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A.M. Kitco Metals Roundup: Gold Weaker as Uncertain Weekend Looms

Friday May 23, 2014 8:23 AM

(Kitco News) - Gold prices are modestly lower in early U.S. trading Friday. A firmer U.S. dollar index that hit a six-week high overnight is limiting buying interest in the yellow metal. June Comex gold was last down $3.50 at $1,291.60 an ounce. Spot gold was last quoted down $3.10 at $1,291.00. July Comex silver last traded down $0.13 at $19.39 an ounce.

It would not be surprising to see some keener risk aversion creep into the market place as trading session progresses Friday. It’s a long, three-day holiday weekend in the U.S and U.K. The European Union sees parliamentary election results during the weekend. There is concern in the EU about anti-EU candidates making a strong showing, which in turn has helped to push EU periphery countries’ bond yields higher recently. And the Russia-Ukraine territorial crisis, while presently on a low simmer, could see the heat turned up this weekend. The Ukraine holds a presidential election on Sunday. I would not want to be short gold, the U.S. Treasuries or the U.S. dollar heading into this extra uncertain weekend.

In overnight news, the German Ifo business confidence index missed market expectations, which helped to push the Euro currency still lower. The Ifo index for May came in at 110.4 versus 111.2 in April. Germany is by far the European Union’s largest economy. This report adds still more weight to notions the European Central Bank will move to further ease its monetary policy at its regular meeting in early June.

Credit rating agencies Moody’s and Standard & Poors have raised their ratings on the sovereign debt of Spain and Greece. The EU debt markets showed little reaction, with yields still elevated due to higher concern regarding the economic health of the bloc.

U.S. economic data due for release Friday is light and includes new residential sales.

Wyckoff’s Daily Risk Rating: 7.0 (It’s an extra uncertain weekend approaching, as mentioned above.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

The London A.M. gold fix is $1,292.00 versus the previous P.M. fixing of $1,298.50.

Technically, June gold futures bulls and bears are on a level near-term technical playing field. Prices are in a choppy and sideways trading range on the daily bar chart. That suggests this market could continue to trade sideways and choppy, in the range. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the May high of $1,315.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the May low of $1,272.00. First resistance is seen at the overnight high of $1,295.70 and then at $1,300.00. First support is seen at this week’s low of $1,282.90 and then at $1,277.70.  

July silver futures bears have the overall near-term technical advantage. However, prices are “basing” at lower price levels, to begin to suggest a market bottom is in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the May high of $20.005 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $19.045. First resistance is seen at the overnight high of $19.525 and then at this week’s high of $19.825. Next support is seen at this week’s low of $19.225 and then at $19.045.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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