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A.M. Kitco Metals Roundup: Comex Gold, Silver Higher amid Weaker U.S. Dollar, Higher Crude Oil, Safe-Haven Buying

(Kitco News) - Comex gold and silver futures prices are trading higher Tuesday morning, with support coming from bullishly postured key "outside markets"--a weaker U.S. dollar index and higher crude oil prices . Also, investor risk appetite has shrunk this week as the European Union's debt crisis continues to fester. This has driven safe-haven investment demand to the precious metals this week. June gold last traded up $5.30 an ounce at $1,520.70. Spot gold last traded up $3.80 an ounce at $1,521.50. July Comex silver last traded up $0.796 at $35.70 an ounce.

The continually simmering European Union sovereign debt crisis has once again injected heightened investor uncertainty into the market place this week. Ratings agencies have recently issued fresh downgrades and warnings regarding the debt and financial condition of the so called "PIG" countries in the EU. This time its Greece that is garnering the most scrutiny in the market place. However, Belgium's financial outlook was also downgraded this week. The EU debt crisis is not going to disappear and is an underlying bullish factor for safe-haven assets like gold. In fact, it could well be that the world market place is presently underestimating the seriousness of the EU's lingering debt problems, which could suddenly boil over into a worldwide debt contagion.

Crude oil prices are trading higher Tuesday morning as prices hover around $99.00 a barrel. Trading has turned choppy in crude. The near-term technical posture in the crude oil market is still shaky, as a bearish pennant pattern has formed on the daily bar chart for July crude oil. Crude oil has been and will continue to be the leader in the raw commodity market sector. If crude embarks on a fresh leg down in prices, gains in the precious metals markets will at least be limited.

The U.S. dollar index is trading weaker Tuesday morning. The dollar index bulls have regained some upside technical momentum following solid gains Monday. Keep in mind that gold and the dollar index can rally in tandem if the market place perceives keener market uncertainty, such as a further, serious deterioration in the EU debt crisis.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs chain store sales index, the weekly Johnson Redbook retail sales report and the Richmond Fed business activity survey.

The London A.M. gold fixing is $1,520.75 versus the previous P.M. fixing of $1,510.50.

Technically, June Comex gold futures bulls have the overall near-term and longer-term technical advantage and have gained fresh upside technical momentum recently. Prices hit a fresh two-week high overnight. Price action, overall, the past three weeks has shown sideways consolidation on the daily chart. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,526.80. Bears' next near-term downside price objective is closing prices below solid technical support at $1,485.00. First resistance is seen at the overnight high of $1,523.50 and then at $1,526.80. First support is seen at the overnight low of $1,513.20 and then at Monday's low of $1,503.70.

July Comex silver futures have seen trading turned sideways and choppy recently. Prices did hit a fresh two-week high overnight as the bulls are regaining some upside technical momentum. The longer prices trade choppy and sideways, the better the odds that the May low of $32.30 will hold. But if the May low cannot hold, that would be an ominous sign for the silver market bulls. The next downside price breakout objective for the bears is closing prices below solid technical support at $32.30. Bulls' next upside price objective is producing a close above solid technical resistance at $37.00 an ounce. First resistance is seen at $36.00 and then at $36.50. Next support is seen at $35.50 and then at $35.00.

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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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