Gold, Silver Markets Oversold, Due For Bounces

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(Kitco News) - Gold prices are modestly down and silver prices are near steady in midday U.S. trading Tuesday. The safe-haven metals bulls are trying to stabilize prices after their recent downdrafts that produced some near-term technical damage. Gold hit five-week low Monday, while silver hit a nine-week bottom. Now, both gold and silver markets are technically oversold on a short-term basis and due for corrective bounces as soon as Wednesday. April gold futures were last down $3.40 an ounce at $1,284.10. May Comex silver was last steady at $15.11 an ounce.

Upbeat trader and investor risk appetites in recent weeks are keeping gold and silver buyers scarcer. As long as world stock markets remain in near-term price uptrends it will be difficult for gold and silver markets to sustain rallies. However, there are some very early technical clues the U.S. stock indexes might be seeing their price uptrends starting to “roll over.” Price action the rest of this week will be extra important for the U.S. stock indexes, and in turn the fortunes of gold and silver bulls.

In overnight news, the unofficial China purchasing managers’ index (PMI) for February came in at its lowest level since October. China also on Tuesday lowered its projected gross domestic product growth for the year. The National People’s Congress lowered its 2019 GDP growth estimate to a rate of 6.0% to 6.5%, from 6.5%. Chinese economic officials also pledged to continue to support the manufacturing sector and emerging businesses, including new deficit spending and tax cuts. The trade war with the U.S. the past year has dented the Chinese economy, which in turn has likely made Chinese leadership keen to end its trade war with the U.S. The National People’s Congress annual meeting in China is taking place this week. A slowing Chinese economy can be read as bearish for gold, as consumer demand for the metal has likely decreased. Chinese citizens are major gold consumers.

Attention of the marketplace is turning to later this week, when the European Central Bank’s regular monetary policy meeting occurs on Thursday. The ECB is expected to loosen its purse strings and provide more low-interest financing to Euro zone banks in order to stimulate an anemic Euro zone economy.

The U.S. March jobs report from the Labor Department is due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000.

The key outside markets today see the U.S. dollar index firmer. The greenback bulls have regained technical strength recently, and that’s also a negative “outside-market” force working against the precious metals markets. Meantime, Nymex crude oil prices are slightly up and trading around $56.50 a barrel.

Technically, April gold futures prices closed nearer the session low today. The bulls and bears are on a level overall near-term technical playing field. Now, the gold market is short-term oversold and due for a corrective bounce soon. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,275.00. First resistance is seen at today’s high of $1,290.60 and then at $1,300.00. First support is seen at the January low of $1,281.50 and then at $1,275.00. Wyckoff's Market Rating: 5.0

May silver futures prices closed near mid-range today. The silver bears have the overall near-term technical advantage. However, the market is now short-term oversold, technically. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at this week’s high of $15.295 and then at $15.40. Next support is seen at today’s low of $15.06 and then at $15.00. Wyckoff's Market Rating: 4.0.

May N.Y. copper closed up 265 points at 293.60 cents today. Prices closed nearer the session high today. The copper bulls have the overall near-term technical advantage. Prices have been trending higher for two months. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 275.00 cents. First resistance is seen at this week’s high of 295.50 cents and then at the February high of 297.75 cents. First support is seen at this week’s low of 289.65 cents and then at 287.25 cents. Wyckoff's Market Rating: 6.5.