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P.M. Kitco Metals Roundup: Gold Ends Sharply Higher on Strong Physical Demand, Short Covering, Bargain Hunting

Monday April 22, 2013 2:02 PM

(Kitco News) - Comex gold futures prices ended the U.S. day session sharply higher Monday, on more bargain hunting, short covering and strong demand for physical gold seen worldwide. Bulls have also gained enough technical momentum to begin to suggest a market bottom is in place. June Comex gold last traded up $30.50 at $1,425.80 an ounce. Spot gold was last quoted up $19.80 at $1,426.75.  May Comex silver last traded up $0.430 at $23.39 an ounce.

Strong demand has surfaced for physical gold (bars, coins, jewelry) in the wake of this month’s collapse in prices. This is a major factor working to lift gold prices up from last week’s lows and beginning to suggest a market bottom is in place.

The other bullish news early this week is the Group of 20 nations at its weekend meeting in Washington, D.C., gave tacit approval of the Bank of Japan’s aggressive monetary policy action recently. Such also hints the major central banks of the world may want to continue their own aggressive monetary policy easing measures for at least the next several months. That would also be a positive for the raw commodity sector, including the precious metals.

The U.S. dollar index is slightly higher Monday and hit a two-week high. The greenback bulls have some upside technical momentum on their side. Meantime, Nymex crude oil futures prices were modestly higher on some short covering after hitting a 9.5-month low late last week.

The London P.M. gold fix is $1,424.50 versus the previous P.M. fixing of $1,405.50.

Technically, June gold futures prices closed near mid-range Monday. Bulls are trying to stabilize the market and have had success recently, to begin to suggest that a near-term market low is in place. Still, gold prices are still in a 6.5-month-old downtrend on the daily bar chart and the bears still have the overall technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,450.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,400.00. First resistance is seen at Monday’s high of $1,438.80 and then at $1,450.00. First support is seen at Monday’s low of $1,403.50 and then at $1,400.00. Wyckoff’s Market Rating: 3.0

May silver futures prices closed near mid-range Monday and saw short covering in a bear market. Serious near-term and longer-term technical damage has been inflicted in silver recently and the bears are still in command, overall. Silver prices are in a 6.5-month-old downtrend on the daily bar chart. A bearish pennant pattern has also formed on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of $22.00. First resistance is seen at Monday’s high of $23.65 and then at $23.82. Next support is seen at $23.00 and then at $22.865. Wyckoff's Market Rating: 2.0.

May N.Y. copper closed down 145 points at 313.40 cents Monday. Prices closed near mid-range and closed at a fresh 1.5-year low close. Copper bears have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 332.50 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of 306.00 cents. First resistance is seen at Monday’s high of 316.50 cents and then at 320.00 cents. First support is seen at 310.00 cents and then at Monday’s low of 308.20 cents. Wyckoff's Market Rating: 1.0.

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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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