(Kitco News) - Gold prices ended the U.S. day session modestly higher Wednesday, supported by short covering in the futures market, bargain hunting in the cash market, and on some fresh demand for physical gold coming out of Asia. The weaker U.S. dollar index and firmer crude oil prices were also a bullish outside markets working in favor of the precious metals bulls Wednesday. April Comex gold was last up $4.60 at $1,201.90 an ounce. May Comex silver was last up $0.242 at $16.475 an ounce.
Gold and silver prices did back well off their daily highs as the U.S. trading session progressed Wednesday. The overall technical postures for gold and silver remain bearish, which continues to limit buying interest in both metals.
After gold prices dropped to a seven-week low Tuesday, there was some renewed demand for physical gold, particularly from Asia as investors there returned to work after the long China Lunar New Year holiday.
There was upbeat economic data coming out of China, the world’s second-largest economy, on Wednesday. China’s flash manufacturing purchasing managers index came in at 50.1 in February from 49.7 in January. A reading above 50.0 suggests growth. The February reading was the highest in four months. This news was a mild positive for the beleaguered raw commodity sector, as China is a major importer of raw commodities.
The German government sold five-year bonds Wednesday, which fetched a negative yield for the first time ever. The average yield was minus 0.8% versus the plus 0.05% yield seen in a late-January auction. In Europe, Germany is regarded as the safe-haven nation for parking investment assets.
Traders and investors Wednesday further digested Fed Chair Janet Yellen’s testimony on monetary policy to the Senate Banking Committee Tuesday. She said the U.S. economy continues to improve and that at some point the Fed will likely raise interest rates. Yellen said the decision on precisely when to make a monetary policy move will be on a meeting-to-meeting basis. Elements of her remarks favored both the monetary policy hawks and doves, and ideas are still mixed on whether she leaned one way or the other on policy, overall. Yellen spoke to a U.S. House panel on Wednesday, but she said nothing market-sensitive.
The London P.M. gold fix was $1,204.75 versus the previous A.M. fixing of $1,206.50.
Technically, April gold futures prices closed near the session low. The gold bears still have the firm overall near-term technical advantage. A five-week-old downtrend is in place on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,223.00. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at the January low of $1,168.30. First resistance is seen at today’s high of $1,211.70 and then at $1,223.00. First support is seen at this week’s low of $1,190.00 and then at $1,185.00. Wyckoff’s Market Rating: 3.0
May silver futures prices closed near mid-range today and saw short covering. Silver bears still have the firm near-term technical advantage. A five-week-old downtrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at today’s high of $16.75 and then at $16.81. Next support is seen at today’s low of $16.295 and then at this week’s low of $16.085. Wyckoff’s Market Rating: 3.0.
May N.Y. copper closed up 40 points at 264.35 cents today. Prices closed nearer the session high today and closed at a six-week high close. The key “outside markets” were in a bullish posture for copper today, as the U.S. dollar index was lower and crude oil prices were higher. The copper market bears still have the overall near-term technical advantage but the bulls have gained some upside momentum to begin to suggest that a market bottom is in place. A three-week-old uptrend is in place on the daily bar chart. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at 275.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 250.00 cents. First resistance is seen at this week’s high of 266.80 cents and then at 270.00 cents. First support is seen at today’s low of 261.65 cents and then at 260.00 cents. Wyckoff’s Market Rating: 3.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff