Profit-Taking Hits Gold; Silver Pushes Still Higher

(Kitco News) - Gold prices ended the U.S. day session lower Wednesday, on a corrective pullback from recent gains, some profit-taking, and as investor risk appetite was on the upswing at mid-week. Silver prices did post modest gains and hit another 5.5-month high. A solid rebound in the U.S. dollar index and weaker crude oil prices today also were bearish “outside markets” for the gold market on this day. June Comex gold was last down $12.80 at $1,248.10 an ounce. May Comex silver was last up $0.078 at $16.30 an ounce.

It was a “risk-on” day in the marketplace Wednesday, as most world stock markets rallied. U.S. stock indexes were higher in afternoon dealings. Some upbeat economic data coming out of China, the world’s second-largest economy, helped to lift traders’ and investors’ spirits at mid-week. Chinese exports rose 11.5% in March—the first increase in nine months. China’s imports were down 7.6% in the same period, but the decline was not as much as forecasters were predicting.

There was downbeat economic data coming out of the European Union Wednesday. Industrial output in the Euro zone dropped in February, by 0.8% from January. The reading was worse than expectations of a 0.5% drop.

There was a batch of U.S. economic data released Wednesday, but it was a mixed bag and had little impact on the markets.

The key “outside markets” on Wednesday saw the U.S. dollar index solidly higher on a corrective bounce after hitting an eight-month low Tuesday. The dollar index remains in a price downtrend and the bears still have the near-term technical advantage. Meantime, Nymex crude oil prices were weaker but still trading above $41.00 a barrel Wednesday. A major oil-producers’ meeting is scheduled for Sunday, at which time participants will discuss limiting their production levels. Reports Tuesday said Russia and Saudi Arabia had agreed to limit their oil production levels. However, there were reports Wednesday the Saudi oil minister said his nation won’t cut back on crude oil production.

Technically, June gold futures prices closed near mid-range today. Gold bulls have the overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,287.80. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,225.00. First resistance is seen at today’s high of $1,258.70 and then at this week’s high of $1,264.70. First support is seen at today’s low of $1,241.40 and then at $1,231.00. Wyckoff’s Market Rating: 6.5

May silver futures closed nearer the session high today and hit another 5.5-month high. The silver market bulls have the overall near-term technical advantage and have momentum on their side. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.37 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at this week’s low of $15.37. First resistance is seen at $16.37 and then at $16.50. Next support is seen at $16.00 and then at Tuesday’s low of $15.80. Wyckoff's Market Rating: 6.5.

May N.Y. copper closed up 185 points at 216.50 cents today. Prices closed near mid-range and saw short more covering. The copper bears still have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 225.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 205.00 cents. First resistance is seen at today’s high of 218.00 cents and then at 220.00 cents. First support is seen at today’s low of 214.40 cents and then at 212.50 cents. Wyckoff's Market Rating: 3.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com