Thursday March 26, 2015 8:25 AM
(Kitco News) - Gold prices are higher, hit a four-week high and have pushed above what was psychological resistance at the $1,200.00 level Thursday. Several factors are working in favor of the gold market bulls, including safe-haven demand and the slumping U.S. dollar index. April Comex gold was last up $13.10 at $1,210.00 an ounce. May Comex silver was last up $0.18 at $17.18 an ounce.
Asian and European stock markets sold off overnight and U.S. stock indexes are under pressure early Thursday morning, amid a “risk-off” attitude in the world market place.
The solid losses in U.S. equities on Wednesday, following a downbeat durable goods orders report, prompted some of the weakness in stock markets in Asia and Europe. Also, Saudi Arabia and its allies’ air strikes against Iran-backed rebels in Yemen have produced fresh geopolitical tension. Saudi Arabia and Iran, the two major Arab powers in the Middle East, are now in a stare-down.
The military action in Yemen was not expected. Crude oil prices rallied sharply to a two-week high above $52.00 a barrel on the news, while safe-haven gold did the same.
Reports overnight said China has moved to allow more companies to import gold into China, which will effectively reduce the premium China’s domestic gold-buyers have had to pay over the world price. The move by Chinese authorities should give a modest boost to gold demand coming from China. The World Gold Council said Chinese demand for imported gold is likely to rise by 11% this year.
The other key “outside market” on Thursday morning finds the U.S. dollar index lower again. The dollar index bulls have faded badly the past week and there are early technical clues of a market top in the index. The weakening greenback has been a bullish underlying factor for the precious metals markets.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash services purchasing managers index, and the Kansas City Fed manufacturing survey.
(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)
Wyckoff’s Daily Risk Rating: 6.5 (Trader and investor market risk aversion picked up Thursday, mainly due to rising tensions in the Middle East.)
(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.
The London A.M. gold fixing is $1,209.40 versus the previous P.M. fixing of $1,195.60.
Technically, gold market bears still have the overall near-term technical advantage but the bulls have momentum on their side. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,223.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at this week’s low of $1,178.60. First resistance is seen at the overnight high of $1,219.50 and then at $1,223.00. First support is seen at $1,200.00 and then at the overnight low of $1,193.80. Wyckoff’s Market Rating: 4.0
May silver futures bulls and bears are now on a level near-term technical playing field but the bulls have momentum on their side. Silver hit a six-week high overnight. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at today’s high of $17.405 and then at $17.50. Next support is at the overnight low of $16.91 and then at this week’s low of $16.61. Wyckoff’s Market Rating: 5.0.
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