Gold Ends Firmer; Technicals Suggest Bigger Daily Price Move Imminent

(Kitco News) – Comex gold futures prices ended the U.S. day session moderately higher Wednesday, supported in part on short covering and a lower U.S. dollar index. Technically, the gold bulls are hanging tough. Also, the recent near-term “collapse in volatility” on the daily chart in the gold market makes me suspect a bigger daily price move is imminent. Comex June gold last traded up $14.10 at $1,393.00 an ounce. Spot gold was last quoted up $13.60 at $1,395.50.  July Comex silver last traded up $0.232 at $22.425 an ounce.

The gold bulls continue to strongly defend the April low of $1,321.50, basis June Comex futures. The longer gold prices trade in a choppy and sideways fashion above that key level, the higher the odds the April low will turn out to be a significant market price bottom.

Rising U.S. Treasury bond and note yields have caught the attention of the market place this week. The 10-year U.S. T-Note yield rose to 2.17% Tuesday, the highest in over a year. The rapidly rising Treasury yields are a clue that the market place now believes there is light at the end of the tunnel of the Federal Reserve’s years-old, aggressive monetary stimulus programs. There has been a recent run of better-than-expected U.S. economic data that also supports notions the Fed could lighten up on its big monthly bond-buying program. The fact that gold prices have so far taken this bearish development in relative stride is also suggestive that the gold sellers are still exhausted after the big downside push in April.

The London P.M. gold fixing is $1,382.50 versus the previous P.M. fixing of $1,376.50.

Technically, June gold futures prices closed nearer the session high Wednesday. Prices are still in a 7.5-month-old downtrend on the daily bar chart. However, good gains in the near term would begin to produce a bullish double-bottom reversal pattern 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 $1,350.00. First resistance is seen at $1,400.00 and then at last week’s high of $1,413.30. First support is seen at this week’s low of $1,372.10 and then at $1,353.10. Wyckoff’s Market Rating: 3.0

July silver futures prices closed nearer the session high Wednesday and were supported by short covering and a weaker U.S. dollar index. Silver bears have the overall near-term technical advantage. Prices are in a 7.5-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $23.29 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $20.25. First resistance is seen at this week’s high of $22.71 and then at $23.00. Next support is seen at this week’s low of $22.11 and then at $21.92 and then at $21.50. Wyckoff’s Market Rating: 3.0.

July N.Y. copper closed down 135 points at 330.15 cents Wednesday. Prices closed near mid-range. Copper bulls and bears are on a level near-term technical playing field. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 341.80 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 322.40 cents. First resistance is seen at this week’s high of 334.55 cents and then at 337.50 cents. First support is seen at this week’s low of 326.75 cents and then at 325.00 cents. Wyckoff’s Market Rating: 5.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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The Art&Science of Trading Gold
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