Gold hits record high; more upside likely

(Kitco News) - Comex gold futures prices are solidly up and overnight hit a new record high of $2,085.40 an ounce, on safe-haven demand amid a jittery U.S. banking system and worries about a U.S. and/or global economic recession. Silver prices are sharply up and near the highs for the year. Gold and silver bulls have the strong technical advantage to suggest still more price gains in the near term. June gold was last up $23.30 at $2,060.20 and July silver was up $0.564 at $26.25.

The U.S. stock market is sharply lower at midday today as risk aversion is keen late this week. Another interest rate increase from the Federal Reserve Wednesday afternoon was no help for the U.S. banking system, parts of which are shaky. Reports now say PacWest Bancorp, a California-based lender, is in trouble. Its stock price saw a 60% decline in after-hours trading Wednesday. The bank is reported to be considering strategic options including a sale. PacWest is much smaller in size compared to failed Silicon Valley Bank and First Republic Bank. Still, this news is keeping U.S. banking turmoil on the front burner of the marketplace and keeping traders and investors nervous. Reads a Barrons headline today: "Powell says banking system is ‘sound and resilient;' try telling that to PacWest investors." The European Central Bank met Thursday and raised its main interest rate by a quarter-point, as expected. 

Global stock markets were mixed to weaker overnight.

The marketplace is now looking forward to Friday's April U.S. jobs report from the Labor Department. The key non-farm payrolls number is forecast to come in at up 180,000 versus a rise of 236,000 in the March report. The U.S. ADP national employment report on Wednesday came in strong, showing 296,000 jobs were created in April, almost double the forecast.

The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices hit a 1.5-year low of $63.64 overnight but rebounded and are now trading around $68.50 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.313%. Treasury yields have dipped this week on flight-to-quality buying amid the wobbly U.S. banking stocks.

Technically, June gold futures bulls have the strong overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at the record high of $2,085.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at today's record high of $2,085.40 and then at $2,100.00. First support is seen at today's low of $2,038.50 and then at $2,025.00. Wyckoff's Market Rating: 9.0

July silver futures bulls have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $27.00. The next downside price objective for the bears is closing prices below solid support at $24.00. First resistance is seen at the April high of $26.435 and then at $26.75. Next support is seen at today's low of $25.70 and then at Wednesday's low of $25.355. Wyckoff's Market Rating: 8.0.

July N.Y. copper closed up 55 points at 385.05 cents today. Prices closed nearer the session low. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 408.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 372.45 cents. First resistance is seen at today's high of 390.75 cents and then at Tuesday's high of 395.30 cents. First support is seen at the April low of 381.65 cents and then at 380.00 cents. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com