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Gold Higher On Short Covering, Bargain Hunting, Weaker U.S. Dollar

(Kitco News) - Gold prices are moderately higher in early U.S. trading Monday. A short-covering bounce in the futures market and bargain hunting in the cash market are featured, following the selling pressure seen late last week. A weaker U.S. dollar index to start the trading week is also supportive for the precious metals markets. June Comex gold was last up $6.30 at $1,236.30 an ounce. May Comex silver was last up $0.075 at $16.97 an ounce.

Global stock markets were weaker in uneventful trading overnight. Generally weaker raw commodity prices Monday, led by crude oil, are in part to blame for the equities markets’ weakness to start the week. Quarterly corporate earnings reports are in focus for stock market traders, at present. U.S. stock indexes are pointed toward slightly lower openings when the day session begins in New York.

Nymex crude oil prices are lower in early U.S. trading and hovering just above $43.00 a barrel. The other key “outside market” finds the U.S. dollar index lower Monday and still mired in a near-term price downtrend.

Live 24 hours gold chart [Kitco Inc.]

Traders and investors are looking ahead to this week’s meeting of the Federal Open Market Committee (FOMC). The Fed meeting begins Tuesday morning and ends early Wednesday afternoon with a statement. No changes in U.S. monetary policy are expected at this meeting. However, the statement at the end of the meeting could provide clues on the timing of the next monetary policy move by the FOMC.

The Bank of Japan holds its regular monetary policy meeting on Thursday.

U.S. economic data due for release Monday includes new residential sales and the Texas manufacturing outlook survey.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated today.)

(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 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).

Technically, June gold futures bulls have the overall near-term technical advantage, but have faded recently. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,272.40. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the March low of $1,207.70. First resistance is seen at $1,245.00 and then at $1,250.00. First support is seen at last week’s low of $1,228.50 and then at $1,225.00. Wyckoff’s Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver bulls have the solid overall near-term technical advantage as prices hit an 11-month high late last week. Silver bulls’ next upside price breakout objective is closing futures 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 $16.00. First resistance is at the overnight high of $17.12 and then at Friday’s high of $17.36. Next support is seen at $16.75 and then at $16.50. Wyckoff's Market Rating: 7.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

 

 

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 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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