Gold, Silver Sink As U.S. Dollar Resumes Rally

(Kitco News) - Gold and silver prices are lower in early-afternoon U.S. trading Wednesday. Gold droppedto a four-week low today. The precious metals were pressured in part by aresumption of the appreciation of the U.S. dollar on the foreign exchangemarket. The U.S. dollar index hit a 3.5-month high today. The USDX has alsoseen a bullish upside technical breakout on the daily chart, to suggest moregains in the near term. Such could be a significantly bearish weight on themetals in the coming weeks. The safe-haven metal bulls need a big dose ofgeopolitical uncertainty to jumpstart price rallies. June Comex gold futureswere last down $9.30 an ounce at $1,323.80. May Comex silver was last down $0.183at $16.52 an ounce.

Worldstock markets were mostly lower overnight. U.S. stock indexes are weaker inafternoon New York dealings. Investor risk appetite has waned a bit at mid-weekon some disappointing corporate earnings reports and worries about risinginterest rates and inflation. If the U.S. stock market sells off sharply in thenear term, look for gold to see safe-haven demand surface.

Afeature in the marketplace recently has been rising world government bondyields. The U.S. Treasury 10-year note yield on Tuesday moved above 3.0%--thehighest level in four years. U.S. bond yields rose further Wednesday.

Theother key “outside markets” on Wednesday sees Nymex crude oil prices nearsteady and trading just below $68.00 a barrel. The oil market has beensupported recently by stronger world economic growth and on some notions thatthe U.S. could pull out of a deal struck with Iran regarding its nuclearambitions. If the U.S. slaps sanctions on Iran again, that would reduce Iran’scapacity to sell oil on the world market.

Technically,gold bulls still have the overall near-term technical advantage but are fadingand need to show fresh power soon to avoid more serious near-term chart damage.Gold bulls' next upside near-term price breakout objective is to produce aclose above solid technical resistance at $1,350.00. Bears' next near-termdownside price breakout objective is pushing prices below solid technicalsupport at the March low of $1,309.30. First resistance is seen at today’s highof $1,333.80 and then at this week’s high of $1,337.60. First support is seenat today’s low of $1,320.20 and then at $1,312.40. Wyckoff's Market Rating: 6.0

Thesilver bulls and bears are on a level overall near-term technical playingfield. Silver bulls' next upside price breakout objective is closing pricesabove solid technical resistance at the April high of $17.36 an ounce. The nextdownside price breakout objective for the bears is closing prices below solidsupport at the March low of $16.10. First resistance is seen at today’s high of$16.71 and then at $16.89. Next support is seen at today’s low of $16.475 andthen at $16.25. Wyckoff's Market Rating: 5.0.

MayN.Y. copper closed down 85 points at 313.35 cents today. Prices closed nearmid-range. The copper bulls have the overall near-term technical advantage. Afour-week-old uptrend is in place on the daily bar chart. Copper bulls' nextupside price objective is pushing and closing prices above solid technicalresistance at 320.00 cents. The next downside price objective for the bears isclosing prices below solid technical support at 300.00 cents. First resistanceis seen at this week’s high of 311.75 cents and then at the April high of319.55 cents. First support is today’s low of seen at 311.65 cents and then at310.00 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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