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P.M. Kitco Roundup: Gold Ends Steady on Chart Consolidation; Major Economic News on Deck Thurs, Fri.

Wednesday June 4, 2014 2:23 PM

(Kitco News) - Gold prices ended the U.S. day session near unchanged levels Wednesday. The precious metal is treading water ahead of two key economic events that lie just ahead: Thursday’s European Central Bank meeting and Friday’s U.S. jobs report. August Comex gold was last down $0.20 at $1,244.40 an ounce. Spot gold was last quoted down $0.70 at $1,244.75. July Comex silver last traded up $0.037 at $18.80 an ounce.

Thursday’s highly anticipated monthly monetary policy meeting of the European Central Bank is widely believed to see the bank announcing fresh monetary policy stimulus measures. Many believe the ECB refinancing rate will be reduced by around 10 or 15 basis points as well as a reduction in the deposit rate to just below zero, for a slightly negative return.

Thursday’s U.S. ADP national employment report came in at up 179,000 jobs for May. That figure is lower than the 215,000 figure expected for the non-farm payrolls growth in this Friday’s U.S. jobs report. The ADP report hints the jobs report Friday could be a slight miss to the downside, which would likely be bullish for the gold and silver markets.

Wednesday afternoon’s Federal Reserve beige book was released and markets barely moved as there was nothing new in the report.

In overnight news, the European Union’s business activity slowed down in May. The Markit composite purchasing managers’ index for the Euro zone came in at 53.5 versus 54.0 in April. Also, EU gross domestic product for the first quarter was reported at an unrevised increase of 0.9%, year-on-year. Euro zone producer prices fell 0.1% in May from April and were down 1.2% year-on-year. These figures only increase concerns about deflationary price pressures gripping the European Union.

The recent strength of the U.S. dollar against the other major world currencies recently has been a bearish underlying factor for the gold and silver markets. The U.S. dollar index, which is a basket of six major currencies weighted against the greenback, hit a two-month high this week. It could be telling for the market place to see how the dollar index and the Euro currency react following Thursday’s ECB meeting and its likely move to stimulate. Many believe the markets have already factored in such a move by the ECB.

The London P.M. gold fix was $1,245.25 versus the previous A.M. fixing of $1,246.00.

Technically, August gold futures prices closed nearer the session low. The market is pausing ahead of key data out Thursday and Friday. Gold prices are hovering near a four-month low today. Gold market bears have the firm overall near-term technical advantage. Prices are in an 11-week-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,268.50. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,220.00. First resistance is seen at this week’s high of $1,251.00 and then at $1,260.00. First support is seen at this week’s low of $1,240.20 and then at $1,235.00. Wyckoff’s Market Rating: 2.5

July silver futures prices closed near mid-range and saw more tepid short covering in a bear market. Silver prices are hovering near the recent contract low. The silver bears have the solid overall near-term technical advantage. Prices are in a 13-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $19.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $18.00. First resistance is seen at $19.00 and then at $19.155. Next support is seen at the contract low of $18.615 and then at $18.50. Wyckoff's Market Rating: 1.0.

July N.Y. copper closed down 435 points at 309.35 cents Wednesday. Prices closed nearer the session low on profit taking. A scandal in the Chinese copper market also hit prices to the downside today. Copper bulls have lost their slight overall near-term technical advantage. A 2.5-month-old uptrend on the daily bar chart was negated today. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 319.25 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at 312.05 cents and then at Wednesday’s high of 314.25 cents. First support is seen at Wednesday’s low of 308.45 cents and then at 306.50 cents. Wyckoff's Market Rating: 5.0.

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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