Gold Down Again, Hits 7-Wk Low; Technical Posture Deteriorating

(Kitco News) - Gold prices ended the U.S. day session moderately lower and scored a seven-week low Wednesday. Follow-through technical selling pressure was featured as the near-term chart postures for both gold and silver markets have significantly deteriorated this week. The precious metals bulls are wondering if their markets can once again show the resilience that had been seen in recent weeks, to stop the bleeding. Gold bulls need to step up and show power soon. The recent rally in the U.S. dollar index remains a bearish outside market force for the precious metals markets. June Comex gold futures were last down $5.20 an ounce at $1,224.10. July Comex silver was last up $0.056 at $16.315 an ounce.

Gold prices have shed about $75.00 an ounce this month, amid worries the U.S. Federal Reserve will raise interest rates in June. The June Fed rate-hike notions have been a bullish element for the U.S. dollar.

Another feature in the marketplace at mid-week is crude oil prices that are near seven-month highs, with Nymex crude oil futures closing in on $50.00 a barrel. The near-term uptrend in crude prices has helped to rally world stock markets this week. Global equity markets were mostly firmer overnight, with U.S. stock indexes also higher in afternoon New York trading. While crude prices are trending higher at present, there are veteran oil market watchers that firmly believe world oil supplies are still very burdensome and that the rally in oil will fizzle out soon.

One bullish element for precious metals traders and all raw commodity market bulls is the high likelihood that crude oil prices have put in a major low, and will continue to trend at least sideways, if not sideways to higher, in the coming weeks and months. If oil prices start to melt down again, the entire raw commodity sector would again be in serious trouble.

Technically, June gold futures prices closed near mid-range 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 an accelerating 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 $1,250.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,200.00. First resistance is seen at today’s high of $1,230.20 and then at $1,240.00. First support is seen at today’s low of $1,217.70 and then at the March low of $1,207.70. Wyckoff’s Market Rating: 5.5

July silver futures prices closed near mid-range and hit another 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 today’s low of $16.185 and then at $16.00. Wyckoff's Market Rating: 5.5.

July N.Y. copper closed up 360 points at 210.25 cents today. Prices closed nearer the session high today and saw more short covering. The copper bears have the 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 210.90 cents and then at 212.50 cents. First support is seen at 208.00 cents and then at today’s low of 206.50 cents. Wyckoff's Market Rating: 3.0.

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