Gold Down On More Profit Taking, Bearish Outside Markets

(Kitco News) - Gold prices ended the U.S. day session solidly lower Wednesday, on follow-through selling and more profit-taking pressure from Tuesday’s declines. The key “outside markets were also in a bearish daily posture for the precious metals markets today, as the U.S. dollar index was higher and crude oil prices were weaker. June Comex gold futures were last down $16.50 an ounce at $1,275.30. July Comex silver was last down $0.204 at $17.295 an ounce.

The U.S. dollar index was higher on more short covering after prices hit an eight-month low on Tuesday. The rebound in the greenback at mid-week has put some selling pressure into many raw commodity markets. Meantime, Nymex crude oil prices were slightly lower Wednesday and hovering just above $43.00 a barrel. If oil prices start to trend lower again, such would be a seriously bearish element for the precious metals and the entire raw commodity sector. But right now, oil prices are still in a near-term uptrend and just seeing some downside corrective action from recent gains.

The U.S. ADP national employment report issued Wednesday morning showed a gain of 156,000 in April, which was well below expectations of a rise of around 200,000. The weak number immediately gave a boost to the gold market. However, gold prices started sliding later in the session.

Traders and investors are looking ahead to Friday’s U.S. jobs report for April from the Labor Department—arguably the most important U.S. economic report of the month. The key non-farm payrolls number is expected to show a rise of 205,000 in April. However, Wednesday’s ADP number calls into question whether the Friday jobs number can meet expectations.

Technically, June gold futures prices closed nearer the session low today. The gold bulls still have the firm overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid longer-term technical resistance at this week’s high of $1,306.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,250.00. First resistance is seen at $1,287.80 and then at today’s high of $1,291.80. First support is seen at $1,272.40 and then at $1,264.70. Wyckoff’s Market Rating: 7.0

July silver futures prices closed nearer the session low today, on more profit taking. A bearish “key reversal” down has been confirmed on the daily bar chart this week, which is an early technical clue that the silver market has put in a near-term top. The silver market bulls still have the firm overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $18.06 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.80. First resistance is seen at today’s high of $17.51 and then at $17.76. Next support is seen at today’s low of $17.215 and then at $17.00. Wyckoff's Market Rating: 7.0.

July N.Y. copper closed down 360 points at 218.30 cents today. Prices closed near the session low. The key “outside markets” were bearish for copper again today as the U.S. dollar index was higher and crude oil prices were lower. The copper bears have regained the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 230.55 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of 207.90 cents. First resistance is seen at 220.00 cents and then at today’s high of 222.20 cents. First support is seen at 215.00 cents and then at 213.70 cents. Wyckoff's Market Rating: 4.0.

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