Gold Firmer, Hits 3-Week High; Weakening Greenback Bullish
New York (Mar 25) Gold prices are modestly higher and hit a three-week high in early U.S. trading Wednesday. The yellow metal is now closing in on the key $1,200.00 mark. A slumping U.S. dollar index this week has worked in favor of the precious metals bulls. April Comex gold was last up $3.50 at $1,194.90 an ounce. May Comex silver was last up $0.027 at $17.01 an ounce.
It was a fairly quiet market place in Asia and Europe overnight. U.S. stock indexes are trading near steady in pre-market electronic trading.
The key “outside markets” on Wednesday morning find the U.S. dollar index lower again and crude oil prices near steady. The dollar index bulls are fading fast and there are early technical clues of a market top in the index. The weakening greenback is a bullish underlying factor for many other raw commodity markets, including the grains, softs and livestock. Price action in many commodity futures markets this week has given the bulls some hope that those markets are at or near price bottoms.
Meantime, Nymex crude oil futures were near steady overnight and continue to hover not far above the six-year low scored last week. Prices are still below $50.00 a barrel. A bearish API report on U.S. stockpiles was released Tuesday evening, and the weekly DOE report today is also expected to be bearish—showing U.S. stockpiles of oil at an 80-year high. The strong bear market in crude oil remains a major negative for the raw commodity sector.
Those bulls awaiting the raw commodity sector to finally bottom out and start to trend higher need to keep a close eye on the Goldman Sachs Commodity Index (GSCI), which is a basket of several raw commodity futures market prices rolled into a composite index price. When the daily GSCI chart starts to show a price uptrend developing, that will be an early clue the sector has made the bullish turn north. My bias is that such will occur in the next few months, if not sooner.
In overnight news, the world is still awaiting fresh details of the German airliner that crashed in the French Alps Tuesday, killing 150 people. However, terrorism is not expected to be the cause.
The European Union got another upbeat economic report this week, as the German Ifo business confidence index rose for the fifth month in a row in March. The Ifo index reading of 107.9 is the highest since July of last year. The report suggests the quantitative easing of EU monetary policy is having some positive impact.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, and the weekly DOE liquid energy stocks report.
Source: KitcoNews
