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P.M. Kitco Metals Roundup: Gold Down On Rally In U.S. Stock Market And Bounce In U.S. Dollar Index

Monday April 20, 2015 1:47 PM

(Kitco News) - Gold prices ended the U.S. day session moderately lower Monday. A rally in the competing asset class U.S. stock indexes and a rebound in the dollar index pressured gold and silver. Also, the overall technical postures for gold and silver remain firmly in the bearish camps, which continue to invite chart-based sellers. June Comex gold was last down $10.00 at $1,193.10 an ounce. May Comex silver was last down $0.344 at $15.885 an ounce.

China’s central bank again moved to stimulate the Chinese economy over the weekend. That news helped to rally in the U.S. equites, which in turn pulled away investor funds from the safe-haven gold market. The People’s Bank of China reduced by 1% the reserve requirement ratio required of its banks. The market place took note of the central bank’s move, but markets did not show significant price reactions to the news. Still, the China easing of its monetary policy is a bullish underlying element for the raw commodity markets, including the precious metals, because it suggests increasing Chinese demand in the coming weeks and months.

The U.S. dollar index was higher Monday on a corrective bounce from recent strong selling pressure. There are still a few technical clues that begin to suggest a market top is in place for the dollar index. If the dollar index has topped out it would be a significantly bullish development for the raw commodity sector.

Greece is back on the front burner of the market place early this week, as Greek and International Monetary Fund/European Union officials debt restructuring talks are not going well. A weekend meeting in Brussels between both sides yielded no positive results. Reports say both sides are far apart on any agreement. Greek bond yields have risen significantly recently, due to the doubts about Greece being able to pay its debts without serious economic reforms. Two-year Greek notes were yielding around 27% Monday, while the 10-year Greek bond was fetching close to 13%. The Greece-EU debt impasse is becoming a distress on world markets, but not yet a serious one. However, if the matter is not resolved soon, risk-aversion will increase and safe-haven assets like gold will stand to benefit. There is a growing belief in the market place that Greece will at some point default on its EU debt obligations.

The other key “outside market” saw crude oil prices higher. Crude prices are in a four-week-old uptrend on the daily bar chart and late last week hit a four-month high—suggesting a market bottom is in place. If crude oil bottoms out such would also be good news for the rest of the raw commodity market bulls.

The London P.M. gold fix is $1,196.50 versus the previous A.M. fixing of $1,203.25.

Technically, June gold futures prices closed nearer the session low and scored a bearish “outside day” down on the daily bar chart today. Gold bears have the firm overall near-term technical advantage. Bulls’ next upside near-term price breakout 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 $1,200.00 and then at last week’s high of $1,209.30. First support is seen at today’s low of $1,190.80 and then at last week’s low of $1,183.50. Wyckoff’s Market Rating: 3.0

May silver futures closed near the session low and hit a four-week low today. Silver bears have the firm near-term technical advantage and gained more power today. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.75 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 $16.00 and then at today’s high of $16.34. Next support is seen at today’s low of $15.82 and then at $15.50. Wyckoff's Market Rating: 2.5.

May N.Y. copper closed down 430 points at 273.10 cents today. Prices closed nearer the session low and scored a bearish “outside day” down on the daily bar chart. The U.S. dollar index was higher today and that was bearish for copper. The copper market bulls and bears are on a level near-term technical playing field amid recent choppy trading. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 283.10 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 260.00 cents. First resistance is seen at 275.00 cents and then at 278.00 cents. First support is seen at today’s low of 272.20 cents and then at 270.00 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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