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P.M. Kitco Metals Roundup: Gold Back Above $1,200 On Big Bounce; Several Factors Cited

Monday April 27, 2015 2:10 PM

(Kitco News) - Heavy short covering in the futures market, bargain hunting in the cash market and even some safe-have demand were featured Monday as gold prices posted solid gains and pushed back above the key $1,200.00 level. Gold hit a five-week low last Friday and the bargain hunters decided to step in and buy the dip Monday. Buy stop orders triggered in the futures market helped accelerate the rally in gold. Worries about the Greek-EU/IMF debt talks prompted some safe-haven demand for the metal. The U.S. dollar index also sold off during the trading session Monday, which was another positive for the gold market. June Comex gold was last up $27.40 at $1,202.40 an ounce. May Comex silver was last up $0.699 at $16.335 an ounce.

There are reports Citibank did a $1 billion gold swap with Venezuela that was completed late last week, which is also being deemed as a bullish element for gold. Venezuela reportedly did the deal with Citibank to raise its foreign reserves.

Reports Monday said there has been very little progress in the Greece-European Union/IMF debt restructuring talks. The reports said EU and International Monetary Fund officials did discuss what would happen if Greece defaulted on its debt, which is a sign of how little headway is being made between Greece and the EU/IMF. Greece reportedly reshuffled its negotiating team in an effort to make headway in the talks. Safe-haven assets like gold and U.S. Treasuries did see buying support from the Greece developments.

The U.S. dollar index fell to a three-week low Monday and could not hold gains seen overnight. The greenback bulls have faded recently and the index is showing early technical clues of a market top being in place. The other key outside market, crude oil, sees prices modestly lower Monday. Crude prices are still in a four-week-old uptrend on the daily bar chart and there are early technical clues crude oil prices have bottomed.

Traders and investors are looking ahead to this week’s meeting of the Federal Reserve’s Open Market Committee (FOMC) that begins Tuesday and ends Wednesday. No press conference from Fed Chair Janet Yellen is scheduled for this meeting. As usual, the market place will parse every word of the statement that comes out after the meeting. No interest rate change is expected at this meeting. Most expect the Fed to reiterate its stance that its actions will be “data dependent.” Recent mixed U.S. economic data falls into the camp of the U.S. monetary policy doves who do not want to see U.S. interest rates rise anytime soon.

The London P.M. gold fix is $1,200.00 versus the previous A.M. fixing of $1,182.75.

Technically, June gold futures prices closed near the session high today. Gold bears still have the overall near-term technical advantage. However, a three-week-old downtrend on the daily bar chart was negated today. 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 today’s high of $1,206.70 and then at $1,210.00. First support is seen at $1,190.00 and then at $1,183.50. Wyckoff’s Market Rating: 3.5

May silver futures prices closed nearer the session high today on heavy short covering. Silver bears still have the near-term technical advantage but the bulls gained some momentum today. A four-week-old downtrend on the daily bar chart was negated. 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 last week’s low of $15.55. First resistance is seen at today’s high of $16.445 and then at $16.65. Next support is seen at $16.165 and then at $16.00. Wyckoff's Market Rating: 3.0.

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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