Treasuries Decline as Dollar’s Rise Versus Yen Damps Demand...

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Treasury 30-year bonds fell, pushing yileds to almost a one-month high, after the dollar strengthened beyond 100 per yen for the first time in four years, damping demand for U.S. government securities.
Treasuries rallied earlier as an auction of 30-year bonds drew a yield of 2.980 percent, compared with a forecast of 2.997 percent in a Bloomberg News survey of nine of the FederalReserve’s primary dealers. Yields had increased since May 3 when a report showed strong-than-forecast jobs growth and unemployment at a four-year low. Bill Gross, co-chief investment officer at Pacific Investment Management Co. raised the holdings of Treasuries held in his flagship fund to the highest level since 2010.

“The move is a stronger dollar versus everything that has caused a technical move in foreign-exchange markets,” said Richard Gilhooly, an interest rate strategist at Toronto-Dominion Bank’s TD Securities unit in New York. “That’s weighing on bonds.”

The 30-year bond yield rose one basis point, or 0.01 percentage point, to 2.99 percent at 4:59 p.m. New York time, according to Bloomberg Bond Trader prices. The 3.125 percent bond due in February 2043 fell 3/32, or $0.94 per $1,000 face amount, to 102 19/32. The yield fell as much as four basis points, after it rose to 3.02 percent yesterday, the highest level since April 4.
The yield on the May 2023 securities sold yesterday was little changed at 1.81 percent.

Japanese Demand

While Bank of Japan’s Governor Haruhiko Kuroda’s April 4 announcement doubling monthly bond purchases spurred speculation that domestic money managers would seek higher yields in the U.S. and other markets, Japanese investors cut holdings of overseas debt for a sixth-straight week in the period ended April 19, the longest streak since January 2010, Ministry of Finance data show. The MOF is scheduled to report the data, covering the past two weeks, this evening.

At today’s U.S. bond auction, indirect bidders, an investor class that includes foreign central banks, purchased 38.8 percent of the notes, compared with an average of 36.5 percent for the past 10 sales.
“We should expect more Japanese related flows to begin entering our market as they likely have this week,” said Christopher Sullivan, who oversees $2.1 billion as chief investment officer at United Nations Federal Credit Union in New York. “We’ve seen overseas interest. A lot of the demand behind that could be Japanese buyers,” he said, referring to the auctions.

Auction Bidding

The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.53, compared with an average of 2.6 for the previous 10 sales.
Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 15.5 percent of the notes, compared with an average of 14.2 percent at the last 10 auctions.
“There remains demand for safety and quality out there,” said Larry Milstein, managing director in New York of government-debt trading at R.W. Pressprich & Co.
The sales will raise $12.4 billion of new cash, as maturing securities held by the public total $59.6 billion, according to the Treasury. (USGG10YR)
Bidding has slowed at Treasury auctions this year, with the $793 billion in debt sales attracting an average of $3 in orders to buy per dollar of debt sold, compared with a record $3.15 in 2012, according to data released by the Treasury and compiled by Bloomberg.

Yield Forecast

The yield on the 10-year note is forecast to end the year at 2.20 percent, according to the median estimates of economists in a Bloomberg News survey May 3 to 8. The figure is down from a forecast of 2.25 percent in a Bloomberg News survey conducted April 5 to April 9. Thirty-year bonds may yield 3.25 percent at the end of the year, compared with a forecast for 3.37 percent in the previous survey.
The Fed reiterated its pledged last week to buy U.S. debt as it tries to spur the economy.

The Fed is buying $85 billion of Treasury and mortgage debt each month to support the economy by putting downward pressure on borrowing costs. It purchased $1.4 billion of TIPS maturing between April 2018 and February 2043 today, according to the Fed Bank of New York’s website.
Other central banks have also increased asset purchases or cut rates. The European Central Bank last week cut its key interest rate week to 0.5 percent from 0.75 percent.

Pimco’s Gross raised the holdings of Treasuries held in his $292.9 billion Total Return fund at Pimco to 39 percent last month, the highest level since July 2010. Gross has been advising investors to sell risk assets and buy government debt, including inflation-linked securities and nominal Treasuries as central banks pursue unprecedented stimulus measures.

