||19-04-2011 10:00 PM
- Gold prices are trading firmer Tuesday morning and poked to another fresh all-time record high of $1,498.90 as of this writing, basis the Comex June futures contract. Prices were hovering very close to the major psychological price level of $1,500.00. Safe-haven investment demand continues to underpin the precious metals markets, amid some geopolitical hotspots and in the wake of the rating downgrade of the U.S. government's debt outlook. Comex June gold last traded up $4.40 an ounce at $1,497.30. Spot gold last traded up $0.50 at $1,497.00.
The precious metals market bulls continue to benefit from safe-haven demand coming from several fronts. The latest development came from a surprise move by the Standard & Poors ratings agency to downgrade the outlook for U.S. government debt to negative. Also, the European Union's smaller countries' have their own sovereign debt crisis that is back on the front burner. Greece and Ireland are making the headlines this week, amid credit ratings downgrades and EU efforts to control the situation. And while the tensions in the Middle East and northern Africa may have eased a bit, the problems in that oil-rich region will not go away any time soon.
There are widespread notions inflationary price pressures will continue to build in the world's major economies. Many raw commodity prices are near record or multi-year highs. Meantime, central bankers of the major world economies the past two years have been flooding the financial system with printed money. Precious metals prices have been boosted in recent months in part by heightened inflation concerns among investors. Such will likely continue to be the case for the foreseeable future.
The U.S. dollar index is weaker Tuesday morning, following good short-covering gains scored on Monday. However, the still-weak overall technical posture of the U.S. dollar index remains a bullish factor for the precious metals markets. If the dollar index can produce a sustained uptrend it would be a clue that gold has put in a near-term market top.
Crude oil prices are lower again Tuesday morning, which is a bit bearish for the precious metals. However, crude is still trading around $106.00 a barrel, which is still an underlying bullish factor for the precious metals due to the inflationary implications.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs chain store sales index, housing starts and building permits and the weekly Johnson Redbook retail sales report.
The London A.M. gold fixing was $1,495.00 versus the previous P.M. fixing of $1,493.00.
Technically, June Comex gold futures bulls have the strong overall near-term and longer-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above major psychological resistance at $1,500.00. That level is within easy striking distance and will likely be hit soon. Bears' next near-term downside price breakout objective is closing prices below solid technical support at last week's low of $1,445.00. First resistance is seen at $1,500.00 and then at $1,510.00. First support is seen at the overnight low of $1,488.20 and then at $1,478.00.
May silver futures last traded up 37.4 cents at $43.33 an ounce Tuesday as prices hover near a 31-year high. Bulls have the strong overall near-term and longer-term technical advantage. A 2.5-month-old uptrend is in place on the daily bar chart. There are still no early clues to suggest a market top is close at hand. The next downside price breakout objective for the bears is closing prices below major psychological support at $40.00. Bulls' next upside price objective is producing a close above technical resistance at $45.00 an ounce. First resistance is seen at Monday's contract high of $43.56 and then at $44.00. Next support is seen at $44.00 and then at the overnight low of $42.755.