Gold Sees Follow-Through Buying; Bulls Have More Work to Do

Author: Paul Ploumis
20 Mar 2015 Last updated at 05:30:53 GMT

(Kitco News) - Gold prices ended the U.S. day session solidly higher Thursday, on follow-through gains from Wednesday’s Fed-inspired rally. Short covering in the futures market and bargain hunting in the cash market were featured. Gold bulls still have some work to do to break the near-term price downtrend. April Comex gold was last up $17.00 at $1,168.20 an ounce. May Comex silver was last up $0.564 at $16.105 an ounce.

The market place on Thursday was still digesting the U.S. Federal Reserve’s Open Market Committee (FOMC) meeting that ended Wednesday afternoon with a very market-sensitive statement that removed the word “patient” regarding when to decide to raise interest rates. The statement also pointed out some weaker U.S. economic data recently, which traders deemed as a very dovish tone and as suggesting the Fed may not be able to raise interest rates as soon as it would have liked. Most now agree no U.S. rate hike is coming from the Fed in June, and maybe not even this year.

The U.S. dollar index on Thursday saw a rebound from Wednesday’s sharp losses. The greenback needed to rebound today in order to prevent near-term technical damage from being inflicted on the daily chart. Meantime, the Euro currency was lower after spiking above $1.10 against the dollar on Wednesday. One market analyst correctly said the currency markets were “wrong-footed” by the FOMC statement Wednesday. But Thursday’s price action suggests not a lot has changed from 24 hours ago, regarding worldwide market fundamentals and the currency markets.

Crude oil prices were lower Thursday and hovering not far above Wednesday’s six-year low. U.S. storage reports this week that showed the highest crude oil levels in storage in recent history are the latest bearish developments in the crude market. Serious technical damage has been inflicted in the crude oil market this week, which suggests prices falling still farther, with upper $30s per barrel now very possible in the near term. Longer-term charts hint that Nymex crude oil has a downside target in the low $30s per barrel. This week’s renewed slump in oil prices is another bearish element for the raw commodity markets, including the precious metals.

The London P.M. gold fixing is $1,166.00 versus the previous A.M. fixing of $1,164.00.

Courtesy: Kitco News