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News Source: www.bloomberg.com

Sharp Gains For Gold Amid Better China Economic Data, Bullish "Outside Markets"

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Comex gold futures ended the U.S. day session with sharp gains Wednesday, boosted by upbeat economic data coming out of China and by bullish “outside market” forces—a lower U.S. dollar index and firmer crude oil prices. June Comex gold last traded up $24.20 at $1,473.00 an ounce. Spot gold was last quoted up $21.50 at $1,474.50.  July Comex silver last traded up $0.079 at $23.885 an ounce.
China on Wednesday reported a trade surplus of $18.2 billion in April compared to expectations of a $15.6 billion surplus. Both imports and exports exceeded market expectations. Asian stock markets were supported on the China news. Also, better-than-expected German industrial production data for April was reported, at up 1.2% when a 0.2% decline was expected. The better China and German data gave a boost to the raw commodity sector, including the precious metals.

The London P.M. gold fixing is $1,468.00 versus the previous P.M. fixing of $1,454.00.
Technically, June gold futures prices closed nearer the session high Wednesday as trading has become choppy. The gold bulls continue to show resilience, which is suggestive of a market bottom being in place. However, gold prices are still in a seven-month-old downtrend on the daily bar chart and the bears have the overall technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,500.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,439.70. First resistance is seen at this week’s high of $1,478.40 and then at last week’s high of $1,487.20. First support is seen at $1,460.00 and then at $1,450.00.

July silver futures prices closed near mid-range Wednesday. Silver bears are still in overall technical control. Prices are in a seven-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $23.00. First resistance is seen at Wednesday’s high of $24.095 and then at this week’s high of $24.42. Next support is seen at Wednesday’s low of $23.64 and then at this week’s low of $23.40.

May N.Y. copper closed up 635 points at 336.40 cents Wednesday. Prices closed nearer the session high and hit a fresh three-week high. Upbeat Chinese economic data released Wednesday also helped to boost copper prices. Copper bulls have gained upside momentum and are now on a level near-term technical playing field with the bears. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 345.25 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 320.00 cents. First resistance is seen at Wednesday’s high of 339.00 cents and then at 340.00 cents. First support is seen at 335.00 cents and then at 332.40 cents.

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News Source: www.bloomberg.com

Gold Modestly Up on Continued Good Physical Demand and Technical Buying...

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Comex gold futures prices ended the U.S. day session modestly higher Monday. The market found support from an improving near-term technical posture of the market. Recent good demand for physical gold continues to underpin the market. June Comex gold last traded up $4.20 at $1,468.40 an ounce. Spot gold was last quoted down $1.50 at $1,469.50.  July Comex silver last traded down $0.054 at $23.96 an ounce.

For the past couple weeks several analysts have been forecasting still-lower gold prices in the coming days and/or weeks based upon the past few months of outflows of investor money from exchange traded funds (ETFs). A report Monday said the largest gold ETF has now seen around a 20% loss in investor funds since the beginning of the year. While gold may or may not decline from present price levels, the price of gold will not decline in the coming weeks based upon an event that has already occurred. That’s not the way markets work. Markets very quickly digest and factor into their prices all known fundamental news.

 Now, if money continues to flow out of gold ETFs, that would be a bearish fundamental that could drive prices lower. However, the past few months of ETF’s money outflows have already been factored into the price of gold.

In overnight news, London was closed for a public holiday, which made for quieter dealings in the foreign exchange market. The European Union overall purchasing managers’ index declined in April, but by less than forecast by economists. However, the German economy, the largest in the EU, is showing weakness. The Market composite PMI for the EU came in at 46.9 in April from 46.5 in March. A reading below 50.0 shows contraction in business activity. Gold did receive a bit of supportive news from European Central Bank president Draghi, who Monday said the ECB could continue to ease its monetary policy if the EU economies show continued weakness.

Israeli missile strikes inside Syrian territory over the weekend have attracted the attention of the market place. Any escalation in that situation would likely prompt keener risk aversion in the world market place, and possibly fresh safe-haven demand for gold.

