Gold Price Sees Modest Corrective Bounce
New York (Apr 23) Gold prices are a bit higher in early U.S. trading Thursday, on some short covering and perceived bargain hunting. A weaker U.S. dollar index on this day also falls into the camp of the precious metals market bulls. June Comex gold was last up $2.10 at $1,189.00 an ounce. May Comex silver was last up $0.054 at $15.85 an ounce.
In overnight news, the Euro zone got some more downbeat economic data Thursday when the Markit composite purchasing managers’ index (PMI) fell to 53.5 in April from 54.0 in March. A rise to 54.4 was expected in April. The reading was still in positive territory. A number above 50.0 suggests growth in the sector. European stocks sold off on the news. The Greece debt concerns also added to the selling pressure in European equities Thursday.
Greek bonds yields are at worrisomely high levels this week. On Thursday the two-year note was fetching near 27%, while the 10-year Greek bond was yielding over 12%. The serious “inverted” yield curve strongly suggests Greece will default on at least some of its debt obligations. More meetings between Greek and European Union and IMF officials will take place Thursday and Friday. Greece has a big debt payment due on May 11, reports said. So far, very little progress has been made on a debt deal between Greece and the EU/IMF. This unresolved matter is likely to become a bullish element for the gold market in the coming weeks and months.
In Asia news, China also got some weak economic data Thursday when the HSBC preliminary manufacturing PMI came in at 49.2 in April versus the final reading of 49.6 in March. The April PMI number was the lowest in a year. China has seen a string of weak economic data in recent months that has prompted its central bank to implement monetary policy stimulus measures.
The downbeat EU and China economic news also falls into the U.S. monetary policy doves’ camp. Reports this week said the Fed will base its interest rate hike timing on world economic growth and the value of the U.S. dollar against the other major world currencies. The Fed’s FOMC meetings occur next week.
The other key “outside market” crude oil saw prices slightly lower Thursday, partly on the weak Asian and European economic data and partly on a refocusing on very large U.S. stockpiles of crude oil. However, crude prices are still in a four-week-old uptrend on the daily bar chart.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash PMI, new residential sales, and the Kansas City Fed manufacturing survey.
Trader and investor market risk aversion has increased moderately as the Greek debt restructuring talks are not going well. Weak EU and China economic data Thursday also is a bit unsettling.)
The London A.M. gold fix is $1,187.75 versus the previous P.M. fixing of $1,189.25.
Technically, June gold futures market bears have the firm overall near-term technical advantage. However, trading has been choppy and sideways for two weeks. The gold bulls’ next upside near-term price objective is to produce a close above solid technical resistance at the April high of $1,224.50. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,178.20. First resistance is seen at the overnight high of $1,191.80 and then at $1,200.00. First support is seen at last week’s low of $1,183.50 and then at $1,178.20. Wyckoff’s Market Rating: 2.5
May silver futures bears have the firm overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the March low of $15.26.
Source: KitcoNews
