Thursday April 23, 2015 2:00 PM
(Kitco News) - Gold prices ended the U.S. day session higher Thursday, on some short covering and perceived bargain hunting after recent selling pressure. The key “outside markets” were fully bullish for the precious metals on this day, as the U.S. dollar index was sharply lower and crude oil prices were sharply higher. June Comex gold was last up $8.50 at $1,195.30 an ounce. May Comex silver was last up $0.096 at $15.88 an ounce.
Gold continues to trade to the tune that the U.S. dollar index dances on a daily basis. The recent choppy trading at higher levels in the dollar index is a bearish warning signal of a topping process in the greenback. Crude oil prices, meantime, are trading near a 4.5-month high and there are early chart clues that a market bottom is in place. If the dollar index has topped and crude oil has bottomed, such a scenario would be significantly bullish for the raw commodity sector, including the precious metals.
In overnight news, the Euro zone got some more downbeat economic data Thursday when the Markit composite purchasing managers’ index (PMI) fell to 53.5 in April from 54.0 in March. A rise to 54.4 was expected in April. The reading was still in positive territory. A number above 50.0 suggests growth in the sector. European stocks sold off on the news. The Greece debt concerns also added to the selling pressure in European equities Thursday.
Greek bonds yields are at worrisomely high levels this week. On Thursday the two-year note was fetching near 27%, while the 10-year Greek bond was yielding over 12%. The serious “inverted” yield curve strongly suggests Greece will default on at least some of its debt obligations. More meetings between Greek and European Union and IMF officials will take place Thursday and Friday. Greece has a big debt payment due on May 11, reports said. So far, very little progress has been made on a debt deal between Greece and the EU/IMF. This unresolved matter is likely to become a bullish element for the gold market in the coming weeks and months.
In Asia news, China also got some weak economic data Thursday when the HSBC preliminary manufacturing PMI came in at 49.2 in April versus the final reading of 49.6 in March. The April PMI number was the lowest in a year. China has seen a string of weak economic data in recent months that has prompted its central bank to implement monetary policy stimulus measures.
The downbeat EU and China economic news also falls into the U.S. monetary policy doves’ camp. Reports this week said the Fed will base its interest rate hike timing on world economic growth and the value of the U.S. dollar against the other major world currencies. The Fed’s FOMC meetings occur next week.
The London P.M. gold fix is $1,185.75 versus the previous A.M. fixing of $1,187.75.
Technically, June gold futures prices closed near the session high today. Gold bears still have the firm overall near-term technical advantage. A three-week-old downtrend is in place on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,210.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,178.20. First resistance is seen at $1,200.00 and then at Wednesday’s high of $1,204.40. First support is seen at last week’s low of $1,183.50 and then at $1,178.20. Wyckoff’s Market Rating: 3.0
May silver futures prices closed nearer the session high today on short covering. Silver bears still have the firm near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the March low of $15.26. First resistance is seen at $16.165 and then at this week’s high of $16.34. Next support is seen at this week’s low of $15.655 and then at $15.50. Wyckoff's Market Rating: 2.0.
May N.Y. copper closed up 300 points at 269.55 cents today. Prices closed nearer the session high on short covering. The key “outside markets” were fully bullish for copper today as the U.S. dollar index was sharply lower and crude oil prices were sharply higher. The copper market bears have the near-term technical advantage. 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 the April high of 283.10 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 260.00 cents. First resistance is seen at 270.85 cents and then at 273.90 cents. First support is seen at 266.85 cents and then at today’s low of 264.75 cents. Wyckoff's Market Rating: 4.0.
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