Gold Pounded to 10-Month Low on Heavy Technical Selling...

Gold prices ended the U.S. day session sharply lower and hit a 10-month low Wednesday. Heavy chart-based selling pressure was featured, including pre-placed sell stop orders being triggered when technical support levels were breached. Sharply lower crude oil prices and a generally weak raw commodity sector Wednesday also led to downside price pressure in gold. Reports this week said exchange traded funds (ETFs) are also seeing investors liquidate their “paper” gold positions. June Comex gold last traded down $23.50 at $1,552.40 an ounce. Spot gold was last quoted down $23.70 at $1,553.00.  May Comex silver last traded down $0.408 at $26.840 an ounce.

There was no specific fundamental news event either Tuesday or Wednesday to account for the strong selling pressure in the gold market. The recent gains in the U.S. stock market, as well as generally stronger stock markets worldwide, have worked to funnel investor and trader monies away from hard assets like gold.

Safe-haven gold has so far not reacted in a bullish fashion to the recent escalation in tensions between the U.S. and North Korea. However, this situation appears to be getting more serious by the day and could quickly prompt strong safe-haven demand for gold.

Reports overnight said physical demand for gold in Asia has picked up as bargain hunters stepped in to buy the dip in prices this week.

Gold prices briefly moved up from their daily lows after the U.S. ADP national employment report was released in Wednesday morning and showed a weaker-than-expected rise of 158,000 non-farm jobs in March. The ADP report is a precursor to Friday’s release of the U.S. Labor Department’s employment situation report, which is arguably the most important U.S. economic report of the month. The consensus forecast for that report had called for the key non-farm payrolls figure to have risen by 200,000 in March, with the overall unemployment rate unchanged from the previous month, at 7.7%. The weaker-than-expected ADP report Wednesday morning now has many ratcheting back expectations for Friday’s Labor Department jobs report.

In overnight news, there were new developments on the Cyprus banking crisis front Wednesday. The island nation reached an agreement with the IMF for an additional 1 billion Euro “lifeline” loan. There was little market reaction to that news. Euro zone inflation rose at its slowest rate in two years in March, at a 1.7% annualized rate, according to the Euro zone statistics bureau, Eurostat. There are key central bank meetings of the European Central Bank, the Bank of Japan and Bank of England on Thursday, all of which will be closely monitored by the market place.

The London P.M. gold fix is $1,574.75 versus the previous P.M. fixing of $1,583.50.
Technically, June gold futures prices closed nearer the session low Wednesday and hit a 10-month low on heavy technically related selling. Serious near-term technical damage has been inflicted this week. The gold bears have the solid overall near-term technical advantage and have gained strong downside momentum this week. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,580.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the May 2012 low of $1,545.00. First resistance is seen at $1,560.00 and then at $1,570.00. First support is seen at Wednesday’s low of $1,549.70 and then at $1,545.00. Wyckoff’s Market Rating: 2.0

May silver futures prices closed nearer the session low again Wednesday and hit a fresh nine-month low. Silver bears have the solid overall near-term technical advantage as serious near-term technical damage has been inflicted this week. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $28.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $26.00. First resistance is seen at $27.00 and then at Wednesday’s high of $27.315. Next support is seen at Wednesday’s low of $26.67 and then at $26.50. Wyckoff's Market Rating: 1.5.

May N.Y. copper closed down 480 points at 333.05 cents Wednesday. Prices closed near the session low and hit a fresh eight-month low. Copper bears have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at this week’s high of 340.30 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the August 2012 low of 332.00 cents. First resistance is seen at 335.00 cents and then at 337.50 cents. First support is seen at Wednesday’s low of 332.95 cents and then at 332.00 cents. Wyckoff's Market Rating: 2.0.

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