FOMC minutes are also will be announced on Wednesday afternoon. Traders and investors will watch closely Bernanke’s remarks and the FOMC minutes for signs on the U.S. central bank’s possible course of monetary policy in the coming weeks and months. There are high expectations in the market that the Fed is planning to bring down its quantitative easing program (QE3) sooner than later. The term currently mentioned about is “tapering” of the Fed’s huge monthly bond-buying program. Nevertheless, there is no clear agreement among market and Fed watchers about what the Fed will do with its monetary policy.

There will be key manufacturing data out of China that will be released on Thursday, which will also gather the market’s attention.

U.S. economic data will be release Tuesday and it is again light, containing the weekly Johnson Redbook and Goldman Sachs retail sales reports.

The London previous P.M. fixing of $1,354.75 and A.M. gold fixing is $1,378.75.

Technically speaking, June gold futures closed prices closed nearer the session high Monday and hit a new four-week low early. On the daily bar chart Monday prices recorded a bullish “outside day” up. The gold bears are still in near-term technical control. Bears’ next near-term downside closing prices below solid technical support at the April low of $1,321.50. The gold bulls’ next upside near-term price produced a close above solid technical resistance at $1,400.00. First resistance is sighted at $1,400.00 and then at $1,410.00 and as for the first support is seen at the overnight low of $1,369.90 and then at $1,350.00.