- Comex gold and silver futures prices are trading at weaker
price levels early Wednesday morning. However, the bulls have
this week regained some upside near-term technical momentum in
what is an extra important trading week, following last week's
strong selling pressure. A strong consumer inflation reading from
China and ongoing worries regarding the European Union's debt
problems are working to support buying interest in the precious
metals Wednesday. However, weaker crude oil prices and a stable
U.S. dollar index are limiting the upside in the metals. June
gold last traded down $4.00 at $1,512.90. Spot gold last traded
down $2.50 an ounce at $1,514.00. July Comex silver last traded
down $0.90 at $37.58 an ounce.
Reports overnight said China's consumer price index in April
rose 5.3%, year-on-year, which was slightly higher than expected
and was supportive to the inflation-sensitive precious metals.
The Chinese government has been battling inflationary pressures
by hiking its interest rates and tightening its monetary policy
in recent months. However, the latest consumer price index data
shows the government has more work to do to tamp down
inflationary price pressures.
Greece is the latest European Union nation to move to the
front burner, regarding the EU's sovereign debt and financial
saga. Ratings agency downgrades for Greece's debt and news
reports Greece may even pull out of the EU have supported
safe-haven buying interest in the precious metals markets.
Crude oil prices are trading lower Wednesday morning, on a
corrective pullback from good gains seen the past couple days.
Crude oil has made a strong recovery from last week's spike low,
which now hints this market is likely to trade in a sideways and
choppy range between last week's high and low. If such does occur
in the coming weeks, that should be a neutral to bullish
development for gold and silver prices. Crude oil is still the
leader in the raw commodity market sector.
The U.S. dollar index is trading near steady price levels
Wednesday morning. Prices last week hit a fresh 2.5-year low, but
have since stabilized at lower levels. The overall technical
posture of the U.S. dollar index remains bearish. However, any
sustained recovery in the U.S. dollar index would be a bearish
development for the precious metals markets.
U.S. economic data due for release Wednesday includes the
weekly MBA mortgage applications survey, international trade in
goods and services, and the weekly DOE energy stocks report.
The London A.M. gold fixing is $1,524.50 versus the previous
P.M. fixing of $1,513.50.
Technically, June Comex gold futures have the past three
trading sessions seen a very good corrective upside bounce
following the strong selling pressure that hit the market late
last week. Short covering and bargain-hunting buying have been
featured. Bulls still have the overall near-term and longer-term
technical advantage and are regaining upside near-term technical
momentum this week. If gold prices close out this week near the
weekly high, then that would be a significantly bullish
development to suggest the near-term price uptrend will continue
and that prices would likely challenge this month's all-time
high, or move even higher. Bulls' next near-term upside technical
objective is to produce a close above solid technical resistance
at $1,550.00. Bears' next near-term downside price objective is
closing prices below solid technical support at $1,492.00. First
resistance is seen at the overnight high of $1,526.80 and then at
$1,530.00. First support is seen at today's low of $1,513.50 and
then at $1,500.00.
July Comex silver futures prices are also seeing good short
covering and bargain-hunting buying interest this week. Serious
near-term chart damage did occur in silver last week and the
bulls still have some work to do to repair that damage. Prices
last week lost around 25% in value. The next downside price
breakout objective for the bears is closing prices below solid
technical support at this week's low of $35.19. Bulls' next
upside price objective is producing a close above solid technical
resistance at $40.00 an ounce. First resistance is seen at the
overnight high of $39.47 and then at $40.00. Next support is seen
at the overnight low of $37.80 and then at $37.50.
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By Jim Wyckoff of Kitco News;