Gold, Silver Gain Amid Depreciating U.S. Dollar
(Kitco News) - Gold and silver futures prices are higher in early U.S. trading Thursday, on follow-through strength from Wednesday’s gains. The cash gold market is a bit weaker today. Official daily metals futures settlement prices occur in early afternoon, U.S. time. Thus, the disparity sometimes between cash and futures daily price changes—especially when bigger price moves occur later in the afternoons the previous day. A weaker U.S. dollar index again today is supporting the precious metals markets. April Comex gold futures were last up $8.30 an ounce at $1,329.70. May Comex silver was last up $0.086 at $16.505 an ounce.
World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The global equity markets are seeing pressure in part due to a slightly hawkish FOMC meeting of the Federal Reserve that concluded Wednesday afternoon with a quarter-point U.S. rate hike, which was fully expected. The technology sectors remain under pressure this week amid the FaceBook data scandal.
Upside price action in gold and silver markets, post-FOMC, is an example of the “sell-the-rumor, buy-the-fact” scenario that occurs when traders factor into prices expected bearish events before they actually occur. In this case, the selling pressure in gold and silver occurred because traders reckoned a U.S. rate hike would be bearish for the metals. And when the rate hike actually occurred, the metals moved higher because the sellers were already exhausted and had played out their rate-hike hand.
The Bank of England held its monetary policy meeting on Thursday. The BOE did not make any changes, which is what the marketplace expected.
In overnight news, the Euro zone’s composite purchasing managers index (PMI) came in at 55.3 in March. That was below market expectations for a reading of 56.7. A reading above 50.0 suggests growth.
The key “outside markets” on Thursday morning see the U.S. dollar index slightly lower and hitting a two-week low overnight. Trading in the USDX has been choppy but the bears have gained some momentum late this week. Meantime, Nymex crude oil prices are slightly weaker on profit taking from this week’s strong gains that saw prices hit a seven-week high on Wednesday.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the monthly house price index, the U.S. flash services and manufacturing PMIs, leading economic indicators, and the Kansas City Fed manufacturing survey.
Technically, April gold bulls and bears are back on a level overall near-term technical playing field. A five-week-old downtrend on the daily bar chart was negated Wednesday. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at Wednesday’s high of $1,336.90 and then at the March high of $1,342.00. First support is seen at $1,320.00 and then at $1,310.00. Wyckoff's Market Rating: 5.0
May silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the March high of $16.895 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 this week’s high of $16.665 and then at the March high of $16.895. Next support is seen at $16.25 and then at this week’s low of $16.10. Wyckoff's Market Rating: 3.5.