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P.M. Kitco Metals Roundup: Comex Gold Ends Lower on Bearish Outside Markets; Bulls Need to Show Fresh Power Soon

Tuesday May 22, 2012 2:13 PM

Comex gold futures prices ended the U.S. day session moderately lower Tuesday, pressured by bearish “outside markets” that included a firmer U.S. dollar index and lower crude oil prices. The gold market is also seeing some consolidation on the charts after recent gains. However, the gold market bulls need to step up and show fresh power very soon to keep the modest near-term technical momentum they achieved late last week. June gold last traded down $12.40 at $1,576.30 an ounce. Spot gold was last quoted down $15.00 an ounce at $1,578.00.  July Comex silver last traded down $0.136 at $28.185 an ounce.

The market place received a negative surprise overnight when the Fitch credit rating agency downgraded Japan’s sovereign debt rating due to the increasing public sector debt load. That set the tone for a “risk off” trading day in the market place, which was bearish for most markets, including the precious metals.

Traders are now awaiting a European Union leaders’ summit meeting in Brussels on Wednesday. Traders and investors want to see the next steps that will be taken by officials to try to mop up the EU debt crisis—namely Greece’s present mess.

Also on Wednesday the Western powers meet with Iran in Baghdad, regarding Iran’s nuclear program. The early talk is that the Baghdad meeting could see progress made, which would be further bearish news for the crude oil market.

Precious metals traders and investors will continue to closely monitor U.S., EU and Chinese economic data for early clues on monetary policy actions from the central banks.

The U.S. dollar index was firmer Tuesday. The index Friday hit a four-month high. The greenback has benefited recently on fresh safe-haven demand. The dollar index bulls still have some upside near-term technical momentum. Meantime, crude oil futures prices were lower Tuesday after hitting a 6.5-month low of $91.12 a barrel on Monday. Crude oil remains in a bearish fundamental and technical posture.

The London P.M. gold fixing was $1,582.50 versus the previous London P.M. fixing of $1,592.50.

Technically, June gold futures prices closed nearer the session low again Tuesday. While recent upside price action did give the bulls a boost, they need to show fresh power very soon to keep that near-term momentum they gained late last week. Gold bears have the overall near-term technical advantage. An 11-week-old downtrend is in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears' next near-term downside price objective is closing prices below solid technical support at last week’s low of $1,526.70. First resistance is seen at Tuesday’s high of $1,594.40 and then at $1,600.00. First support is seen at Tuesday’s low of $1,572.00 and then at $1,567.80. Wyckoff's Market Rating: 3.0.

July silver futures prices closed nearer the session low again Tuesday. Silver prices are in an 11-week-old downtrend on the daily bar chart. The silver bears have the solid near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at Tuesday’s high of $28.775 and then at $29.00. Next support is seen at Tuesday’s low of $27.975 and then at $27.78. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed down 150 points 348.70 cents Tuesday. Prices closed nearer the session low. The key “outside markets” were bearish for the copper market Tuesday, as the U.S. dollar index was firmer and crude oil prices were weaker. Copper bears have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 365.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the January low of 340.60 cents. First resistance is seen at this week’s high of 352.05 cents and then at 355.00 cents. First support is seen at 345.00 cents and then at last week’s low of 343.15 cents. Wyckoff's Market Rating: 3.0.

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

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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