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Gold Solidly Higher On Safe-Haven Demand, Technical

(Kitco News) - Gold prices were ending the U.S. day session with solid gains and near the daily high early Thursday afternoon. The yellow metal was supported on safe-haven demand as world markets were unsettled by Japan’s central bank surprisingly taking no action at its monetary policy meeting. Gold and silver bulls are also having a good week from a technical perspective, which has invited fresh chart-based buying in both metals. June Comex gold was last up $17.00 at $1,267.40 an ounce. July Comex silver was last up $0.265 at $17.60 an ounce.

The Bank of Japan left its monetary policy unchanged at its meeting Thursday. Most of the marketplace was surprised, as most looked for additional stimulus measures to be unveiled. The Japanese yen rallied and Japanese stocks sold off sharply in the wake of the BOJ meeting. The BOJ inaction came despite a report released Thursday that showed consumer price inflation in Japan down 0.3% in March, year-on-year. The BOJ is battling slow economic growth, price deflation and an appreciating yen on the world foreign exchange market.

The precious metals markets were also supported by a downbeat U.S. economic report Thursday. The first-quarter advance GDP report came in at up a paltry 0.5%, year-on-year, which was below expectations. This downbeat, important economic data led many market watchers to believe that June is now “off the table” for a Federal Reserve interest rate hike.

World stock markets were mostly lower overnight, in part spooked by the lack of BOJ action on its monetary policy. U.S. stock indexes were mixed in afternoon trading in New York.

Live 24 hours gold chart [Kitco Inc.]

Nymex crude oil prices were firmer Thursday and hit another nearly five-month high, trading above $45.00 a barrel. The other key “outside market” saw the U.S. dollar index lower and near the multi-month low scored in mid-April. The weaker greenback recently has been a bullish underlying factor for the precious metals and for the entire raw commodity sector.

Technically, June gold futures prices closed nearer the session high and scored a bullish “outside day” up on the daily bar chart today. The gold bulls have the firm overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,287.80. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at today’s low of 1,239.10. First resistance is seen at the April high of $1,272.40 and then at $1,280.00. First support is seen at $1,260.00 and then at $1,250.00. Wyckoff’s Market Rating: 7.0

July silver futures prices closed nearer the session high today and closed at an 11-month high close. The silver market bulls have the firm overall near-term technical advantage. Silver 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 $16.75. First resistance is seen at today’s high of $17.65 and then at the April high of $17.77. Next support is seen at today’s low of $17.185 and then at $17.00. Wyckoff's Market Rating: 7.5.

July N.Y. copper closed up 80 points at 223.15 cents today. Prices closed nearer the session high. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 230.55 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of 214.00 cents. First resistance is seen at 225.00 and then at this week’s high of 227.25 cents. First support is seen at this week’s low of 220.10 cents and then at 218.00 cents. Wyckoff's Market Rating: 5.0.

In other overnight news, the Euro zone got a slightly upbeat economic report Thursday. Euro zone businesses and consumers were more optimistic in April. The European Commission’s economic sentiment indicator was 103.9 in April from 103.0 in March. The reading was a bit higher than expected.

Nymex crude oil prices are near steady in early U.S. trading, but hovering near Wednesday’s nearly five-month high. Nymex crude is trading above $45.00 a barrel. The other key “outside market” finds the U.S. dollar index lower and near the multi-month low scored in mid-April. The weaker greenback recently has been a bullish underlying factor for the precious metals and for the entire raw commodity sector.

Traders and investors have mostly digested the results of the meeting of the U.S. Federal Open Market Committee (FOMC) that ended early Wednesday afternoon with a statement. There were no changes in U.S. monetary policy, as expected. The statement was deemed neutral and provided just scant clues that would favor the dovish or hawkish monetary policy camps.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the advance first-quarter GDP report, and the Kansas City Fed manufacturing survey.

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

Wyckoff’s Daily Risk Rating: 3.0 (Trader and investor market risk aversion is a bit 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 and continue to show resilience. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the April high of $1,272.40. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,225.00. First resistance is seen at $1,264.70 and then at $1,272.40. First support is seen at $1,250.00 and then at the overnight low of $1,239.10. Wyckoff’s Market Rating: 6.5

July silver bulls have the solid overall near-term technical advantage. 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 $16.50. First resistance is at this week’s high of $17.48 and then at the April high of $17.77. Next support is seen at the overnight low of $17.185 and then at $17.00. 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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