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A.M. Kitco Metals Roundup: Gold Rallies amid Middle East Unrest, Higher Crude Oil, Weak U.S. Dollar

(Kitco News) -Comex gold futures prices are trading solidly higher Friday morning, as the Middle East concerns are ratcheted up a notch, which has in turn boosted crude oil prices and is supporting investment demand for gold. The weakened state of the U.S. dollar is also moving buying interest toward gold Friday morning. Comex April gold last traded up $14.30 an ounce at $1,418.50. Spot gold last traded up $13.90 at $1,418.50.

The United Nations late Thursday approved fresh sanctions against Libya, which include a "no fly" zone backed by military force. Libyan strong man Moammar Gadhaffi has responded by making new threats. There is also ongoing unrest in Bahrain. Crude oil prices are trading higher Friday morning and were above $103.00 a barrel. The higher crude prices are supporting buying interest in the precious metals markets due to the inflationary implications and also due to safe-haven buying interest from the heightened Middle East uncertainty.

News reports from Japan Friday were not as alarming as earlier in the week, with nuclear officials there coming up with fresh plans to avert nuclear meltdowns. Still, the anxiety in the market place coming from Japan will continue for at least a while. There are notions that Japanese officials are being evasive on the actual events occurring, regarding the damaged nuclear reactors. Look for precious metals markets and other markets to react quickly to any fresh, major developments on Japan.

The U.S. dollar index is trading lower Friday morning, with the June futures contract hitting another new low. The major news in the FOREX market is that the Group of Seven central banks did coordinated intervention in the currency markets to push down the value of the Japanese yen. That move had little immediate impact on the gold market. U.S. dollar index bears have the solid overall technical advantage, which is an underlying bullish factor for the precious metals markets.

There is no major U.S. economic data due for release Friday.

The London A.M. gold fixing was $1,415.50 versus the previous P.M. fixing of $1,403.75.

Technically, April Comex gold futures prices had seen some near-term technical damage inflicted earlier this week. However, price gains Thursday and so far Friday are working to repair much of that damage. How gold prices end the week on Friday (nearer the weekly low or nearer the weekly high) will likely provide a good clue of the price direction for the near term. As of Friday morning, it appears gold will end the week closer to the weekly high than the weekly low, which would be a bullish clue for the market. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at this week's high of $1,433.50. Bears' next near-term downside price breakout objective is closing prices below solid technical support at this week's low of $1,380.70. First resistance is seen at $1,425.00 and then at $1,433.50. First support is seen at $1,410.00 and then at the overnight low of $1,402.20.

May silver futures last traded up 87.2 cents at $35.13 an ounce Friday. Some mild near-term chart damage was inflicted earlier this week, but would be mostly repaired by a solidly higher close on Friday. The silver bulls still have the overall near-term technical advantage. The next downside price breakout objective for the bears is closing prices below solid technical support at this week's low of $33.565. Bulls' next upside price objective is producing a close above solid technical resistance at the March high of $36.745 an ounce. First resistance is seen at $35.50 and then at $36.00. Next support is seen at $34.50 and then at the overnight low of $34.24.

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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