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A.M. Kitco Metals Roundup: Comex Gold Near Steady, Silver Prices Weaker as Markets Digest IMF Leader Scandal

(Kitco News) - Comex gold prices are trading near unchanged Monday morning, while silver prices are under selling pressure. The crude oil market is lower and the U.S. dollar index is near steady, which are impediments to the precious metals bulls in the early going Monday. The arrest of IMF leader Strauss-Kahn in New York City on rape charges has shaken the European financial community Monday morning. That has put downside pressure on the Euro currency and on crude oil prices , as Strauss-Kahn has been an influential force in dealing with the European Union's sovereign debt crisis. June gold last traded up $1.00 at $1,494.60. Spot gold last traded down $0.40 an ounce at $1,495.50. July Comex silver last traded down $0.613 at $34.40 an ounce.

While other International Monetary Fund officials are saying the institution is operating normally Monday, in the wake of it's leaders jailing Sunday, the markets are reacting with uncertainty. This "international incident" will likely pass soon, from a markets perspective. However, the arrest of the IMF leader only bolsters the opinions of many who were already wary of the world body in the first place.

Crude oil prices are trading lower Monday Friday morning on the IMF/European Union debt uncertainty and on technical weakness in the crude oil market. Trading has become choppy in crude oil. Crude oil is still the leader in the raw commodity market sector. If crude oil prices back off some more, many other commodity markets, including precious metals, will likely do the same, or at least see upside price potential limited.

The U.S. dollar index is trading near steady Monday morning, as the Euro currency came under more pressure on the IMF leader's arrest. The dollar index bulls have gained some upside technical momentum recently, to begin to suggest that at least a near-term market low is in place. Any sustained recovery in the U.S. dollar index would be a bearish development for the precious metals markets.

Euro zone inflation rose to 2.8% year on year in April, according to a Eurostat report Monday. That rate is a 2.5-year high and does hint the European Central Bank will have to further tighten monetary policy sooner rather than later. The stronger inflation reading was a mildly bullish factor for the precious metals markets and did somewhat limit selling interest in gold and silver Monday morning.

U.S. economic data due for release Monday includes the Empire State manufacturing survey, Treasury international capital flow data and the NAHB housing market index.

The London A.M. gold fixing is $1,495.00 versus the previous P.M. fixing of $1,505.75.

Technically, June Comex gold futures bulls still have the overall near-term and longer-term technical advantage. However, the bulls have faded recently, including a bearish weekly low close on Friday. Prices have been trending lower for two weeks, since the May 2 all-time high of $1,577.40. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at last week's high of $1,526.80. Bears' next near-term downside price objective is closing prices below solid technical support at the May low of $1,462.50. First resistance is seen at $1,500.00 and then at $1,510.00. First support is seen at the overnight low of $1,486.00 and then at last week's low of $1,477.60.

July Comex silver futures bulls have seen serious near-term chart damage occur recently, to suggest at least a near-term market top is in place. Silver last Friday closed near the weekly low close, which has kept the bears with downside technical momentum. The next downside price breakout objective for the bears is closing prices below major psychological support at $30.00. Bulls' next upside price objective is producing a close above solid technical resistance at $37.00 an ounce. First resistance is seen at $35.00 and then at the overnight high of $35.40. Next support is seen at the overnight low of $34.00 and then at $33.50.

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By Jim Wyckoff of Kitco News; jwyckoff@kitco.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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