Gold Price Up on More Short Covering, Bargain Shopping
New York (May 5) Gold prices are moderately higher in early U.S. trading Tuesday, with buying interest accelerating just after the Comex futures market opened. More short-covering in the futures and bargain hunting in the cash market are featured. It’s been a quieter start to the trading week, markets news-wise. June Comex gold was last up $9.30 at $1,196.00 an ounce. July Comex silver was last up $0.144 at $16.585 an ounce.
The key “outside markets” on Tuesday morning see Nymex crude oil futures prices pushing to a new four-month high above $60.00 a barrel, and that has spilled over into buying interest in the precious metals markets. The U.S. dollar index is slightly higher on a short-covering bounce from recent selling pressure.
In overnight news, Australia’s central bank cuts its key interest rate to a record low of 2% Tuesday. The news was not surprising and Asian markets saw no major price reactions.
Euro zone producer prices rose by 0.2% in March from February, it was reported Tuesday. The EU is still battling deflationary price pressures and this report shows more work needs to be done to suppress deflation-creep.
Reports overnight said gold demand in India will rise sharply during April and May, by up to 80%, due to lower gold prices and easing government restrictions on gold imports. India is the world’s top gold consumer.
Traders are looking ahead to Friday’s U.S. employment report for April. The key non-farm payrolls number is forecast to come in at up 220,000. As Friday approaches many markets could be more subdued. Look for Friday morning to be the most active trading period of the week, in the wake of the jobs data.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. international trade report, the U.S. services PMI, the ISM non-manufacturing report, and the IDB/TIPP economic optimism index.
The London A.M. gold fix is $1,187.40 versus the previous P.M. fix of $1,175.95.
Technically, June gold futures market bears have the firm overall near-term technical advantage. The gold bulls’ next upside near-term price objective is to produce a close above solid technical resistance at $1,200.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,150.00. First resistance is seen at the overnight high of $1,196.00 and then at $1,200.00. First support is seen at the overnight low of $1,184.90 and then at Monday’s low of $1,176.60. Wyckoff’s Market Rating: 2.5
July silver futures bears have the overall near-term technical advantage but bulls have gained some upside momentum early this week. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce.