Gold Gains On Bargain Hunting, Short Covering
(Kitco News) - Gold prices are posting good gains in early U.S. trading Thursday, on some bargain hunting in the cash market and on short covering in the futures market. A weaker U.S. dollar index and lower U.S. stock indexes today are working in favor of the precious metals market bulls. June Comex gold futures were last up $11.60 an ounce at $1,317.20. July Comex silver was last up $0.195 at $16.57 an ounce.
The marketplace has quickly moved past Wednesday afternoon’s FOMC statement, which announced no change in U.S. monetary policy, and hinted that the Federal Reserve is not quite as concerned about inflationary pressures as in recent months. The gold market did see some slight appreciation after the FOMC statement, on notions the Fed will not be too aggressive in raising interest rates in the coming months.
In overnight news, the inflation rate in the Euro zone was up 1.2% in April versus up 1.3% in March, on an annual basis. The European Central Bank would like to see annual inflation at 2.0%.
The World Gold Council reported today that global demand for the yellow metal fell 7% in the first quarter of this year, compared to the same period last year. India and China led the decline, on weakening demand for bars and coins.
A U.S. high-level trade delegation is in China Thursday to try to avert a trade war between the world’s two largest economies. The marketplace will closely watch the news outlets for updates on progress at the meeting.
On Friday is the April U.S. employment report from the Labor Department—arguably the most important U.S. data point of the month. The key non-farm payrolls number is forecast to come in at up 195,000.
The outside markets today see the U.S. dollar index slightly lower on a corrective pullback after hitting a 4.5-month high on Wednesday. Meantime, Nymex crude oil prices are slightly up and trading around $68.00 a barrel.
It’s a busy day for U.S. economic data Thursday, including the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the international trade report, the U.S. services PMI, manufacturers’ shipments and inventories, and the ISM non-manufacturing report on business.
Technically, June gold bulls and bears are on a level overall near-term technical playing field. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,337.60. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at $1,320.00 and then at $1,325.00. First support is seen at $1,309.00 and then at this week’s low of $1,302.30. Wyckoff's Market Rating: 5.0
July silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at $16.75 and then at $16.89. Next support is seen at the overnight low of $16.385 and then at $16.25. Wyckoff's Market Rating: 3.5.