Gold Weaker on Chart Selling and Firmer U.S. Dollar
New York (Apr 20) Gold prices are modestly lower in early U.S. trading Monday. A rebound in the U.S. dollar index to start the trading week is helping to pressure gold and silver. The overall technical postures for gold and silver remain firmly in the bearish camps. June Comex gold was last down $4.70 at $1,198.30 an ounce. May Comex silver was last down $0.174 at $16.055 an ounce.
Greece is back on the front burner of the market place early this week, as Greek and International Monetary Fund/European Union officials debt restructuring talks are not going well. A weekend meeting in Brussels between both sides yielded no positive results. Reports say both sides are far apart on any agreement. Greek bond yields have risen significantly recently, due to the doubts about Greece being able to pay its debts without serious economic reforms. Two-year Greek notes were yielding around 27% Monday, while the 10-year Greek bond was fetching close to 13%. The Greece-EU debt impasse is becoming a distress on world markets, but not yet a serious one. However, if the matter is not resolved soon, risk-aversion will increase and safe-haven assets like gold will stand to benefit. There is a growing belief in the market place that Greece will at some point default on its EU debt obligations.
China’s central bank again moved to stimulate the Chinese economy over the weekend. The People’s Bank of China reduced by 1% the reserve requirement ratio required of its banks. The market place took note of the central bank’s move, but markets did not show significant price reactions to the news. Still, the China easing of its monetary policy is a bullish underlying element for the raw commodity markets, including the precious metals.
The U.S. dollar index is higher Monday morning, on a corrective bounce from recent strong selling pressure. There are technical clues that begin to suggest a market top is in place for the dollar index. If the dollar index tops out it would be a significantly bullish development for the raw commodity sector.
The other key “outside market” finds crude oil prices lower to start the trading week. Crude prices are still in a four-week-old uptrend on the daily bar chart and late last week hit a four-month high—suggesting a market bottom is in place. If crude oil bottoms out such would be good news for all raw commodity market bulls.
U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.
The London A.M. gold fix is $1,203.35 versus the previous P.M. fixing of $1,203.25.
Technically, June gold futures market bears have the firm overall near-term technical advantage. However, trading has been choppy 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 last week’s high of $1,209.30 and then at $1,215.00. First support is seen at $1,195.00 and then at $1,190.00. Wyckoff’s Market Rating: 3.0
May silver futures bears have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.75 an ounce.
Source: KitcoNews
