Gold, Silver Prices Firmer; Bulls Try To Stop The Bleeding

(Kitco News) – Gold and silver prices are modestly higher in early U.S. trading Wednesday, on some short covering in the futures market and some perceived bargain buying in the cash. Gold prices dropped to a nearly four-month low Tuesday. “Risk-on” trader and investor attitudes the past several weeks continue to see monies flowing into stocks—to the detriment of the safe-haven metals. June gold futures were last up $1.90 an ounce at $1,279.10. May Comex silver was last up $0.065 at $14.975 an ounce.

Asian and European stock indexes were mostly higher overnight. U.S. stock indexes are pointed toward modestly higher openings and near Tuesday’s six-month highs when the New York day session begins. The U.S. indexes are closing in on their record highs scored last fall.

China’s gross domestic product report came out Wednesday and showed slightly better-than-expected growth of 6.4% in the first quarter, year-on-year. Stronger industrial production and retail sales were cited as boosting GDP. Most were expecting upbeat numbers just north of 6% annual GDP growth for the world’s second-largest economy. This report is friendly for the metals markets, as it implies better demand for raw commodities coming from the world’s largest raw commodity importer.

In other overnight news, the Euro zone consumer price index for March showed a rise of 1.0% from February but was up only 1.4% year-on-year. Meantime, the U.K. CPI came in at up 0.2% in March and up 1.9% year-on-year. This continues a theme of very tame inflation in the world’s major economies.

An important change in market psychology has occurred just the past few weeks. Government bond yields in the world’s major economies are on the rise, after seeing their yields decline the first two months of the year. This is due in part to little risk aversion in the marketplace that is seeing monies flow into stock markets, which in turn prompts bond yields to rise in order to attract investor buying interest.

The key outside markets today find the U.S. dollar index weaker. Meantime, Nymex crude oil prices are higher and trading around $64.50 a barrel.

U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the international trade report, monthly wholesale trade, the Federal Reserve’s beige book and the weekly DOE liquid energy stocks report.

Technically, the gold bears have gained the overall near-term technical advantage. A downtrend line is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,300.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,250.00. First resistance is seen at $1,284.90 and then at Tuesday’s high of $1,291.70. First support is seen at this week’s low of $1,275.50 and then at $1,250.00. Wyckoff’s Market Rating: 4.0

May silver futures bears have the overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the April high of $15.31 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.50. First resistance is seen at $15.065 and then at $15.215. Next support is seen at this week’s low of $14.795 and then at $14.70. Wyckoff’s Market Rating: 4.0.

By Jim Wyckoff
For Kitco News


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