(Kitco New) - Gold prices are modestly lower and silver modestly higher near midday Tuesday. Both markets hit nearly three-week lows today but are well up from their session lows. Some bargain hunters are stepping in to buy this week’s big dips in prices. June gold was last down $9.40 at $2,336.60. May silver was last up $0.03 at $27.28.
Profit taking and weak long liquidation from the shorter-term futures traders has been featured in both precious metals early this week. While major central banks and other longer-term investors have been snapping up gold bullion with no intention of selling it back anytime soon, it’s a different story with the shorter-term futures traders and the high leverage involved. That’s what drove this week’s downdraft in gold and silver prices: weak-handed futures traders (both in the U.S. and overseas futures markets) who are under water. Many of them are likely getting margin calls from their brokers after futures exchanges raised their margin requirements. These shorter-term speculators are being forced to liquidate their losing long positions. Also, the fortunate futures traders that still hold a profit are taking those profits and getting out of the gold and silver futures markets. This is not anything new in futures markets trading. While the gold and silver bulls have lost their upside momentum, both markets remain overall firmly technically bullish. This week’s sell offs in the gold and silver markets are still just significant downside price corrections in major bull runs. However, if the sharp selling pressure continues deeper into this week, near-term technical damage would likely be inflicted to begin to suggest near-term market tops, if not major market tops, are in place. Trading action in gold and silver the rest of this week will be extra important. The bulls need to step up, stop the bleeding and show some fresh power soon to keep their bull runs alive.
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are firmer and trading around $82.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.588%. The weaker USDX, firmer crude oil and slight downtick in bond yields are friendly “outside-market” elements for the metals markets, and probably prompting some buyers in gold and silver to step up today.
Technically, June gold futures bulls still have the firm overall near-term technical advantage. However, a nine-week-old uptrend on the daily bar chart has stalled out. Bulls’ next upside price objective is to produce a close above solid resistance at $2,400.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,250.00. First resistance is seen at $2,350.00 and then at $2,375.00. First support is seen at today’s low of $2,304.60 and then at $2,300.00. Wyckoff's Market Rating: 7.0.
May silver futures bulls still have the firm overall near-term technical advantage. However, a two-month-old price uptrend on the daily bar chart has stalled out. Silver bulls' next upside price objective is closing prices above solid technical resistance at $29.00. The next downside price objective for the bears is closing prices below solid support at $25.00. First resistance is seen at today’s high of $27.42 and then at $28.00. Next support is seen at today’s low of $26.715 and then at $26.575. Wyckoff's Market Rating: 7.0
May N.Y. copper closed down 595 points at 441.65 cents today. Prices closed nearer the session low on profit taking after hitting a 22-month high Monday. The copper bulls have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 460.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 425.00 cents. First resistance is seen at today’s high of 449.10 cents and then at this week’s high of 455.05 cents. First support is seen at today’s low of 438.60 cents and then at 434.00 cents. Wyckoff's Market Rating: 7.5.
