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P.M. Kitco Metals Roundup: Gold Ends Modestly Up On Short Covering, Chart Consolidation

Monday June 10, 2013 2:15 PM

(Kitco News) - Comex gold futures prices ended the U.S. day session with modest gains in quieter trading Monday. Short covering and technical chart consolidation were featured Monday, following Friday’s solid selling pressure. Prices did poke to a two-week low in overnight trading. Comex August gold last traded up $3.10 at $1,386.10 an ounce. Spot gold was last quoted up $2.20 at $1,387.25. July Comex silver last traded up $0.222 at $21.965 an ounce.

Standard & Poors upgraded the U.S. government’s credit rating from negative to stable Monday morning, which did put some initial, modest downside price pressure on gold and boosted the U.S. dollar index to its daily high. The impact of that news was short-lived, however, as gold prices drifted back toward unchanged shortly thereafter.

St. Louis Federal Reserve President James Bullard in a speech Monday morning said low inflationary pressures at present could allow the Fed to keep its very easy money policies in place. Bullard is a voting member of the FOMC. His remarks also limited selling pressure in the precious metals.

In overnight news, China reported weaker-than-expected economic data during the weekend. Its producer price index fell 2.9% in May, on an annual basis. Imports declined 0.3% in May. China industrial production was up 9.2% year-on-year in May—down slightly from April. Electricity output grew by 4.1% on an annual basis in May, versus a 6.2% rise in April. The China data continues a recent string of weaker-than-anticipated reports coming out of the world’s second-largest economy. The data is a mildly bearish underlying factor for the raw commodity sector to start the trading week.

The U.S. dollar index was slightly higher Monday afternoon and well down from its early high. Prices late last week hit a 3.5-month low. The greenback bears still have some downside near-term technical momentum on their side. Nymex crude oil prices are weaker Monday. Trading in oil has been choppy as the bulls and bears struggle for near-term control. These two key “outside markets” were in a mildly bearish posture for the precious metals markets Monday.

The London P.M. gold fixing is $1,383.25 versus the previous P.M. fixing of $1,386.00.

Technically, August gold futures prices closed nearer the session high Monday after hitting a two-week low early on. The gold bears have the overall near-term technical advantage. Prices are in an eight-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 last week’s high of $1,423.30. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the May low of $1,338.00. First resistance is seen at Monday’s high of $1,387.70 and then at $1,400.00. First support is seen at Monday’s low of $1,375.10 and then at $1,370.00. Wyckoff’s Market Rating: 3.0

July silver futures prices closed nearer the session low Monday and hit a fresh three-week low early on. Silver bears have the solid overall near-term technical advantage and have gained fresh downside momentum recently. Prices are in an eight-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $22.915 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the May low of $20.25. First resistance is seen at $22.25 and then at $22.50. Next support is seen at Monday’s low of $21.33 and then at $21.00. Wyckoff's Market Rating: 2.5.

July N.Y. copper closed down 340 points at 323.45 cents Monday. Prices closed nearer the session high and did hit a fresh five-week low early on. Prices have also seen a bearish downside “breakout” from the recent choppy trading range. Bears have regained the near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the 335.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 315.00 cents. First resistance is seen at Monday’s high of 325.15 cents and then at 327.50 cents. First support is seen at Monday’s low of 320.20 cents and then at 317.50 cents. Wyckoff's Market Rating: 4.0.

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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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