19 September 2011, 10:46 a.m.
By Kitco News
http://www.kitco.com/
(Kitco News) - Mon Sept 19—Comex December gold futures are pushing lower Monday as the recent consolidation and correction off the September 6 all-time high at $1923.70 an ounce continues. Daily momentum tools are trending lower from bearishly divergent positions, which means that those indicators did not confirm the September 6 new price high. The market is working off its overbought condition and remains in a sideways range near term.
"The near term rally is going to take a breather and correct," said Paul Hare, executive vice president at the Linn Group. "The market is going through a consolidation that will force more short-term liquidation," he added.
The gold market is approaching short-term moving average support from the 40-day at $1,764 on Monday. December gold futures have been trading above that moving average since early July. Hare pointed to the 40-day moving average as key near term support. "If we take that out and close below it the market could drop to the $1,700 area," Hare warned.
Overall, however, Hare said the gold market was just correcting off an interim high, there were no signs of a major top in the market.
On the downside, major support for December gold lies at the August 25 daily low at $1,705. 40. That represents major intermediate term support for the December gold contract, and must hold to keep the technical picture from deteriorating more dramatically.
In the short term, Hare's advice for gold traders was to "liquidate longs."
Shifting over the outlook for October platinum, the daily chart reveals a pattern of lower lows and lower highs in recent weeks, keeping the short-term technical bias bearish.
Platinum is also under the influence of a falling 9-period relative strength index (RSI), which is a widely watched momentum indicator. The RSI is trending lower from overbought levels, which is a traditional sell signal on that tool.
Key near term support for October platinum lies at $1,770.00, the September 16 daily low. That nearly coincides with the 61.8% Fibonnaci retracement of the August 5-August 23 rally, which comes in around $1,771. If October platinum posts a solid close below the $1,770 region, that would open the door for a retest of the August 5 low at $1,682, according to traditional Fibonacci analysis.
The market has broken below the key 200-day moving average. Many technical traders consider this to be the key line in the sand for the longer-term trend. And, if October platinum continues to trade below the 200-day, it would be bearish for the longer-term trend outlook. On Monday, the 200-day moving average was seen at $1,788.90.
Finally, shifting over to December Nymex palladium, the technical trends are down, but the market is approaching a major longer-term support zone. There is a strong band of congestive support from the $710-701 region. The market etched major lows in that area in March, May, August and September.
Given the strength of the support the $700 region is not likely to break on a first attempt, but that is the key level that the bears will be eyeing and testing in the days ahead.
If that floor were to give way, it would open the door for a massive new wave of declines in the days and weeks ahead.
By Kitco News
Editor’s Note:
Kitco News will provide readers with comprehensive print and video coverage of three-major precious metals market events in New York, Toronto and Montreal during the next two weeks.
First, Kitco News will supply live coverage on Wednesday, Sept. 14, of the CPM Platinum Group Metals Seminar in New York. That will be followed by the Toronto Resource Investment Conference September 15-16, and then the London Bullion Marketing Association meeting in Montreal September 18-20.
The CPM Group's Platinum Metals Group Seminar Sept. 14 will showcase presentations from some of the leading analysts and investors in the PGM sector. Register to watch the CPM Platinum Group Metals Seminar Live (Free Registration): http://cpmevents.kitco.com/
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