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Gold Ends Slightly Up on Short Covering, Weaker USDX

(Kitco News) - Gold prices ended the U.S. day session with slight gains Thursday. Short covering in the futures market and some bargain hunting in the cash market were featured. As has been the case for some time now, precious metals traders are keeping one eye on the U.S. dollar index, which traded on both sides of unchanged Thursday but was lower in afternoon action. Gold and silver traders are in need of some new fundamental developments to drive price action. Friday morning’s first-quarter U.S. gross domestic product report could provide a spark. August Comex gold was last up $2.50 at $1,189.00 an ounce. July Comex silver was last up $0.023 at $16.67 an ounce.

The U.S. dollar index treaded water Thursday morning after poking to a four-week high Wednesday. The index then weakened in late-morning dealings, which was mostly a profit-taking pullback from recent gains. In Asian trading overnight the greenback hit a 12-year high against the Japanese yen. Asian stock markets sold off sharply, partly due to the strong U.S. dollar. If the Asian stock markets continue their sell offs Friday, such could prompt some safe-haven demand for gold.

Recent U.S. economic data has led many market watchers to believe the Federal Reserve will raise interest rates this year. That’s been U.S. dollar-bullish and comes when other major central banks of the world remain in monetary policy easing modes. San Francisco Fed President John Williams said on Thursday in Singapore the Fed will likely start to raise rates sometime this year. He added that the slow pace of U.S. economic growth in the first quarter of this year was an anomaly.

Greece and its debt repayment problems are back near the front burner of the market place this week. Reports overnight said a Greece government spokesman said a deal will be reached between Greece and its EU/IMF creditors by Sunday. This news has given a slight lift to the Euro currency Thursday. However, a German EU official on Thursday said little progress is being made in the debt talks, adding that the Greeks always put a positive spin on the matter. The European Central Bank Thursday said a deal needs to be reached quickly in order to assuage jittery European financial markets. Greece and its lenders are meeting in Brussels to hammer out a deal. The Group of Seven industrial nations will meet in Germany, beginning Thursday, to likely discuss the Greece matter, as well as other world economic and financial issues. The Greece debt situation could also become a bullish element for safe-haven gold, if it further deteriorates.

Reports overnight said hedge funds are showing more interest in adding gold and silver to their portfolios, and especially silver. A Bank of America Merrill Lynch report said hedge funds are snapping up silver at the fastest rate in 18 years.

The London P.M. fix is $1,185.00 versus the previous A.M. fixing of $1,189.45.

Technically, August gold futures prices closed nearer the session high on tepid short covering in a bear market. Gold bears still 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 $1,200.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the May low of $1,170.00. First resistance is seen at today’s high of $1,192.80 and then at $1,200.00. First support is seen at today’s low of $1,180.20 and then at $1,175.00. Wyckoff’s Market Rating: 2.5

July silver futures prices closed near mid-range today and did hit another two-week low early on. Silver bears have the near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the May high of $17.775 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at $16.81 and then at $17.00. Next support is seen at today’s low of $16.54 and then at $16.50. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed down 10 points at 276.75 cents today. Prices closed nearer the session low and closed at  a four-week low close today. Copper bears have the near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 290.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of 266.00 cents. First resistance is seen at 279.05 cents and then at this week’s high of 283.45 cents. First support is seen at today’s low of 275.85 cents and then at 272.50 cents. Wyckoff's Market Rating: 4.0.

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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