Gold bulls step in to buy early dip, suggesting more upside

 New York (Apr 20)  Gold prices are moderately higher in midday U.S. dealings Tuesday, with silver holding slight gains. In a bullish sign, traders stepped up to buy the early dip in gold prices. The yellow metal hit a seven-week high on Monday. June gold futures were last up $8.20 at $1,778.80 and May Comex silver was last up $0.083 at $25.92 an ounce.

U.S. stock indexes are lower at midday, which is also a bit supportive for the safe-haven metals. The U.S. indexes are pausing early this week after hitting record highs last week. There was no major U.S. economic data released Tuesday and the pace for U.S. data is slow up until Thursday. Focus of equity traders is presently on quarterly earnings reports, which are expected to be mostly upbeat as the U.S. rolls out of its pandemic-inducted economic slowdown.

In another sign that inflation could become problematic in the coming months, or sooner, SP Angel this morning said in an email dispatch: "U.S. ports are breaking new records for imports as shops and online retailers stock up ahead of new consumer splurge. Volumes at the Port of Los Angeles rose nearly 123%, year-on-year, and also up 65% from 2019. Imports have climbed to high levels driven by Biden's 'go big' stimulus and by consumer exuberance led by the rapid roll out of vaccinations in the U.S." If such a scenario does indeed play out it would be bullish for hard assets like precious metals and real estate, and bearish for paper assets like stocks and bonds.

The key outside markets today see the U.S. dollar index firmer after hitting a six-week low overnight. The greenback bears are in control at present. Nymex crude oil prices are lower on profit taking after hitting a four-week high overnight, and are trading around $62.50 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.62%.

Technically, June gold futures bulls have the overall near-term technical playing field as prices are in a fledgling uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week's low of $1,723.20. First resistance is seen at this week's high of $1,790.40 and then at $1,800.00. First support is seen at today's low of $1,763.50 and then at $1,750.00.

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