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P.M. Kitco Metals Roundup: Gold Ends Higher on Short Covering, Bargain Hunting, Lower U.S. Dollar

Tuesday April 09, 2013 2:16 PM

(Kitco News) - Gold prices rallied during the U.S. trading session Tuesday, boosted on short covering and bargain hunting following recent losses that last week pushed prices to a 10-month low. The weaker U.S. dollar index Tuesday also prompted fresh buying interest in gold and silver markets. June Comex gold last traded up $13.10 at $1,585.60 an ounce. Spot gold was last quoted up $13.30 at $1,586.50.  May Comex silver last traded up $0.742 at $27.88 an ounce.

The gold and silver market bulls gained a wee bit of upside technical momentum with Tuesday’s rallies. But the bulls have more heavy lifting to do in the near term to lift those precious metals out of their near-term technical funk.

The next significant news development for the precious metals markets is likely to be Wednesday’s release of the minutes from the last meeting of the U.S. Federal Reserves Open Market Committee (FOMC).

In overnight news, it was reported that China’s consumer price inflation came in lower than expected, at a 2.1% annual rate in March versus expectations of a 2.4% rise. This is a bullish underlying factor for the raw commodity sector. China is the world’s largest consumer of many raw commodities. The buzz in the market place continues on the Bank of Japan and its aggressive devaluation of the yen. The yen hit multi-year lows versus the U.S. dollar and Euro currencies overnight. There is also talk the European Central Bank could soon lower its interest rates, in the race to devalue. Weak U.S. jobs data last week suggests the U.S. Federal Reserve will not be easing its monetary policy any time soon. The devaluation of the major currencies is also a bullish underlying factor for hard assets in the investment world, including gold and silver.

Reports overnight said better demand for physical gold coming out of Asia continues as investors scoop up the metal at what they perceive as bargain prices.

The U.S. dollar index was solidly lower Tuesday on more profit taking. The greenback bulls have faded. However, the U.S. dollar bulls still have the overall technical advantage. Meantime, Nymex crude oil futures prices were higher Tuesday, on short covering. These two key “outside markets” were in a bullish posture for the precious metals Tuesday, and they will continue to have a significant daily influence on gold and silver prices.

The London P.M. gold fix is $1,577.25 versus the previous P.M. fixing of $1,575.00

Technically, June gold futures prices closed near the session high Tuesday. The gold bears still have the overall near-term technical advantage. Prices are still in a six-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,600.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,539.40. First resistance is seen at Tuesday’s high of $1,590.10 and then at $1,600.00. First support is seen at $1,580.00 and then at Tuesday’s low of $1,570.00. Wyckoff’s Market Rating: 3.0

May silver futures prices closed nearer the session high Tuesday and saw heavy short covering and bargain hunting. The silver bears still have the overall near-term technical advantage. Prices are still in a six-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $28.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $26.575. First resistance is seen at Tuesday’s high of $28.02 and then at $28.25. Next support is seen at $27.50 and then at Tuesday’s low of $27.14. Wyckoff's Market Rating: 2.5.

May N.Y. copper closed up 725 points at 344.30 cents Tuesday. Prices closed nearer the session high and saw heavy short covering and bargain hunting. The weaker U.S. dollar index was also supportive. Copper bears still have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 350.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of 330.60 cents. First resistance is seen at Tuesday’s high of 345.25 cents and then at 347.50 cents. First support is seen at 342.50 cents and then at 340.00 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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