Gold Price Rebounds from Morning Low As Traders Once Again 'Buy The Dip'
New York (Mar 10) Gold prices are trading not far from unchanged in morning U.S. dealings. Prices have recovered from the sell-off that occurred after the announcement of the monetary policy easing measures from the European Central Bank. Once again, the gold market has shown its resilience by rebounding from selling pressure, as traders take an opportunity to “buy the dip” in prices. April Comex gold was last down $1.00 at $1,256.50 an ounce. May Comex silver was last up $0.059 at $15.415 an ounce.
The highly anticipated regular meeting of the European Central Bank saw the ECB initiate fresh monetary stimulus by cutting its deposit rate by 10 basis points, cutting its refinancing rate by 5 basis points, and increasing the amount of its monthly bond-buying program. Those moves are deemed to be on the aggressive side of market expectations.
The Euro currency dropped sharply and to a new six-week low on the news, while the U.S. dollar index pushed to solidly higher levels on the day and hit a new high for the week. The weaker Euro and stronger greenback are bearish developments for the gold market, on this day.
Traders were listening to the press conference from ECB President Mario Draghi, as of this writing.
Many world stock markets traded near steady ahead of the ECB meeting results. U.S. stock indexes were firmer ahead of the U.S. day session openings.
In overnight news, China’s consumer price inflation was a bit hotter than expected, which did put some downside pressure on China’s stock indexes, with the Shanghai index down around 2% on the day. The higher-than-expected inflation data makes it more difficult for China’s central bank to initiate monetary policy easing measures.
New Zealand’s central bank cut its key interest rate by 0.25% Thursday, which was surprising to Asian market watchers.
U.S. economic data due for release Thursday includes the weekly jobless claims report and the monthly Treasury budget statement.
Technically, April gold futures prices are still in a 2.5-month-old uptrend on the daily bar chart and the bulls have the firm overall near-term technical advantage. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,280.70. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,225.00. First resistance is seen at Wednesday’s high of $1,265.70 and then at $1,275.00. First support is seen at $1,250.00 and then at $1,240.00. Wyckoff’s Market Rating: 7.5
May silver bulls and bears are on a level overall near-term technical playing field. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at the February high of $16.005 an ounce.