A.M. Kitco Metals Roundup: Comex Gold Back Above $1,200.00 as Bulls Regaining Upside Momentum

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26 May 2010, 8:28 a.m.
By Jim Wyckoff
Of Kitco News www.kitco.com
Comex gold futures are trading higher and have moved back above the psychological $1,200.00 level Wednesday morning. The bulls are regaining upside near-term technical momentum. The gold market continues to be supported by safe-haven buying amid trader uncertainty regarding the European Union debt crisis and on fresh worries about a conflict between the two Koreas. June gold last traded up $14.40 at $1,212.50 an ounce.
The European Union's debt crisis remains a major issue with traders worldwide. There is increasing concern the EU's debt crisis will spread from Greece to Portugal and Spain, and possibly turn into a worldwide contagion that could lead to a "double-dip" world economic recession. Traders have been buying gold with European currencies as a hedge against further weakness of the European currencies. Such will likely continue to be the case in the near term as investors "wait for the next shoe to drop" as the EU debt crisis plays out.
Rising tensions between North Korea and South Korea have added to the anxiety among traders worldwide this week. South Korea is putting diplomatic and economic pressure on North Korea following strong evidence that North Korea did torpedo a South Korean navy vessel earlier this year.
The Euro currency is trading near unchanged levels Wednesday and hovering around 14-month lows. Solidly higher crude oil prices Wednesday are adding to buying interest in the precious metals, as is a weaker U.S. dollar index.
In overnight news, reports said sales of gold coins by the U.S. Mint have risen to their highest levels since December 2008, with coin dealers reporting very brisk activity among buyers.
U.S. data scheduled for release Wednesday included new home sales, durable goods orders and the weekly DOE energy stocks data.
The London A.M. gold fix was $1,212.50 versus the previous P.M. fixing of $1,198.25.
Technically, Comex gold futures bulls are regaining upside near-term technical momentum as prices Wednesday pushed above what was psychological resistance at $1,200.00 an ounce.
June gold prices are in a 14-week-old uptrend on the daily bar chart. A close in June gold futures below the last "reaction low" low on the daily bar chart, at $1,166.00, would negate the aforementioned uptrend on the daily chart, produce serious near-term chart damage and would also be one early technical clue that a near-term market top is in place.
For June gold, shorter-term technical resistance is seen at the overnight high of $1,215.00, at $1,220.00 and then at $1,225.00. Buy stops likely reside just above those levels. Sell stops likely reside just below what is now psychological support at $1,200.00, at $1,190.00 and then at $1,180.00. Today's key near-term Fibonacci pivot level for June gold: $1,218.00.
Comex silver futures are trading higher Wednesday on short covering amid bullish "outside markets" that include a lower U.S. dollar index and higher crude oil and stock index futures prices. July silver last traded up 47.9 cents at $18.26 an ounce.
Silver bulls have the overall near-term technical advantage and needed to show fresh power this week to avoid serious chart damage. Serious near-term chart damage in July silver would be inflicted if prices closed below the last "reaction low" on the daily bar chart, which is located at the May low of $17.08. A bearish pennant pattern may now be forming on the daily bar chart.
July silver finds shorter-term technical resistance at the overnight high of $18.34 and then at $18.50. Buy stops likely reside just above those levels. Shorter-term technical support for July silver is located at $18.00 and then at $17.75. Sell stops are likely placed just below those levels. Today's key Fibonacci pivot level for July silver futures is located at $18.34.
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