A.M. Kitco Metals Roundup: Comex Gold Trades Near Steady on Chart Consolidation; U.S. Economic Data Awaited
By Jim Wyckoff
Comex gold futures prices are trading not far from unchanged levels Thursday morning as the market place awaits a heavy slate of U.S. economic data to be released Thursday, followed by Friday’s U.S. jobs report. The gold market is also seeing some consolidation on the daily bar chart. The key “outside markets” are in a mildly bullish posture for the precious metals Thursday morning, as the U.S. dollar index is weaker and crude oil prices are slightly higher. August gold last traded down $1.90 at $1,563.90 an ounce. Spot gold was last quoted up $0.10 an ounce at $1,563.00. July Comex silver last traded down $0.063 at $27.92 an ounce.
On this last trading day of the month (which makes Thursday an extra important day, from a technical perspective), there is a heavy slate of U.S. economic data released, including weekly jobless claims and the gross domestic product estimate for the second quarter, which could make for more active trading in many markets today.
The U.S. and European stock markets have at least temporarily stabilized from their selling pressure seen on Wednesday.
Here are the latest news headlines coming out of the European Union sovereign debt crisis. The European Central Bank chief Draghi has reiterated he wants comprehensive banking union in EU. Spanish 10-year bond yields were above 6.5% late Wednesday. Spanish bond yields above 6% are deemed untenable.
However, possibly the most poignant development Thursday is news that St. Louis Federal Reserve president Bullard said in a speech in Japan overnight that the EU debt crisis is “grave” and said EU leaders must act to prevent a “major meltdown” of the world economies. Bullard also said he is worried about the economic slowdown in China. When a major U.S. banker and economist says such, it only underscores how close the world could be to a major debt/financial contagion and/or economic calamity.
The main data point of the week is the U.S. jobs report due out on Friday morning. Trading in many markets could be more subdued ahead of that report, and then turn more active in the aftermath of the report. The key non-farm payrolls figure in the jobs report is expected to have gained around 150,000 in May.
The U.S. dollar index is trading weaker Thursday morning on profit taking after hitting a nearly two-year high on Wednesday. The dollar index bulls still have upside near-term technical momentum. Meantime, Nymex crude oil futures are slightly higher on tepid short covering after hitting a seven-month low of $87.27 a barrel on Wednesday. Crude oil remains in a bearish overall fundamental and technical posture.
The London A.M. gold fixing was $1,567.50 versus the previous London P.M. fixing of $1,540.00.
U.S. economic data due for release Thursday includes the Challenger job cut report, the ADP monthly jobs report, second-quarter GDP estimate, the weekly jobless claims report, the ISM Chicago business survey, and the weekly DOE liquid energy stocks report.
Technically, August gold futures prices closed nearer the session high in an active day Wednesday. Gold market bulls were encouraged by the market’s ability to hold above strong chart support at the May low of $1,529.30. Gold bears do still have the overall near-term technical advantage. A three-month-old downtrend is still in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears’ next near-term downside price objective is closing prices below solid technical support at the May low of $1,529.30. First resistance is seen at the overnight high of $1,572.60 and then at this week’s high of $1,585.70. First support is seen at $1,550.00 and then at $1,540.00.
July silver futures bears still have the solid overall near-term technical advantage. A three-month-old downtrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at the overnight high of $28.19 and then at $28.50. Next support is seen at $27.50 and then at this week’s low of $27.355.