Gold Shows Follow-Through Strength, Hits 3-Mo. High; Silver Also in Rally Mode

(Kitco News) - Gold prices ended the U.S. day session moderately higher Thursday and hit a three-month high, showing good follow-through strength from solid gains posted Wednesday.
Meantime, silver futures also hit a three-month high Thursday. Gold and silver bulls have gained upside technical momentum this week. Buy stop orders were triggered in both gold and silver futures markets Thursday, to help push prices higher. Some slight safe-haven demand for gold is also seen this week. June Comex gold was last up $6.70 at $1,225.00 an ounce. July Comex silver was last up $0.254 at $17.475 an ounce.

The U.S. dollar index hit a nearly four-month low in overnight trading but did rebound during U.S. dealings to trade just above unchanged. Meantime, the Euro currency pushed to a three-month high against the greenback Thursday.

The other key outside market saw Nymex crude oil prices trading weaker Thursday but still not too far below last week’s five-month high above $62.00 a barrel. Crude prices have rallied by around $20.00 from the late-winter lows that reached the low forties per barrel.

The recent rout in world bond markets (lower prices, rising yields) is another clue the bust cycle in the raw commodity markets has ended. Rising bond yields point to rising inflation, which is bullish for hard assets. The other clues the raw commodity sector will see better days just ahead include the slumping U.S. dollar index and the price uptrend in raw commodity sector leader crude oil. And if hard assets do start to show general price appreciation, the other “paper” asset—equities—along with bonds will also likely see a downturn.

Reports overnight said better demand for physical gold from India is also helping to boost gold prices. The World Gold Council said an improving Indian economy and big consumer purchases for festivals were behind the rise in domestic demand in India.

The London P.M. fix is $1,225.00 versus the previous A.M. fixing of $1,214.75.

Technically, June gold futures prices closed nearer the session high today. Technically related buying was featured today as key resistance levels were penetrated on the upside. Gold bears still have the slight overall near-term technical advantage but the bulls have upside momentum. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,250.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,190.00. First resistance is seen at today’s high of $1,227.70 and then at $1,235.00. First support is seen at today’s low of $1,211.90 and then at $1,200.00. Wyckoff’s Market Rating: 4.5

July silver futures prices closed nearer the session high today and hit a 3.5-month high. Silver bulls have the near-term technical advantage and still have upside momentum. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.48. First resistance is seen at today’s high of $17.585 and then at $17.80. Next support is seen at $17.20 and then at today’s low of $17.07. Wyckoff's Market Rating: 6.0.

May N.Y. copper closed down 55 points at 294.45 cents today. Prices closed near mid-range today. Copper bulls have the near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 272.20 cents. First resistance is seen at this week’s high of 296.10 cents and then at 300.00 cents. First support is seen at 291.75 cents and then at last week’s low of 289.50 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff