Gold Sinks To 4-Week Low As U.S. Dollar Resumes Rally

(Kitco News) - Gold aresolidly lower and fell to a four-week low in early U.S. trading Wednesday,pressured in part by a resumption of the appreciation of the U.S. dollar on theforeign exchange market. The U.S. dollar index hit a 3.5-month high overnight. June Comex gold futures were last down $10.60 an ounce at $1,322.40. May Comex silver was last down $0.203 at $16.50 an ounce.

Worldstock markets were mostly lower overnight. U.S. stock indexes are pointedtoward weaker openings when the New York day session begins. Investor riskappetite has waned a bit this week on some disappointing corporate earningsreports and worries about rising interest rates and inflation. If the U.S.stock market sells off sharply today, look for gold to see better safe-havendemand that could push prices back above unchanged on the day.

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 morning.

Thekey “outside markets” on Wednesday morning see the U.S. dollar index trading firmer.A look at several currency-pair charts reveals near-term strong-trending, andeven “breakout” price moves that have occurred over the past couple weeks.Trends in currency markets tend to be stronger and longer-lasting than trendsin other markets.

Meantime,Nymex crude oil prices are slightly down and trading below $68.00 a barrel. Theoil market has been supported recently by stronger world economic growth and onsome notions that the U.S. could pull out of a deal struck with Iran regardingits nuclear ambitions. If the U.S. slaps sanctions on Iran again, that wouldreduce Iran’s capacity to sell oil on the world market.

U.S.economic data due for release Wednesday includes the weekly MBA mortgageapplications survey and the weekly DOE liquid energy stocks report.

Technically,Junegold bulls still have the overall near-term technical advantage, but arefading. Gold bulls' next upside near-term price breakout objective is toproduce a close above solid technical resistance at $1,350.00. Bears' nextnear-term downside price breakout objective is pushing prices below solidtechnical support at the March low of $1,309.30. First resistance is seen attoday’s high of $1,333.80 and then at this week’s high of $1,337.60. Firstsupport is seen at $1,320.00 and then at $1,312.40. Wyckoff's Market Rating: 6.0

Maysilver futures bulls and bears are on a level overall near-term technicalplaying field. Silver bulls' next upside price breakout objective is closingprices above solid technical resistance at the April high of $17.36 an ounce.The next downside price breakout objective for the bears is closing pricesbelow solid support at the March low of $16.10. First resistance is seen attoday’s high of $16.71 and then at $16.89. Next support is seen at $16.40 andthen at $16.25. Wyckoff's Market Rating: 5.0.

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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