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P.M. Kitco Metals Roundup: Comex Gold Ends Sharply Lower as Bernanke Disappoints; Bulls Lose Technical Momentum

Thursday June 07, 2011 2:26 PM

Comex gold futures prices ended the U.S. day session sharply lower Thursday and dropped below what was psychological support at the $1,600.00 level. The yellow metal careened lower following Federal Reserve Chairman Ben Bernanke's speech to the Joint Economic Committee of the U.S. Congress. The gold bulls quickly lost their newfound technical momentum. August gold last traded down $43.20 at $1,590.80 an ounce. Spot gold was last quoted down $30.20 an ounce at $1,590.00.  July Comex silver last traded down $0.893 at $28.60 an ounce.

Bernanke said the U.S. is facing economic headwinds, especially due to the European Union debt crisis, but offered up no specifics on any fresh monetary stimulus package to promote more economic growth. The restrained tone of Bernanke's speech disappointed gold market bulls who wanted immediate gratification on economic stimulus. However, Bernanke at this time holding his cards close to his vest on the matter did not surprise most market watchers--many of whom still reckon the Fed will at some point down the road provide fresh monetary policy easing.

The “Bernanke bust” overshadowed several significant market place developments that occurred earlier Thursday, led by news China has cuts its interest rate by 0.25% in an effort to stimulate its economy. The surprise move by China is a bullish factor for most raw commodity markets, as China is a major raw commodity consumer.

In other news Thursday, the French unemployment rate was reported at a 13-year high, while Greek unemployment was reported at record high of 22%. European stocks are firmer Thursday and Spanish bond yields have fallen after a well-received Spanish bond auction Thursday. Meantime, the Bank of England left its key interest rates unchanged.

The U.S. dollar index traded lower again Wednesday on more profit-taking from recent gains. The dollar index bulls still have the overall near-term technical advantage. Meantime, Nymex crude oil futures were higher Thursday on more short covering in a bear market. Crude oil remains in a bearish overall fundamental and technical posture.

The London P.M. gold fix is $1,606.00 versus the previous London P.M. fixing of $1,635.00.

Technically, August gold futures prices closed nearer the session low Thursday as the bulls have quickly lost their upside technical momentum. Bears have regained the slight near-term technical advantage in gold. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,642.40. Bears' next near-term downside price objective is closing prices below solid technical support at the May low of $1,529.30. First resistance is seen at $1,600.00 and then at $1,610.00. First support is seen at Thursday’s low of $1,579.40 and then at $1,575.00. Wyckoff’s Market Rating: 4.5

July silver futures prices closed nearer the session low Thursday and lost all of Wednesday’s solid gains. Bulls also quickly lost their newfound technical momentum in silver today. Bulls’ next upside price breakout objective is closing prices above major psychological resistance at $30.00 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 $29.00 and then at $29.50. Next support is seen at Thursday’s low of $28.36 and then at $28.00. Wyckoff's Market Rating: 4.0.

July N.Y. copper closed down 35 points 337.50 cents Thursday. Prices closed near mid-range. Copper bears still have the overall near-term technical advantage. Prices are in a five-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 345.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 308.00 cents. First resistance is seen at 340.00 cents and then at Thursday’s high of 343.05 cents. First support is seen at 335.00 cents and then at today’s low of 333.00 cents. Wyckoff's Market Rating: 3.0.

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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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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