first majestic silver

Gold Down, Hits 9-Wk Low, on More Chart-Based Selling, Rallying U.S. Equities

April 22, 2014

Chicago (Apr 22)  Gold prices ended the U.S. day session moderately lower and hit a nine-week low Tuesday. Mild short covering and bargain hunting early in the day gave way to technical selling pressure that in turn triggered sell stops to push prices still lower.  June gold was last down $6.90 at $1,281.60 an ounce. Spot gold was last quoted down $8.70 at $1,282.00. May Comex silver last traded up $0.034 at $19.38 an ounce.

The recent solid rebounds in the U.S. stock indexes, from their mid-April swoons, have also been a bearish factor for the precious metals. Money is again flowing into the competing asset class, equities, to the detriment of most other competing asset classes.

U.S. economic data released Tuesday included the monthly house price index, existing home sales and the Richmond Fed business survey. The home sales data was a bit better than expected, which lifted the U.S. dollar index slightly, which was in turn slightly bearish for gold.

In overnight news, Asian and European stock markets were quieter and traded mixed to mostly firmer amid no major, fresh fundamental news to move prices.

Reports Tuesday said China’s central bank has announced it is reducing its reserve requirement ratio for its rural commercial banks. This move is an easing of monetary policy to try to stimulate the ag sector of the Chinese economy. Major banks in urban areas of China were not included in the move.

Traders and investors are awaiting key Chinese economic data due out Wednesday: the HSBC April manufacturing PMI for China. Recent China economic data has been mostly downbeat by not meeting market expectations.

The Russia-Ukraine crisis has de-escalated early this week. While U.S. and Russia have agreed to work to tamp down this potential geopolitical flashpoint, both sides are once again trading barbs. U.S. Vice President Joe Biden is presently in Kiev for talks with Ukrainian officials. While tensions have temporarily eased regarding this matter, it’s my bias the situation will flare up again and likely sooner rather than later.

The London P.M. gold fixing is $1,286.75 versus the previous P.M. fixing of $1,299.00.

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