Gold posted moderate losses Thursday but prices did finish well up from the daily low following some weaker-than-expected U.S. economic data. Gold has been dropping for the past week and hit a four-week low Thursday. The near-term technical posture of the yellow metal is firmly bearish. June Comex gold last traded down $10.00 at $1,386.10 an ounce. Spot gold was last quoted down $5.00 at $1,388.00. July Comex silver last traded up $0.052 at $22.71 an ounce.
Weak long liquidation and fresh technical short selling in the gold futures market were featured Thursday. Several fundamental factors are stacked against the gold market. Strong world stock markets are pulling away money from other investment classes, including safe-haven gold. There is presently a low-inflation environment in the major world economies, with even some talk of deflationary price pressures building. Deflation is the archenemy of all raw commodity markets, including the precious metals.
There has been lackluster physical gold demand in Asia that is also a bearish weight on gold recently. Reports overnight said new India government regulations to thwart gold speculation have worked to decrease consumer demand in that gold-hungry nation.
Reports Thursday said U.S. government filings show legendary investor George Soros and the BlackRock fund have cut their holdings in gold exchange traded funds. A World Gold Council report Thursday also reaffirmed the exodus of investor monies from gold ETFs the past few months.
Federal Reserve Bank of Philadelphia president Charles Plosser said in Italy Thursday that the central banks of the world cannot create wealth and said central banks do not have the tools to fix the present economic and financial problems in the major industrialized countries. He said the U.S. should wind down its quantitative easing program. Federal Reserve Bank of Dallas president Richard Fisher echoed Plossers feelings Thursday. Plosser’s and Fisher’s comments were in line with what many Kitco readers already knew: Major central banks of the world continuing to run their money-printing presses is at best a short-term bandaid which will eventually create major long-term problems. The inflationary implications of the extremely easy central bank monetary policies of the past few years is very likely to become at some point down the road a long-term bullish factor for gold and other raw commodity markets.
The London P.M. gold fixing is $1,381.00 versus the previous P.M. fixing of $1,410.00.
Technically, June gold futures prices closed nearer the session high Thursday and hit a fresh four-week low early on. The gold bears are in firm near-term technical control. Prices are in a seven-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,400.00. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at the April low of $1,321.50. First resistance is seen at Thursday’s high of $1,397.00 and then at $1,400.00. First support is seen at Thursday’s low of $1,368.00 and then at $1,350.00. Wyckoff’s Market Rating: 2.0
July silver futures prices closed nearer the session high Thursday and saw tepid short covering after hitting a fresh four-week low early on. Silver bears are still in firm overall technical control. Prices are in a seven-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $23.84 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of $21.12. First resistance is seen at $23.00 and then at Wednesday’s high of $23.45. Next support is seen at $22.50 and then at Thursday’s low of $22.06. Wyckoff’s Market Rating: 2.0.
May N.Y. copper closed up 250 points at 329.20 cents Thursday. Prices closed nearer the session high on short covering. Copper bears still have the near-term technical advantage. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at the May high of 339.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 320.00 cents. First resistance is seen at Thursday’s high of 330.30 cents and then at 332.50 cents. First support is seen at 327.50 cents and then at 325.00 cents. Wyckoff’s Market Rating: 4.0.
By Jim Wyckoff