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Jim Wyckoff P.M. Kitco Metals Roundup: Gold Ends Firmer, Hits Another High; Silver Nears $50.00 Early but Finishes Down from High

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

(Kitco News) - In a very active trading session Monday, Comex gold and silver futures prices hit new for-the-move highs, with silver once again leading the charge. Comex May silver futures once again posted very strong daily gains that pushed prices very close to $50.00 an ounce, scoring a 31-year high of $49.82 in early trading Monday. Meantime, Comex gold futures prices notched another new all-time record high of $1,519.20 an ounce Monday, basis the June contract. Silver prices did back well off the daily high by the close of daytime trading. Comex June gold last traded up $7.60 an ounce at $1,511.40. Spot gold last traded up $6.30 at $1,511.50. May Comex silver last traded up $1.55 at $47.60.

(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 free, 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 silver market has been showing up "big brother" gold the past few days. During the past three trading sessions silver futures futures prices have posted intra-day gains of better than $1.00 an ounce, with prices early Monday showing big daily gains of over $3.00 an ounce at one point. The fact that the silver market has now gone parabolic does suggest the market has taken one more step in what is now a mature bull market run. This does not necessarily suggest a market top is imminent. However, yet another step taken in a mature bull market run does serve as a warning signal that daily price moves in the silver market will likely remain more volatile--on the upside and on the downside--in the near term. Also, commodity market price history has shown that the last phase of a major bull market run in commodities can be a "blow-off-top" phase, in which daily price action does become significantly more volatile before a major market top occurs.

The U.S. dollar index was weaker early Monday morning but did rebound off its low as the day progressed. That did work to produce some profit-taking pressure that took the precious metals off their daily highs. Still, the U.S. dollar index is hovering near a 2.5-year low. The still very weak overall technical posture of the U.S. dollar index remains a significantly bullish factor for the precious metals markets.

Crude oil prices are firmer early Monday morning, but did back off the high as the day wore on. That also was a bit bearish for gold and silver. Still, the crude bulls have upside technical momentum and prices are closing in on the April high of $114.05 a barrel, basis the nearby June futures contract. The fact crude is 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. Tensions in the Middle East and northern Africa escalated over the weekend, with fresh military action in Libya and with protests and violence in Syria and Yemen. The problems in that oil-rich region will not go away and could flare up even further in the near term.

Gold and silver traders are anxiously awaiting Wednesday afternoon's conclusion of the latest meeting of the U.S. Federal Reserve's Open Market Committee (FOMC). After the meeting Fed Chairman Bernanke will hold a first-ever press conference to discuss the meeting and the Fed's monetary policy. Precious metals traders will closely scrutinize Wednesday afternoon's Fed press conference for fresh clues on the inflation front. The specter of rising inflation have been a major booster of the precious metals markets recently.

The London P.M. gold fix was not available as the U.K. markets were closed for a holiday on Monday.

Technically, June Comex gold futures closed near mid-range Monday. Gold bulls remain in strong overall technical command. There are still no early technical warning signals that a market top is close at hand. Gold traders need to now look to the more volatile silver market for direction. The silver market has gone parabolic. Any technical clues that do hint a market top is close at hand in silver would likely suggest the same for gold. But right now for gold, the lack of high volatility recently is bullish. Gold prices are in a 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 $1,550.00. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,477.80. First resistance is seen at Monday's record high of $1,519.20 and then at $1,525.00. First support is seen at Monday's low of $1,502.20 and then at $1,493.80. Wyckoff's Market Rating: 9.0.

May silver futures closed near mid-range Monday. Bulls have the strong overall near-term and longer-term technical advantage. Bulls remain in strong overall technical command. A nearly three-month-old uptrend is in place on the daily bar chart. The market is presently overdone on the upside, on a short-term basis, and due for a decent corrective, profit-taking pullback soon. The next downside price breakout objective for the bears is closing prices below major solid technical support at $45.00. Bulls' next upside price objective is producing a close above major psychological resistance at $50.00 an ounce. First resistance is seen at $48.00 and then at $48.50. Next support is seen at $47.00 and then at $46.69. Wyckoff's Market Rating: 10.0.

May N.Y. copper closed down 975 points at 430.25 cents Monday. Prices closed nearer the session low. Trading has turned choppy. Copper bulls have the slight overall near-term technical advantage but did fade Monday. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week's high of 440.30 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at last week's low of 417.20 cents. First resistance is seen at 432.50 cents and then at 435.00 cents. First support is seen at Monday's low of 426.00 cents and then at 425.00 cents. Wyckoff's Market Rating: 6.0.



By Jim Wyckoff of Kitco News;

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