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A.M. Kitco Metals Roundup: Gold Prices Lower In Wake Of FOMC Statement, U.S. Jobless Claims

Thursday April 30, 2015 8:30 AM

Editor's Note: The article was updated a second time to reflected lower gold prices.

(Kitco News) - Gold prices are sharply lower in early U.S. trading Thursday, in the wake of a bearishly construed FOMC statement. Losses were extended following an upbeat U.S. jobless claims report this morning. Fresh chart-based selling has also surfaced, including sell stop orders being triggered when technical support levels were breached in gold and silver markets. June Comex gold was last down $24.50 at $1,186.00 an ounce. May Comex silver was last down $0.75 at $15.92 an ounce.

Gold saw strong selling pressure develop after the weekly U.S. jobless claims report showed a decline to 262,000 in the latest reporting week—a 15-year low. The U.S. dollar index saw a rebound on the jobs data.

The market place has mostly digested the U.S. Federal Reserve’s Open Market Committee (FOMC) statement Wednesday afternoon. The statement said the U.S. economy slowed in the first quarter, but the slowdown is likely just transitory. There were mixed ideas on whether the statement fell into the camp of the monetary policy hawks or doves. The strong jobless claims report Thursday has some rethinking that the FOMC statement favors the hawks.

Market features this week are a rally in crude oil prices to a 4.5-month high and a slump in the U.S. dollar index to a three-month low. Near-term technical signals suggest the crude oil market has put in a price bottom and the dollar index has put in a price top. These developments are significantly bullish underlying factors for the raw commodity sector—suggesting the raw commodity “bust” has ended that a “boom” cycle will follow.

The European Union saw its consumer price index hold steady in April, after posting declines for the past four months, it was reported Thursday. This report somewhat assuages fears in the EU that that bloc is trapped in a deflationary price environment.

There may be some slight progress in the Greece-European Union/IMF debt restructuring talks this week. Reports said Greece’s reshuffling of its negotiating team may be benefitting the talks. Perhaps a bigger concern at present in the EU is falling bond yields in most countries whose economies are on more solid footing than Greece. The big bond-buying, quantitative easing program implemented by the ECB a while back has deflated the yields of most European bonds. While trying to fix one problem the ECB may have created another.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the employment cost index, personal income and outlays, and the ISM Chicago 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 so far this week is not keen.)

(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 $1,204.30 versus the previous P.M. fixing of $1,209.00.

Technically, June gold futures market bears have the overall near-term technical advantage and regained downside momentum Thursday. The gold bulls’ next upside near-term price objective is to produce a close above solid technical resistance at this week’s high of $1,214.90. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,174.10. First resistance is seen at $1,200.00 and then at today’s high of $1,207.40. First support is seen at $1,183.50 and then at $1,174.10. Wyckoff’s Market Rating: 3.0

May silver futures bears have the overall near-term technical advantage and regained downside momentum Thursday. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at today’s high of $16.70 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 $16.25 and then at $16.50. Next support is at today’s low of $15.91 and then at $15.75. 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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