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Jim Wyckoff P.M. Kitco Metals Roundup: Gold Firmer and Hits Another High, But Silver Stealing the Show with Big Price Gains

21 April 2011, 02:41 p.m.
By Jim Wyckoff
Of Kitco News

(Kitco News) - Comex gold futures prices ended higher Thursday and scored another new all-time record high of $1,509.60 an ounce, basis the June contract. However, Comex silver futures stood in the spotlight as its gains well outpaced those in gold. May silver hit a fresh 31-year high of $46.40 on Thursday. A lower U.S. dollar index and higher crude oil prices Thursday once again fueled advances in precious metals prices. Comex June gold last traded up $7.80 an ounce at $1,506.70. Spot gold last traded up $4.40 at $1,507.00.

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The silver market has shown up "big brother" gold the past couple days. During the trading session Wednesday and Thursday silver futures prices posted gains of around $1.50 or more an ounce on the day. While some analysts are calling the recent silver market move a "bubble," such is not likely the case. Remember that gold has been setting new all-time highs for months, while silver has yet to reach an all-time high. It can be better argued that silver is just playing catch up to gold and other raw commodity markets that have also set new all-time highs in recent months.

The U.S. dollar index traded lower again Thursday and hit a fresh 2.5-year low. It seems as if the Standard & Poors downgrade of the U.S. government's debt outlook is having a delayed bearish impact on the dollar index. The very weak overall technical posture of the U.S. dollar index remains a significantly bullish factor for the precious metals markets.

Crude oil prices traded higher Thursday, as the crude bulls have regained upside technical momentum this week and prices are closing in on last week's high of $114.05 a barrel, basis the nearby June futures contract. Crude is now trading above $110.00 a barrel is also an underlying bullish factor for the precious metals due to the inflationary implications.

The precious metals market bulls continue to benefit from safe-haven demand coming from several fronts. Besides the move by the S&P ratings agency to downgrade the outlook for U.S. government debt, the European Union's smaller countries' have their own sovereign debt crisis. 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 and could flare up at any time.

The London P.M. gold fix was $1,504.00 versus the previous P.M. fixing of $1,501.00.

Technically, June Comex gold futures closed near mid-range Thursday. Gold bulls remain in strong overall technical command. There are still no early technical warning signals that a market top is close at hand. The lack of high volatility on this week's run to new highs is bullish, too. If gold does start to see bigger daily price moves on the upside that would then suggest the bulls have become over-extended and that a corrective pullback is coming soon. Gold prices are in a nearly three-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 resistance at $1,520.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,478.00. First resistance is seen at Thursday's record high of $1,509.60 and then at $1,515.00. First support is seen at Thursday's low of $1,500.40 and then at $1,493.80. Wyckoff's Market Rating: 9.0.

May silver futures closed up 183.9 cents at $46.295 an ounce Thursday. Prices closed near the session high and hit another fresh contract and 31-year high of $46.40. Bulls still have the strong overall near-term and longer-term technical advantage. A nearly three-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. However, the bigger daily price moves of the past two sessions do suggest the market has become short-term overdone on the upside and due for a profit-taking, corrective pullback very soon. The next downside price breakout objective for the bears is closing prices below major psychological support at $42.00. Bulls' next upside price objective is producing a close above major psychological resistance at $50.00 an ounce. First resistance is seen at Thursday's contract high of $46.40 and then at $47.00. Next support is seen at $46.00 and then at $45.50. Wyckoff's Market Rating: 10.0.

May N.Y. copper closed up 525 points at 439.20 cents Thursday. Prices closed nearer the session high and saw more short covering and bargain hunting. The key "outside markets" were bullish for the copper market again Thursday, as the U.S. dollar index was lower, while crude oil and the U.S. stock indexes were higher. Copper bulls have the overall near-term technical advantage and are gaining some fresh upside momentum. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 453.30 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at this week's low of 417.20 cents. First resistance is seen at Thursday's high of 440.30 cents and then at 442.50 cents. First support is seen at 437.50 cents and then at 435.00 cents. Wyckoff's Market Rating: 7.0.



By Jim Wyckoff of Kitco News;

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