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P.M. Kitco Metals Roundup: Comex Gold, Silver End Higher on Bullish "Outside Markets"

(Kitco News) - Comex gold and silver futures prices closed higher Tuesday amid a rally in commodity sector leader crude oil, and on a weaker U.S. dollar index. August gold last traded up $8.30 an ounce at $1,523.90. Spot gold last traded up $7.90 an ounce at $1,523.75. July Comex silver last traded up $0.563 at $35.30 an ounce.

The precious metals were able to impressively rebound from some earlier selling pressure linked to overnight news that Chinese consumer prices rose 5.5% on a year-on-year basis in May, which was stronger than expected. In a move to tamp down inflation, China's central bank announced it is raising bank reserve requirement ratios by 50 basis points--the sixth such hike this year. This news put initial downward price pressure on many commodity markets, including the precious metals and crude oil. However, this news was quickly pushed to the back burner after traders realized China remains a major raw commodity consumer and that won't change any time soon.

Gold and silver prices were also supported Tuesday on their safe-haven investment status. The European Union's debt crisis continues to simmer as the EU and IMF debate how to deal with Greece's debt woes. Standard & Poors on Monday downgraded Greece's sovereign debt and credit outlook once again. The progress on the EU's sovereign debt crisis can best be described as "one step forward and two steps back." The market place is realizing more and more the severity of the EU debt crisis.

The U.S. dollar index is traded slightly lower again Tuesday, which was a supportive factor for the precious metals. The dollar index remains in a weak near-term technical posture, which also encourages the gold and silver market bulls.

Crude oil prices were trading lower early Tuesday, on the China news, but then rebounded sharply to post solid gains as short covering was seen. Crude oil prices were on the verge of a bearish downside technical "breakout" below a wide, sideways trading range on the daily chart, until Tuesday's solid price gains pushed prices back more into the middle of the trading range. A move in nearby crude oil futures prices below $95.00 a barrel would likely produce more technical selling pressure in crude, which would in turn likely put more downside price pressure in the precious metals markets. Crude oil has been and will continue to be a leader in the raw commodity market sector.

The London P.M. gold fixing $1,516.00 versus the previous P.M. fixing of $1,526.25.

Technically, August Comex gold futures prices closed near the session high Tuesday. The market dropped below key near-term chart support on Monday, but could produce no follow-through selling pressure Tuesday and the minor chart damage was quickly repaired. Gold bulls have the overall near-term and longer-term technical advantage. Prices are in a 4.5-month-old uptrend on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at the June high of $1,555.00. Bears' next near-term downside price objective is closing prices below psychological support at $1,500.00. First resistance is seen at this week's high of $1,533.90 and then at $1,540.00. First support is seen at $1,520.00 and then at this week's low of $1,511.40. Wyckoff's Market Rating: 6.5.

July Comex silver futures prices closed near the session high Tuesday after hitting a fresh three-week low early on. Prices on Monday also dropped below some key near-term technical support but were able to rebound Tuesday to repair minor chart damage. Silver bulls have the overall near-term technical advantage, but still need to show more power soon to keep that advantage. The next downside price breakout objective for the bears is closing prices below solid technical support at the May low of $32.30. Bulls' next upside price objective is producing a close above solid technical resistance at last week's high of $37.86 an ounce. First resistance is seen at $36.00 and then at $36.50. Next support is seen at $35.00 and then at Tuesday's low of $34.40. Wyckoff's Market Rating: 5.5.

July N.Y. copper closed up 1,300 points at 416.00 cents Tuesday. Prices closed near the session high. The key "outside markets" were bullish for copper Tuesday, as the U.S. dollar index was weaker and crud oil prices were solidly higher. Copper bulls regained upside technical momentum Tuesday. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the May high of 426.70 cents. The next downside price breakout objective for the bears is closing prices below major psychological support at 400.00 cents. First resistance is seen at today's high of 417.00 cents and then at 421.00 cents. First support is seen at 412.00 cents and then at 410.00 cents. Wyckoff's Market Rating: 5.5.

Follow me on Twitter! If you want daily, or nightly, up-to-the-second market analysis on gold and silver price action, follow me on Twitter. It's free, too. My account is @jimwyckoff .

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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