Gold Above $1,250, Silver Surges To 10.5 Mo. High As Raw Commodities Perk Up

(Kitco News) - Gold prices ended the U.S. day session solidly higher Tuesday, while silver prices were also sharply higher and hit a 10.5-month high. The key “outside markets” were in a bullish posture for the precious metals and the raw commodity sector Tuesday, as the U.S. dollar index was lower and crude oil prices were higher. June Comex gold was last up $20.70 at $1,255.70 an ounce. May Comex silver was last up $0.657 at $16.91 an ounce.

A much-weaker-than-expected U.S. housing report released Tuesday morning added more price upside to the gold and silver markets, as they hit daily highs in the aftermath of the downbeat data. March housing starts were down 8.8% from a month earlier. This report falls into the camp of the U.S. monetary policy doves, who do not want to see the Federal Reserve raise interest rates any time soon.

Looking across the commodity market spectrum Tuesday, not only did the precious metals rally, but the grains, livestock and most of the international foods markets were also in rally modes. And crude oil has rallied this week despite a failed weekend attempt by major oil producers to curb their output levels. Several commodity markets are now in near-term price uptrends on the charts. There are “green shoots” in the raw commodity sector that suggest the major bust cycle is ending and that better times are ahead for commodity markets—including the precious metals.

It was a quieter overall marketplace overnight, with European and Asian stock markets mostly firmer.

In other overnight news, China, which is the world’s largest producer and consumer of gold, has begun a two-times-a-day price fixing for the yellow metal. The fixing will be set in Chinese yuan per gram of gold. The move is an effort to move China to the front burner as a world markets-maker for gold.

Technically, June gold futures bulls have the overall near-term technical advantage and gained fresh upside momentum Tuesday. Prices scored a big and bullish “outside day” up on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the April high of $1,264.70. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week’s low of $1,225.40. First resistance is seen at Tuesday’s high of $1,258.50 and then at $1,264.70. First support is seen at $1,250.00 and then at $1,240.00. Wyckoff’s Market Rating: 6.5

May silver bulls have the firm overall near-term technical advantage and gained more power today as prices hit a 10.5-month high. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is at today’s high of $17.11 and then at $17.25. Next support is seen at $16.60 and then at $16.395. Wyckoff's Market Rating: 7.0.

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