Gold Sees Modest Rebound On Short Covering

(Kitco News) - Gold prices ended the U.S. day session modestly higher Thursday. Some liquidation of previously established sold, or short, futures positions (short covering) was featured today. There was also some perceived bargain-basement buying interest in the cash market after prices fell to a four-week low earlier this week. August Comex gold was last up $4.00 an ounce at $1,249.80. July Comex silver was last up $0.131 at $16.51 an ounce.

The crude oil futures market was firmer today and that also at least temporarily assuaged the precious metals market bulls. However, crude prices hit a 14-month low on Wednesday and the oil market bears have the solid overall near-term technical advantage as Nymex prices are trading below $43.00 a barrel.

The other important “outside market” on Thursday saw the U.S. dollar index trade slightly up on the day. The index has stabilized this week after trending lower for several weeks.

Besides the recent slump in crude oil prices, another feature in the marketplace this week has been falling world government bond yields. Earlier this year many analysts and market watchers were looking for rising inflationary pressures to put central bank monetary policies back into more traditional postures regarding their interest rates. However, at mid-year most inflation numbers around the world have either held steady or even backed off a bit. This situation is arguably a mixed bag for the precious metals markets. The metals bulls like inflation, as do most raw commodities bulls. But recent history shows the specter of rising interest rates and tighter monetary policies that would come with rising inflation have been bearish for most commodity markets.

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Technically, August gold futures prices closed near mid-range. The gold bulls and bears are on a level overall near-term technical playing field. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,275.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,225.00. First resistance is seen at this week’s high of $1,257.30 and then at $1,268.50. First support is seen at today’s low of $1,246.40 and then at this week’s low of 1,241.70. Wyckoff's Market Rating: 5.0

July silver futures prices closed near mid-range today and saw short covering in a bear market. The silver bears still have the firm overall near-term technical advantage. 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 the May low of $16.06. First resistance is seen at this week’s high of $16.68 and then at $16.80. Next support is seen at this week’s low of $16.315 and then at $16.06. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed down 25 points at 259.95 cents today. Prices closed nearer the session high today. The copper bulls and bears are on a level overall near-term technical playing field amid choppy trading. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 265.20 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 247.25 cents. First resistance is seen at today’s high of 261.50 cents and then at the June high of 265.20 cents. First support is seen at today’s low of 257.10 cents and then at this week’s low of 253.95 cents. Wyckoff's Market Rating: 5.0.