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Gold Firmer on Safe-Haven Demand, Short Covering and Bargain Hunting

(Kitco News) - Gold prices ended the U.S. day session moderately higher Monday. After trading near unchanged in early-morning action, the yellow metal saw a late-morning rally that was fueled by some safe-haven demand due to the Greece debt-talks breakdown. Short covering in the futures market and bargain hunting in the cash market were also featured, helped along by the U.S. dollar index losing its early gains. August Comex gold was last up $7.30 at $1,186.50 an ounce. July Comex silver was last up $0.275 at $16.10 an ounce.

The Greece-EU/IMF debt negotiations that had been ongoing broke down on Sunday. Now, reports say Greece’s prime minister will try to deal directly with European Union leaders on the matter. The next deadline is June 25, on which a meeting in Brussels occurs between European Union leaders. This news has pressured the Euro currency and European stock markets, and given the U.S. dollar index a boost. Greek bond yields pushed higher and are now trading near 28% for the two-year note.

The Federal Reserve’s Open Market Committee (FOMC) begins its meeting on U.S. monetary policy Tuesday. The meeting ends Wednesday with an FOMC statement followed by a press conference from Fed Chair Janet Yellen. Most market watchers do not expect the FOMC to raise interest rates at the June meeting, but instead do so in September or later. Still, the FOMC statement and Yellen press conference will be very closely scrutinized by the market place, and market price action could become very active in the immediate aftermath of the meeting.

The market place will keep a close eye on U.S. and German bond markets this week, after the recent beating both have taken. Early Monday, German and U.S. bond prices were a bit firmer.

The London P.M. fix is $1,178.25 versus the previous A.M. fixing of $1,182.80.

Technically, August gold futures prices closed nearer the session high today and scored a bullish “outside day” up on the daily bar chart—whereby today’s high was higher and low was lower than Friday’s daily trading range, with a higher close on the day. Short covering, bargain hunting and safe-haven demand were featured today. Gold bears still have the overall near-term technical advantage. A four-week-old downtrend is in place on the daily bar chart. 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 June low of $1,161.00. First resistance is seen at last week’s high of $1,191.80 and then at $1,200.00. First support is seen at $1,180.00 and then at today’s low of $1,171.90. Wyckoff’s Market Rating: 3.0

July silver futures prices closed nearer the session high today on short covering and bargain hunting. Silver still bears have the firm overall near-term technical advantage. A four-week-old downtrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the April low of $15.595. First resistance is seen at today’s high of $16.235 and then at $16.40. Next support is seen at $16.00 and then at last week’s low of $15.77. Wyckoff's Market Rating: 2.5.

July N.Y. copper closed down 290 points at 264.85 cents today. Prices closed near mid-range and hit a three-month low today. Copper bears have the near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the June high of 276.70 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the March low of 255.40 cents. First resistance is seen at 266.00 cents and then at today’s high of 268.10 cents. First support is seen at today’s low of 262.55 cents and then at 260.00 cents. Wyckoff's Market Rating: 3.0.

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

 

 

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