Gold prices are building a new support level this morning, after closing yesterday at a 3-week high. Yesterday's spot close at $1,258 is up $40 from April's low. Bullion prices have been boosted by concerns over a dismal earnings season that started this week, and a weak US dollar.
A close at or above Tuesday's settlement will pretty much confirm a bullish breakout from recent range-bound behavior. This morning's high was $1,263, with prices now oscillating at yesterday's close.
First support should occur at the $1,254 level. A break below this puts $1,244 in play. First resistance starts at the morning high of $1,263, with the next hurdle being $1,266.
June gold futures settled at $1,258 an ounce Tuesday, for a gain of $14.20 (1.1%.) This was paper gold's highest close since March 17th. Spot gold closed at the top end of trading Tuesday at $1,258.10, adding $19.70.
On Wall St., the S&P 500 fell 5.6 points (0.27%) to drop back into a loss for 2016. The DJIA and Nasdaq also fell. Shares are battling investor unease at was is touted as the worst earnings season in several quarters.
Oil futures are slightly higher this morning, after being up more than 1% in early trading. Crude futures closed higher Tuesday, with WTI settling above $40 an ounce on forecasts that US shale production should see a drop of 114,000 barrels a day next month. Brent crude futures gained 2.1% to settle at $42.83. This allowed the oil market to shake off the news that OPEC increased oil production last month by 40,000 barrels a day. This was mainly attributed to Iran, which is working diligently to ramp production up to pre-sanctions levels.
The market buzz today is a renewed belief that something will actually come out of the oil producers' summit in Doha, Qatar this Sunday. A spokesman for the Iraqi government expressed confidence that a production freeze would be agreed upon. Given the track record of cheating on production agreements by practically everyone involved in the meeting, the real impact will probably only be psychological.
The poor, battered greenback finally saw some bargain hunting this morning, after languishing near eight-month lows. The dollar has been pressured by a scaling back of Fed rate hike expectations, but its main antagonist has been the Japanese yen. USD/JPY has been at 1-1/2 year lows recently, as the Bank of Japan has been unable to halt the yen's rally.
We get another market-mover for oil tomorrow morning, as the US Energy Information Agency releases its crude stockpile report at 10:30. Also on tap are retail sales and producer prices for the US.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product