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A.M. Kitco Metals Roundup: Gold Climbs, Refocus On Bullish Fundamentals

(Kitco News) - Comex gold futures shrugged off last week's price plunge and are climbing higher Monday morning for the second session in a row. Gold traders returned their focus to bullish underlying fundamentals for the yellow metal, which includes volatility and uncertainty in the Middle East, rising inflation levels in parts of the world, and continuing concern over the sovereign debt crisis in the Euro-zone.

June Comex gold last traded up $14.00 at $1,505.60 an ounce. Spot gold last traded up $11.50 at $1,506.10. Technically, June gold is rebounding off an important recent low at $1,462.50, the May 5 low, which is now major near term technical support for the contract.

Also supportive to gold early Monday is a modest set-back in the U.S. dollar index following Friday's approach of the 75.00 level. The dollar index stalled at that zone and is now posting modest inside day losses, which is lending support to the commodity complex in general.

Fresh unrest has emerged in Syria Monday, as government security forces are conducting house raids in search of protesters. Also, there have been reports of weekend deaths in Egypt following clashes between Muslims and Christians, which helps keep a safe-haven bid in the gold market.

Crude oil has also rallied Monday morning, after the July New York crude contract hit a low at $95.18 on Friday. Continuing gains in crude oil are inflationary and in turn supportive to gold.

Investors remain nervous over the European debt crisis situation following Friday's rumors, which were quickly denied, that Greece might leave the European Monetary Union. Gold bounced higher Friday, amid those rumors; and traders will continue to monitor headlines for fresh developments in that region.

Looking at the bigger picture, both individual investors and central banks have been buyers of gold in recent weeks and months amid the plethora of underlying bullish factors.

So far in May, the United States Mint has sold 62,000 ounces of its American Eagle gold coins, which is equal to nearly 60% of the total amount of gold coins sold during the entire month of April, according to newswire reports.

Also, in recent months, central banks-especially in emerging markets, have been large buyers of gold. International Monetary Fund data revealed that the Mexican central bank had purchased nearly 100 metric tons of gold during February and March. More recently, Russia and Thailand have completed major purchases of 18.8 tons and 9.3 tons, respectively, the IMF said.

The May 9 London a.m. gold fix stood at $1505.00 versus the previous p.m. fix at $1486.50.

On the U.S. economic calendar Monday, there is little market moving data slated for release today.

Technically, the June Comex gold's short-term outlook has improved. No significant technical chart damage occurred on last week's retreat as the contract held above 50-day moving average support. The $1462.50 level now acts as major near term support.

However, if the market were to reverse back below that zone it would turn the short-term outlook back to negative. June gold held up much better last week than the July silver contract which collapsed spectacularly.

July Comex silver saw a much deeper correction than gold and remains in a weaker technical position. Near term support for July silver is seen at $33.03 an ounce, which will be the key downside level for traders to monitor.

By Kitco News;reporters@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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