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P.M. Kitco Roundup: Gold Slumps to 3.5-Mo. Low on Increased Risk Appetite, Technical Selling

Tuesday May 27, 2014 2:00 PM

(Kitco News) - Gold prices ended the U.S. day session sharply lower and scored a 3.5-month low Tuesday. The long holiday weekend in the U.S. saw potential geopolitical tensions de-escalate. Risk appetite has picked up in the world market place this week, as U.S. and some European stock indexes are at or near record or multi-year highs. Technical selling was also featured in gold Tuesday, as key chart support levels were penetrated on the downside, which set off pre-placed sell stop orders. June Comex gold was last down $25.10 at $1,266.50 an ounce. Spot gold was last quoted down $26.10 at $1,267.00. July Comex silver last traded down $0.343 at $19.075 an ounce.

There was a heavy slate of U.S. economic data released Tuesday, including durable goods orders, the U.S. flash services PMI, the S&P/Case-Shiller home price index, the monthly house price index, the consumer confidence index, the Texas manufacturing survey, and the Richmond Fed business survey. Most of this data was upbeat and that also was in favor of the gold market bears Tuesday.

The Russia-Ukraine territorial crisis appears to have ratcheted down at least a notch over the holiday weekend. The Ukraine held a presidential election on Sunday. The new president-elect of Ukraine, Petro Poroshenko, said he wanted to work with Russia and with Europe on integrating his country into both. Recent rhetoric from Russian president Vladimir Putin also seemed to be more conciliatory.  This news allowed some more risk appetite to creep back into the market place Tuesday. However, reports also said there is still significant fighting occurring between Ukrainian government troops and pro-Russian separatists.

The European Union saw parliamentary election results during the weekend.  Italy and Germany saw their present governing parties declare victory, which was deemed as calming to the market place. There had been concern in the EU about anti-EU candidates making a strong showing, which helped to push EU periphery countries’ bond yields higher recently. However, the so-called euroskeptics did make progress in France and the United Kingdom. The Euro currency and European stock markets were supported by the weekend EU election results.

The London P.M. gold fix was $1,275.50 versus the previous P.M. fixing of $1,291.50.

Technically, June gold futures prices closed nearer the session low and hit a fresh 3.5-month low Tuesday. Gold prices Tuesday also saw a bearish downside “breakout” from the recent choppy and sideways trading range. Gold market bears have regained the level near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,250.00. First resistance is seen at $1,268.40 and then at $1,272.00. First support is seen at Tuesday’s low of $1,264.30 and then at $1,260.00. Wyckoff’s Market Rating: 4.0

July silver futures closed nearer the session low and hit a three-week low Tuesday. The silver bears have the overall near-term technical advantage and gained fresh downside momentum today. 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 the May low of $18.685. First resistance is seen at $19.25 and then at Tuesday’s high of $19.50. Next support is seen at $19.00 and then at $18.95. Wyckoff's Market Rating: 2.5.

July N.Y. copper closed up 65 points at 317.40 cents Tuesday. Prices closed near mid-range and did hit a nearly three-month high. Copper bulls have the overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 325.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of 309.85 cents. First resistance is seen at Tuesday’s high of 319.25 cents and then at 320.00 cents. First support is seen at Tuesday’s low of 316.40 cents and then at 315.00 cents. Wyckoff's Market Rating: 6.0.

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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