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Jim Wyckoff P.M. Kitco Metals Roundup: Comex Gold Ends Higher, Hits New High, amid Bullish Reaction to FOMC Statement

27 April 2011, 02:50 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/

(Kitco News) - Comex gold and silver futures prices rallied sharply and moved to daily highs in afternoon trading, in the wake of a bullishly construed statement from the Federal Reserve. June gold hit a new all-time record high of $1,524.20 an ounce. The U.S. dollar index weakened and fell to its daily low, hitting a fresh 2.5-year low, in the wake of the FOMC meeting statement, which contained no major surprises but did hint that U.S. interest rates would remain low for some time to come. That was bullish for metals due to the inflationary implications and because it was also bearish for the U.S. dollar. June gold last traded up $18.30 an ounce at $1,521.80. Spot gold last traded up $14.30 at $1,522.00. May Comex silver last traded up $1.80 an ounce at $46.85.

Traders were anxiously awaiting Wednesday afternoon's first-ever press conference to discuss the meeting and the Fed's monetary policy. As of this writing the press conference was in progress and no significant developments were coming from it. The reason for the keen market place interest in Bernanke's post-FOMC remarks is that traders really did not know what to expect from the Fed chief.

The U.S. dollar index was lower again Wednesday and hit another fresh 2.5-year low. The index slipped further after the FOMC statement, due to the Fed suggesting U.S. interest rates won't be rising any time soon. The very weak overall technical posture of the U.S. dollar index remains a bullish factor for the precious metals markets.

Crude oil prices were firmer Wednesday. The crude bulls still have some upside technical momentum as 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 $112.00 a barrel is also an underlying bullish factor for the precious metals due to the inflationary implications.

The London P.M. gold fixing was $1,511.00 versus the previous P.M. fixing of $1,497.50.

Technically, June Comex gold futures prices closed near the session high Wednesday. Gold bulls remain in strong overall technical command. There are still no early technical warning signals that a market top is close at hand. For gold, the recent lack of high volatility 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 this week's low of $1,492.00. First resistance is seen at Wednesday's record high of $1,524.20 and then at $1,530.00. First support is seen at $1,510.00 and then at Wednesday's low of $1,503.30. Wyckoff's Market Rating: 9.0.

May Comex silver futures closed nearer the session high Wednesday and recovered most of Tuesday's big losses. Still, early-week price action produced a bearish buying "exhaustion tail" on the daily bar chart, whereby buying interest dried up at higher price levels. This is still an early clue of a near-term market top being in place. But bulls still have the overall near-term and longer-term technical advantage, and good follow-through buying strength on Thursday would work to render moot the aforementioned buying exhaustion tail. The specter of the much higher daily price volatility seen in silver just recently is not bullish for the market and is indicative of a final, topping process in a mature bull market. Still, a nearly three-month-old uptrend is in place on the daily bar chart. The next downside price breakout objective for the bears is closing prices below solid technical support at $44.00. Bulls' next upside price objective is producing a close above solid technical resistance at Monday's contract high of $49.82 an ounce. First resistance is seen at Wednesday's high of $47.19 and then at $47.50. Next support is seen at $46.00 and then at $45.50. Wyckoff's Market Rating: 8.5.

May N.Y. copper closed down 875 points at 423.15 cents Wednesday. Prices closed nearer the session low and closed scored a big and bearish "outside day" down on the daily bar chart. Trading has turned very choppy. Copper bulls and bears are presently on a near-term level technical playing field. 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 425.00 cents and then at 427.50 cents. First support is seen at Wednesday's low of 420.90 cents and then at 417.20 cents. Wyckoff's Market Rating: 5.0.

If you want daily up-to-the-second market analysis on gold and silver price action, follow me on Twitter. It's free, too. My account is @jimwyckoff .

 

By Jim Wyckoff of Kitco News; jwyckoff@kitco.com

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