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A.M. Kitco Metals Roundup: Gold Firmer on Bargain Hunting, Short Covering

Thursday April 16, 2015 8:32 AM

(Kitco News) - Gold prices are modestly higher in early U.S. trading Thursday, on some bargain hunting in the cash, or spot, market and some short covering in the Comex futures market. A lower U.S. dollar index is also a bullish daily factor for the precious metals Thursday. June Comex gold was last up $3.50 at $1,204.60 an ounce. May Comex silver was last up $0.121 at $16.405 an ounce.

Nymex crude oil prices are weaker Thursday morning after hitting a four-month high Wednesday. Crude oil prices are in a four-week-old uptrend on the daily bar chart, too. There are significant, early technical clues that a market bottom is in place for crude oil. The market place is starting to take note of ideas crude oil prices have bottomed out. Several raw commodity markets have seen recent price-stabilization, or even fledgling uptrends, due in part to their sector leader crude oil’s price recovery.

The U.S. dollar index is weaker in early North American trading Thursday. The index has this week again come under selling pressure. If crude oil prices have indeed bottomed out, that also a strong clue the U.S. dollar index has topped out. Again, the greenback putting in a market top would be a bullish development for the raw commodity sector, as most commodities are priced in U.S. dollars on the world markets.

Reports this week say the Greek and International Monetary Fund/European Union officials debt restructuring negotiations are not going well. Greece has reportedly asked the IMF if it could delay a debt payment and the IMF reportedly refused. The Standard & Poors credit agency on Wednesday lower their ratings for Greece further into junk territory. Greek bond yields have risen significantly recently, due to the doubts about Greece being able to pay its debts without serious economic reforms.

A feature in European markets this week is the dropping yields on German government bonds. The Europeans reckon German debt is the safest on the continent. Combine that with the European Central Banks pledge to buy big amounts of EU government bonds and the result has been long-term German bond yields well below one percent.
Japan is now the top foreign holder of U.S. Treasuries. Japan displaced China for the number-one spot. The U.S. Treasury said Japan now holds $1.2 trillion of U.S. securities. Over the past year, Japanese holdings of U.S. debt have increased by $13.6 billion while China’s holdings have dropped by $49.2 billion.

U.S. economic data due for release Thursday includes the weekly jobless claims report, new residential construction and the Philadelphia Fed business survey.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Wyckoff’s Daily Risk Rating: 5.0 (Trader and investor market risk aversion is not high at present.)

(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 $1,204.60 versus the previous P.M. fixing of $1,192.90.

Technically, June gold futures market bears still have the firm overall near-term technical advantage. The gold bulls’ next upside near-term price objective is to produce a close above solid technical resistance at the April high of $1,224.50. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,178.20. First resistance is seen at the overnight high of $1,208.80 and then at $1,215.00. First support is seen at $1,200.00 and then at $1,190.00. Wyckoff’s Market Rating: 2.5

May silver futures bears have the firm overall near-term technical advantage. 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 the March low of $15.26. First resistance is seen at this week’s high of $16.51 and then at $16.75. Next support is at the overnight low of $16.29 and then at $16.10. Wyckoff’s Market Rating: 2.5.

 

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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