Gold Sees Corrective Bounce, Helped By Weaker U.S. Dollar

(Kitco News) - Gold prices ended the U.S. day session moderately higher Monday. A short-covering bounce in the futures market and bargain hunting in the cash market were featured, following the selling pressure seen late last week. A weaker U.S. dollar index was also supportive for the precious metals markets. June Comex gold was last up $10.00 at $1,240.00 an ounce. May Comex silver was last up $0.085 at $16.98 an ounce.

Global stock markets were weaker in uneventful trading Monday, and that also benefitted the safe-haven gold market bulls. Quarterly corporate earnings reports are in focus for stock market traders, at present. U.S. stock indexes were slightly lower in afternoon trading in New York.

Nymex crude oil prices were lower Monday and hovering just above $43.00 a barrel in afternoon trading. The other key “outside market” saw the U.S. dollar index lower Monday and still mired in a near-term price downtrend.

Traders and investors are looking ahead to this week’s meeting of the Federal Open Market Committee (FOMC). The Fed meeting begins Tuesday morning and ends early Wednesday afternoon with a statement. No changes in U.S. monetary policy are expected at this meeting. However, the statement at the end of the meeting could provide clues on the timing of the next monetary policy move by the FOMC.

The Bank of Japan holds its regular monetary policy meeting on Thursday.

Technically, June gold futures prices closed nearer the session high on a corrective bounce from late last week’s selling pressure. The 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 last week’s high of $1,272.40. 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 $1,243.80 and then at $1,250.00. First support is seen at today’s low of $1,231.30 and then at $1,225.00. Wyckoff’s Market Rating: 6.0

May silver futures prices closed near mid-range today. The silver market bulls have the firm overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing 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 $16.395. First resistance is seen at $17.36 and then at $17.50. Next support is seen at $16.75 and then at $16.50. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed down 115 points at 225.30 cents today. Prices closed nearer the session low on profit taking after hitting a four-week high on Friday. The copper bulls have the slight overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the March high of 232.35 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of 214.00 cents. First resistance is seen at today’s high of 227.25 cents and then at last week’s high of 230.20 cents. First support is seen at 223.50 cents and then at 221.00 cents. Wyckoff's Market Rating: 5.5.

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