Gold Hits Another New All-Time High$1,498.60
Kitco News) - Comex gold futures prices ended higher Monday and hit another fresh all-time record high of $1,498.60, basis the June contract. News the Standard & Poors ratings agency downgraded the U.S. government's debt outlook to negative from stable boosted the precious metals markets to new for-the-move highs on more safe-haven investment demand. May Comex silver futures scored a fresh 31-year high of $43.56 an ounce. A stronger U.S. dollar index and sharply lower crude oil prices did somewhat limit buying interest in the precious metals Monday. Comex June gold last traded up $10.70 an ounce at $1,496.70. Spot gold last traded up $9.70 at $1,496.50.
Gold prices were under some mild profit-taking selling pressure in early trading Monday. Then the S&P ratings downgrade for the U.S. was reported in the news media and gold prices immediately pushed higher. The overall triple A credit rating for the U.S. was maintained by S&P, but the debt outlook downgrade by the agency hit the U.S. stock market hard and also prompted a sell off in U.S. Treasuries. Meantime, the U.S. dollar index initially backed down from its session high on the negative U.S. debt outlook. However, the dollar index then rallied and posted strong gains on the day in the wake of the ratings downgrade.
Gold and silver market bulls stand to continue to benefit from the ongoing safe-haven investment demand coming from several fronts. The European Union's smaller countries' sovereign debt crisis is also on the front burner again. This time it's Greece and Ireland that are making the headlines, amid their own credit ratings downgrades and EU efforts to control the situation. While the tensions in the Middle East and northern Africa may have eased a bit, the problems in that oil-rich region will not go away any time soon. And reports over the weekend said it may take six months to get the Japanese nuclear crisis under control.
In other news, reports said China raised its interest rates again Monday, in an effort to curb domestic demand for commodities and ward off price inflation. The Chinese consumer price index rose 5.4% year-on-year in March, as reported late last week. There are widespread notions inflationary price pressures will continue to build in the world's major economies. Precious metals prices have been boosted in recent months in part by heightened inflation concerns among investors.
Crude oil prices were sharply lower Monday, which was bearish for the precious metals and did limit the upside in gold and silver. Crude prices were pressured by the stronger U.S. dollar index and lower U.S. stock market. However, crude is still trading around $105.00 a barrel, which is still an underlying bullish factor for the precious metals due to the inflationary implications.
The London P.M. gold fix was $1,493.00 versus the previous P.M. fixing of $1,476.75.
Technically, June Comex gold futures closed nearer the session high Monday. Gold bulls remain in strong overall technical command. There are still no early technical warning signals that a market top is close at hand. Prices are in a 2.5-month-old uptrend on the daily bar chart and in a 10-year-old uptrend on the longer-term monthly chart. Bulls' next near-term upside technical objective is to produce a close above major psychological resistance at $1,500.00. That level is now within easy striking distance. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week's low of $1,445.00. First resistance is seen at $1,500.00 and then at $1,510.00. First support is seen at $1,489.10 and then at Monday's low of $1,477.80. Wyckoff's Market Rating: 9.0.
May Comex silver futures closed up 30.9 cents at $42.88 an ounce Monday. Prices closed near mid-range and hit another fresh contract and 31-year high. Bulls have the strong overall near-term and longer-term technical advantage. A 2.5-month-old uptrend is in place on the daily bar chart. There are still no early clues to suggest a market top is close at hand. The next downside price breakout objective for the bears is closing prices below major psychological support at $40.00. Bulls' next upside price objective is producing a close above solid technical resistance at $45.00 an ounce. First resistance is seen at Monday's contract and 31-year high of $43.56 and then at $44.00. Next support is seen at $42.50 and then at Monday's low of $42.20. Wyckoff's Market Rating: 9.0.
May N.Y. copper closed down 560 points at 420.15 cents Monday. Prices closed nearer the session low and hit a fresh four-week low on more profit-taking pressure. Bulls still have the slight overall near-term technical advantage, but are fading and need to show fresh power soon. Worries about demand from China are bearish for copper, as the Chinese have again raised interest rates to decrease demand. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 435.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the March low of 407.60 cents. First resistance is seen at 422.50 cents and then at 425.00. First support is seen at Monday's low of 417.20 cents and then at 415.00 cents. Wyckoff's Market Rating: 5.5.
By Jim Wyckoff of Kitco News; jwyckoff@kitco.com