Gold, Silver Prices Pull Back As U.S. Stocks Rally

Date: 01/04/2019

Jim Wyckoff Monday April 01, 2019 12:29

Kitco News

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(Kitco News) – Gold and silver prices are modestly down in early-afternoon U.S. trading Monday. Trading has been choppy and on both sides of unchanged in both metals today. A rally in the U.S. stock market and a rebound in the U.S. dollar index from its overnight weakness worked to pressure the precious metals markets today. June gold futures were last down $3.50 an ounce at $1,295.00. May Comex silver was last down $0.01 at $15.10 an ounce.

On this first day of the second quarter, Asian and European stock indexes were also mostly higher overnight. China got some upbeat manufacturing data to boost Asian and European shares Monday. The Caixin-Markit China purchasing managers index (PMI) came in at 50.5 in March from 49.2 in February. A reading above 50.0 suggests growth in the sector.

The U.S. retail sales report, released this morning, showed a drop of 0.2% in February, which was a downside miss from expectations of a 0.2% rise. This report did put some brief downside price pressure on the U.S. dollar index, which in turn helped to lift gold and silver prices above unchanged for a short while.

The Euro zone jobless rate was reported at 7.8% in February, which is unchanged from January and in line with market expectations. The Euro zone March consumer price index came in at up 1.4%, year-on-year, versus up 1.5% in February. The March CPI reading was just a bit below trade expectations, continuing a worldwide theme of very low inflation. Last autumn, notions among many economists and market watchers were growing that inflation was creeping back into the world marketplace, and possibly becoming problematic. Those ideas have all but disappeared now. Commodity markets, including the precious metals, could use some higher inflation levels to help boost their prices.

Minneapolis Federal Reserve Bank President Neel Kashkari said Monday now is not the time to lower U.S. interest rates. While he said risks to the U.S. economy have increased, Kashkari said the Fed needs more time to see if those risks pan out. He said he is worried about low inflation. Kashkari was interviewed by the Wall Street Journal and is one of the Fed’s more dovish members on U.S. monetary policy.

The other key outside market today is in a bullish posture for the metals markets, as Nymex crude oil prices are higher, hit a 4.5-month high and are trading above $61.00 a barrel.

Technically, June gold futures prices closed nearer the session low today. The bulls still have the overall near-term technical advantage but have faded badly recently and need to show fresh power soon to avoid more serious chart damage being inflicted. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,330.80. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at the March low of $1,287.50. First resistance is seen at $1,300.00 and then at Friday’s high of $1,304.60. First support is seen at last week’s low of $1,291.30 and then at $1,287.50. Wyckoff’s Market Rating: 6.0.

May silver futures prices closed near mid-range today. The silver bears have gained the slight overall near-term technical advantage. A five-week-old downtrend has been re-established on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $15.65 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.50. First resistance is seen at $15.25 and then at $15.315. Next support is seen at last week’s low of $14.95 and then at $14.75. Wyckoff’s Market Rating: 4.5.

May N.Y. copper closed down 85 points at 292.70 cents today. Prices closed near the session low today after spiking to a nine-month high early on. The copper bulls have the overall near-term technical advantage. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 283.45 cents. First resistance is seen at 297.80 cents and then at today’s high of 298.85 cents. First support is seen at 290.00 cents and then at 287.80 cents. Wyckoff’s Market Rating: 6.5.

By Jim Wyckoff