Gold Down, But Bulls Eyeing “Sell In May and Go Away" For Equities

(Kitco News) - Gold prices are down in midday U.S. trading Thursday, but up from their daily lows that saw June gold hit a 4.5-month low. Gold bulls are searching for positives, and one could be the old stock market trading adage, “sell in May and go away.” U.S. stock indexes have sold off the first two days in May. That old saying suggests selling stocks in May and not coming back to the buy side until late summer. Such a scenario would be a bullish element for the competing class of safe-haven metals. June gold futures were last down $10.20 an ounce at $1,273.90. July Comex silver was last down $0.009 at $14.72 an ounce.

Traders and investors are still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) statement and press conference from Fed Chairman Jerome Powell. Gold prices sold off in the aftermath of the news. While the Fed made no changes in U.S. monetary policy, the statement and Powell’s comments did move markets. The FOMC statement said some members were worried that inflation is too low, which the marketplace initially read as dovish on monetary policy. However, at Powell’s press conference, when asked about worrisome low inflation, he said elements causing present lower inflation are “transitory.” While there is no clear consensus at all on the timing or direction of the next Fed interest rate move, it seems most of the marketplace deemed the Fed meeting a bit hawkish on U.S. monetary policy and now feels there is less of a chance the Fed will cut U.S. interest rates anytime soon. That’s because Powell not only said very low inflation was transitory, he was also very upbeat on assessing the U.S. economy’s prospects.

The key “outside markets” today worked in favor of the metals market bears. The U.S. dollar index is slightly higher, while Nymex crude oil prices are sharply lower, hit a four-week low and trading around $61.00 a barrel.

Focus will quickly turn to Friday morning’s April U.S. employment report from the Labor Department. That report is expected to show a non-farm payrolls rise of 190,000. However, Wednesday’s very strong ADP jobs gain (up 275,000 versus expectations of up 177,000) has many thinking Friday’s more important Labor Department jobs number will be higher.

Technically, June gold futures prices closed near mid-range today. The bears have the overall near-term technical advantage and have gained momentum late this week. A nine-week-old downtrend line is in place on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,250.00. First resistance is seen at today’s $1,279.40 and then at last week’s high of $1,290.90. First support is seen at today’s low of $1,267.30 and then at $1,260.00. Wyckoff's Market Rating: 3.5

July silver futures prices closed near mid-range and hit another five-month low today. The silver bears have the firm overall near-term technical advantage. A nine-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 $15.25 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $14.175. First resistance is seen at $14.775 and then at $15.00. Next support is seen at today’s low of $14.57 and then at $14.50. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed down 195 points at 278.20 cents today. Prices closed nearer the session low and hit another 2.5-month low today. The copper bulls have faded and lost their overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at this week’s high of 291.35 cents. The next downside price objective for the bears is closing prices below solid technical support at 270.00 cents. First resistance is seen at today’s high of 280.65 cents and then at 284.65 cents. First support is seen at today’s low of 277.15 cents and then at 275.00 cents. Wyckoff's Market Rating: 5.0.