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Jim Wyckoff P.M. Kitco Metals Roundup: Comex Gold Hits $1,500.00 amid Weaker U.S. Dollar, Firmer Crude Oil Prices

19 April 2011, 02:14 p.m.
By Jim Wyckoff
Of Kitco News

(Kitco News) - Comex gold futures at midday Tuesday hit the major psychological level of $1,500.00 an ounce, after flirting with that key price for much of the morning. Tuesday's new all-time record high in June gold futures now stands at $1,500.50 an ounce. Meantime, silver futures notched a fresh 31-year high near $44.00 an ounce Tuesday. A weaker U.S. dollar index and firmer crude oil prices helped to support the higher precious metals prices Tuesday. June Comex gold last traded up $4.30 an ounce at $1,497.20. Spot gold last traded up $1.00 at $1,497.50.

The fact that gold hit the much-anticipated $1,500.00 mark will now garner even more general media attention, which in turn will likely draw even more general investor demand to the precious yellow metal. With the $1,500.00 mark now being hit for gold futures, traders and investors are now eyeing the next major upside technical price objective, which is $1,600.00 an ounce.

(NOTE: As a new feature for Kitco, I have started "tweeting" on Twitter. I will do several tweets a day, depending on market conditions. My tweeting mission is to provide you, my valued Kitco reader, with the fastest and most insightful precious metals market analysis in the world. If you want up-to-the-second analysis and perspective on the latest developments in precious metals markets, you need to follow me on Twitter. My account is @jimwyckoff.)

The U.S. dollar index traded solidly lower Tuesday, following good short-covering gains scored on Monday. The still-weak overall technical posture of the U.S. dollar index remains a bullish factor for the precious metals markets. If the dollar index can produce a sustained uptrend it would be a clue that gold has put in a near-term market top. Such seems well off in the distance at present.

Crude oil prices rebounded Tuesday and held moderate gains in afternoon trading, which also supported some fresh buying interest in the precious metals. Crude is still trading around $107.00 a barrel, which is an underlying bullish factor for the precious metals due to the inflationary implications.

Indeed, there are widespread notions inflationary price pressures will continue to build in the world's major economies. Many raw commodity prices are near record or multi-year highs. Meantime, central bankers of the major world economies the past two years have been flooding the financial system with printed money. Precious metals prices have been boosted in recent months in part by heightened inflation concerns among investors. Such will likely continue to be the case for the foreseeable future.

The precious metals market bulls also continue to benefit from safe-haven demand coming from several fronts. The latest development came from a surprise move on Monday by the Standard & Poors ratings agency to downgrade the outlook for U.S. government debt to negative. Also, the European Union's smaller countries' have their own sovereign debt crisis that is back on the front burner. Greece and Ireland are making the headlines this week, amid credit ratings downgrades and EU efforts to control the situation.  And while the tensions in the Middle East and northern Africa may have eased a bit, the problems in that oil-rich region will not go away any time soon.

The London P.M. gold fix was $1,490.50 versus the previous P.M. fixing of $1,493.00.

Technically, June Comex gold futures closed nearer the session high Tuesday as bulls remain in strong overall technical command. There are still no early technical warning signals that a market top is close at hand. Prices are in a 2.5-month-old uptrend on the daily bar chart and in a 10-year-old uptrend on the longer-term monthly chart. Bulls' next near-term upside technical objective is to produce a close above psychological resistance at $1,600.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week's low of $1,445.00. First resistance is seen at Tuesday's all-time high of $1,500.50 and then at $1,510.00. First support is seen at Tuesday's low of $1,488.20 and then at $1,478.00. Wyckoff's Market Rating: 9.0.

May silver futures closed up 88.4 cents at $43.84 an ounce Tuesday. Prices closed near the session high today and hit another fresh contract and 31-year high. Same story: Bulls have the strong overall near-term and longer-term technical advantage. A 2.5-month-old uptrend is in place on the daily bar chart. There are still no early clues to suggest a market top is close at hand. The next downside price breakout objective for the bears is closing prices below major psychological support at $40.00. Bulls' next upside price objective is producing a close above solid technical resistance at $45.00 an ounce. First resistance is seen at Tuesday's contract and 31-year high of $43.93 and then at $44.00. Next support is seen at $43.50 and then at $43.00. Wyckoff's Market Rating: 9.5.

May N.Y. copper closed up 515 points at 424.90 cents Tuesday. Prices closed nearer the session high and saw some short covering and perceived bargain hunting. Bulls have the slight overall near-term technical advantage. Worries about demand from China are bearish for copper. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 435.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the March low of 407.60 cents. First resistance is seen at Tuesday's high of 426.10 cents and then at this week's high of 428.80. First support is seen at 422.50 cents and then at 420.00 cents. Wyckoff's Market Rating: 6.0.


By Jim Wyckoff of Kitco News;

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