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A.M. Kitco Metals Roundup: Comex Gold Lower on Corrective Pullback, Chart Consolidation, after Big Gains Friday

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By Jim Wyckoff

Comex gold futures prices are moderately lower in early U.S. trading Monday, amid a downside correction and some consolidation on the charts following Friday’s big gains. The bulls do still have some fresh near-term technical momentum on their side. August gold last traded down $14.20 at $1,590.00 an ounce. Spot gold was last quoted down $9.70 an ounce at $1,590.00.  September Comex silver last traded down $0.352 at $27.26 an ounce.

Many markets Monday are seeing a pause or modest corrective pullbacks and chart consolidation following a big trading day on Friday. On Friday, European Union leaders at their summit meeting agreed upon several significant measures to confront the EU debt crisis. The EU summit was considered a success given the scant progress that was expected. Many markets, including gold and silver, closed at their weekly high closes on Friday, amid that big “risk on” trading day.

Monday morning sees some fresh, dour economic news, however. There was another weak manufacturing report coming out of China, which showed the worst reading for that report since November. Also, reports overnight showed manufacturing activity in the European Union was weak, with EU unemployment also reported at a record high rate of 11%.

Traders are now awaiting Friday morning’s U.S. jobs report. It’s likely to be a quieter trading week this week, as the U.S. Independence Day holiday falls on Wednesday, with many traders likely opting to take the entire week off.

The U.S. dollar index is firmer Monday morning on a corrective bounce from big losses Friday that did see the greenback bulls fade badly. Meantime, Nymex crude oil futures prices are see a corrective pullback following its big gains posted on Friday. Technical odds have increased that the crude oil market may have now put in a market low and that the dollar index may have put in a near-term high. Such a scenario would be bullish for the precious metals.

The London A.M. gold fix is $1,596.25 versus the previous London P.M. fixing of $1,598.50.

U.S. economic data due for release Monday includes the manufacturing PMI, the ISM manufacturing report, the global manufacturing PMI, and construction spending.

Technically, August gold futures bulls and bears are back on a level near-term technical playing field following Friday’s big gains that did produce a bullish weekly high close. Trading has turned choppy on the daily chart. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the June high of $1,642.40. Bears’ next near-term downside price objective is closing prices below solid technical support at last week’ low of $1,547.60. First resistance is seen at $1,600.00 and then at Friday’s high of $1,607.80. First support is seen at $1,580.00 and then at $1,575.00.

September silver futures bulls did gain some upside technical momentum with Friday’s big gains and bullish weekly high close. But the bulls have more work to do in the near term to climb back on a level technical playing field with the bears. Silver bears still have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $29.095 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $26.105. First resistance is seen at the overnight high of $27.52 and then at Friday’s high of $27.915. Next support is seen at $27.00 and then at the May low of $26.89.