P.M. Kitco Metals Roundup: Comex Gold Ends Firmer; Traders Discuss PIMCO's Dumping of U.S. Bonds


P.M. Kitco Metals Roundup: Comex Gold Ends Firmer; Traders Discuss PIMCO's Dumping of U.S. Bonds
09 March 2011, 02:14 p.m.


(Kitco News) - Comex gold futures prices ended firmer and near mid-range Wednesday. Precious metals traders were digesting and debating the reported move by the "bond king" PIMCO to dump its holdings of U.S. Treasury securities. Comex April gold last traded up $5.20 an ounce at $1,432.40. Spot gold last traded up $3.30 at $1,432.75.

Reports Wednesday said PIMCO is in the process of dumping all of its U.S. government debt. PIMCO had been the world's largest fund holding of U.S. government securities. PIMCO head Bill Gross is worried about the U.S. deficit and U.S. financial problems. PIMCO's move to dump U.S. debt can be viewed by gold market bulls as bullish, due to the implications of huge government deficits weakening the value of the U.S. dollar and the financial and economic standing of the U.S. in the world arena, in general. However, part of Gross's reason for dumping U.S. securities is that he believes the Federal Reserve will become less accommodative in monetary policy in the coming months, including the specter of rising interest rates, to fight inflationary price pressures. That could be viewed as bearish for the precious metals and bullish for the U.S. dollar.

Crude oil prices traded near steady Wednesday, and are above $104.00 a barrel. While there have been no fresh, major developments in the Middle East this week, traders are still very closely watching the price of crude oil as a gauge of the tensions in the Middle East. Some analysts believe a United Nations-established "no fly" zone over Libya could put serious downside price pressure on crude oil, which would also likely pressure the gold market. The stronger crude oil prices have been bullish for the precious metals due to the inflationary implications and the related geopolitical uncertainty that invites safe-haven demand. 

The market place has this week again been reminded of the serious problems the European Union is facing with its smaller countries' sovereign debt. The EU debt situation will continue to limit selling interest in precious metals for at least the near term. This problem is not going to just fade away.

The U.S. dollar index traded near steady Wednesday. Dollar index bears still have the solid overall technical advantage, which continues to be bullish for the precious metals markets.

The London P.M. gold fix was $1,431.00 versus the previous P.M. fixing of $1,426.25.

Technically, April Comex gold futures closed near mid-range Wednesday. The gold market bulls still have the strong overall technical advantage. There are still no early technical clues to suggest a market top is close at hand for gold. A steep six-week-old price uptrend is still in place on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,450.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,410.00. First resistance is seen at Wednesday's high of $1,436.80 and then at the record high of $1,445.70. First support is seen at Wednesday's low of $1,423.20 and then at $1,418.80. Wyckoff's Market Rating: 8.0.

May silver futures closed up 50.0 cents at $36.16 an ounce Wednesday. Prices closed near mid-range and did close at a fresh contract and 31-year high close. The silver bulls have the strong overall near-term technical advantage. There are still no early technical clues to suggest a market top is close at hand. Prices are in a steep six-week-old uptrend on the daily bar chart. The next downside price breakout objective for the bears is closing prices below solid technical support at $35.00. Bulls' next upside price objective is producing a close above solid technical resistance at $37.50 an ounce. First resistance is seen at Wednesday's high of $36.44 and then at Tuesday's high of $36.55. Next support is seen at this week's low of $35.51 and then at $35.00. Wyckoff's Market Rating: 8.5.

May N.Y. copper closed down 1,205 points at 421.80 cents Wednesday. Prices closed nearer the session low, hit a fresh nearly three-month low and scored a big and bearish "outside day" down on the daily bar chart. Serious near-term chart serious chart damage occurred Wednesday. Prices are in a three-week-old downtrend on the daily bar chart. Bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at today's high of 437.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support 410.00 cents. First resistance is seen at 424.35 cents and then at 427.50. First support is seen at Wednesday's low of 418.30 cents and then at 415.00 cents. Wyckoff's Market Rating: 4.0.

 
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