Gold Down Sharply, Hits 4-Wk Low; Higher U.S. Dollar, Stock Market Are Bearish

(Kitco News) - Gold prices ended the U.S. day session solidly lower and scored a four-week low Tuesday. The recent uptrend in the U.S. dollar index remains a bearish outside market force for the precious metals markets. The dollar index hit a seven-week high today. A rally in the U.S. stock market Tuesday also pulled away buying interest in the safe-haven gold market. June Comex gold futures were last down $22.00 an ounce at $1,229.00. July Comex silver was last down $0.173 at $16.25 an ounce.

The U.S. dollar index has been trending higher for the past three weeks, which has dented upside price action in many raw commodity markets. A strong U.S. home sales report Tuesday that showed the best pace of sales in eight years in April also worked in favor of the U.S. dollar bulls. The report falls into the camp of the U.S. monetary policy hawks, who want to see the Fed raise interest rates sooner, and more often. There appears to be growing odds the Fed will raise U.S. interest rates in June, and those notions are also bearish for the precious metals markets.

World stock markets were mixed and choppy overnight. U.S. stock indexes were posting solid gains Tuesday afternoon. Global equity traders continue to closely watch crude oil prices, which were firmer Tuesday afternoon. Trading days on which oil prices are lower have tended to limit buying interest in stocks. Notions of an ongoing world oil glut are keeping crude gains in check. Oil traders are awaiting the June 2 OPEC meeting in Vienna, Austria.

Technically, June gold futures prices closed near the session low today. The gold still bulls have the slight overall near-term technical advantage but have faded badly and need to show fresh power soon. Prices are in a three-week-old downtrend on the daily bar chart. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,270.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,200.00. First resistance is seen at $1,240.00 and then at $1,250.00. First support is seen at today’s low of $1,228.00 and then at $1,225.00. Wyckoff’s Market Rating: 5.5

July silver futures prices closed near the session low and hit a five-week low today. The silver market bulls have the slight overall near-term technical advantage, but have faded badly as a three-week-old downtrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at this week’s high of $16.59 and then at $16.75. Next support is seen at $16.20 and then at $16.00. Wyckoff's Market Rating: 5.5.

July N.Y. copper closed up 130 points at 206.80 cents today. Prices closed near mid-range today and saw short covering. The copper bears have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 220.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 200.00 cents. First resistance is seen at today’s high of 208.95 cents and then at 210.00 cents. First support is seen at last week’s low of 203.80 cents and then at 202.00 cents. Wyckoff's Market Rating: 2.5.

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