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P.M. Kitco Metals Roundup: Comex Gold, Silver Prices Rebound from Early Selling Pressure as Crude Rallies, U.S. Dollar Index Weakens

(Kitco News) - Comex gold futures ended modestly higher while the silver futures market ended modestly lower. However, it was a moral victory for the precious metals bulls today as the markets made a strong recovery from strong early selling pressure. A solid rebound in crude oil prices and a weakening U.S. dollar index as the trading session wore on Thursday did work to support buying interest in gold and silver. June gold last traded up $4.30 at $1,505.60. Spot gold last traded up $5.20 an ounce at $1,506.50. July Comex silver last traded down $0.16 at $35.35 an ounce.

Strong follow-through selling pressure was seen in crude oil and the precious metals markets early Thursday morning, following solid losses posted on Wednesday. However, as the trading session progressed the metals worked their way up from the session lows to finish near the session highs.

News overnight that China's central bank had raised domestic bank reserve requirements another 50 basis points further rattled the commodity market bulls. This was the fifth tightening move by China this year as it works to fight inflation. Commodity markets extended declines on the news early Thursday as tighter bank reserve requirements make it harder for Chinese importers to free up lines of credit. However, by the afternoon on Thursday many commodity markets had recovered early losses, including crude oil.

Crude oil prices Thursday morning and hit a low of $95.25, basis the nearby June Nymex futures contract, before recovering to trade back near $100.00 a barrel. Official reports surfaced this week that energy demand has been reduced by the recent high energy prices. Combined with world economic growth that is still deemed tepid, crude oil prices have taken a big downside hit. Crude oil is still the leader in the raw commodity market sector. If crude oil prices continue to erode, many other commodity markets will do the same, or at least see the upside price potential very limited.

The U.S. dollar index was trading higher early Thursday morning, on follow-through strength from good gains posted Wednesday. However, the dollar index gains Thursday could not be held and prices slipped lower on the day by the afternoon. The dollar index bulls have gained some upside technical momentum 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. The dollar index has received some help recently from the ongoing European Union sovereign debt saga. Greece is the nation moved to the front burner this time. Ratings agency downgrades for Greece's debt and news reports Greece may even pull out of the EU have dented the Euro currency recently.

The London P.M. gold fixing $1,489.50 versus the previous P.M. fixing of $1,508.00.

Technically, June Comex gold futures bulls do still have the overall near-term and longer-term technical advantage. Now, Friday's trading action is extra important, technically. A close at or near the weekly high on Friday would be significantly bullish to suggest the uptrend on the daily chart being restarted. However, a close Friday at or near the weekly low would be significantly bearish to suggest still more downside price pressure in the near term. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at this week's high of $1,526.80. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,462.50. First resistance is seen at $1,510.00 and then at $1,520.00. First support is seen at $1,500.00 and then at $1,492.00. Wyckoff's Market Rating: 6.5.

July Comex silver futures closed nearer the session high Thursday after slumping to a fresh 2.5-month low of $32.30 early on. Some short-covering and bargain-hunting buying interest were featured in silver. Like gold, how silver market prices end the trading week this Friday (near the weekly high or near the weekly low) will be very technically significant regarding price action in the coming weeks. Serious near-term chart damage has occurred in silver recently, to suggest at least a near-term market top is in place. 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 $36.00 and then at $36.50. Next support is seen at $35.00 and then at $34.50. Wyckoff's Market Rating: 4.0.

July N.Y. copper closed up 750 points at 398.85 cents Thursday. Prices closed near the session high after hitting a fresh 5.5-month low early on. Short covering and bargain hunting were featured in copper. A weakening U.S. dollar and firming crude oil prices as the session wore on Thursday helped to support the copper market. Copper bears still have the near-term technical advantage as serious near-term technical damage has been inflicted recently. Copper prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 410.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 380.00 cents. First resistance is seen at 400.00 cents and then at 402.50 cents. First support is seen at 395.00 cents and then at 392.80 cents. Wyckoff's Market Rating: 4.0.

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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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