The U.S. dollar index was higher Monday, which did limit the upside in gold. The recent rebound in the greenback is a bearish underlying factor for the precious metals markets. Meantime, Nymex crude oil futures prices were slightly higher Monday. The crude oil bulls have regained upside near-term technical momentum as prices hit a four-week high overnight. That’s a bullish underlying factor for the precious metals.

Technically,  June gold futures prices closed near mid-range Monday. The bulls continue to show resilience, which suggests a near-term market bottom is in place. However, the bulls still have much work to do to suggest a near-term price uptrend can be sustained. Gold prices are still in a seven-month-old downtrend on the daily bar chart and the bears still have the overall technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,500.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,439.70. First resistance is seen at Monday’s high of $1,478.40 and then at last week’s high of $1,487.20. First support is seen at Monday’s low of $1,463.80 and then at Friday’s low of $1,455.40. Wyckoff’s Market Rating: 3.5
July silver futures prices closed nearer the session low Monday.

 Silver bears are still in overall technical control. Prices are in a seven-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $23.00. First resistance is seen at Monday’s high of $24.42 and then at last week’s high of $24.58. Next support is seen at Monday’s low of $23.82 and then at $23.62. Wyckoff's Market Rating: 3.5.

May N.Y. copper closed down 135 points at 330.00 cents Monday. Gold Price closed nearer the session low following Friday’s big gains that do suggest a market low is now in place. Copper bears still have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 345.25 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 315.00 cents. First resistance is seen at Monday’s high of 332.40 cents and then at 335.00 cents. First support is seen at 328.20 cents and then at 325.00 cents. Wyckoff's Market Rating: 3.0.

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News Source: www.marketwatch.com

Israel strikes Syria, Says targeting Hezbollah arms...

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Israeli jets bombed Syria on Sunday, rocking Damascus for hours and sending pillars of flame into the night sky in what a Western source called a new strike on Iranian missiles bound for Lebanon's Hezbollah.

Local people reported massive explosions and internet video showed the capital's skyline lit by flashes; Syrian opponents of President Bashar al-Assad rejoiced at Israel's third raid this year, and second in 48 hours, while anger in Tehran highlighted how Syria's civil war risks spinning further beyond its borders.

Israel, while declining to confirm the strike, stressed its focus was to deny its Lebanese foes new Iranian firepower and not take sides between Assad, long seen as a toothless adversary, and rebels who have won sympathy from Israel's Western allies but who also include al Qaeda Islamists hostile to the Jewish state.It appears to calculate that Assad will not risk forces he needs to fight the rebels by attacking a much stronger Israel.

Syrian state television said the bombing around a military research facility at Jamraya caused "many civilian casualties and widespread damage" and quoted a letter from the foreign minister to the United Nations saying: "The blatant Israeli aggression has the aim to provide direct military support to the terrorist groups after they failed to control territory."

People living near the Jamraya base spoke of explosions over several hours in various places near Damascus, including a town housing senior officials: "Night turned into day," one man told Reuters from his home near Jamraya, also struck on January 30.

CNN quoted Syrian Deputy Foreign Minister Faisal al-Mekdad calling Sunday's attack a "declaration of war", and the Iranian foreign minister urged countries to resist Israel. But a senior Iranian commander also said Syria was strong enough to defend itself without Tehran's help - though he also offered training.

ROCKETS TARGETED

A confidant of Israeli Prime Minister Benjamin Netanyahu said Israel hoped that by not confirming its attack, it would not force its enemies into serious retaliation. There was little response from Hezbollah, Syria or Iran to an earlier attack on the Jamraya compound, near the Lebanese border, on January 30.
After an Israeli strike on Friday, U.S. President Barack Obama defended Israel's right to defend itself from Hezbollah, which fired many rockets into Israel during a war in 2006.

A Western intelligence source told Reuters: "In last night's attack, as in the previous one, what was attacked were stores of Fateh-110 missiles that were in transit from Iran to Hezbollah."
Hezbollah in Lebanon declined immediate comment. Iran denied that the attack was on armaments bound for Lebanon.

Israel has long sought to block Hezbollah's land, sea and air transport from Iran and frets such new missiles could give the Shi'ite militants, who share in Lebanon's government, the ability to strike its Tel Aviv conurbation with some accuracy.

Netanyahu's colleague, Tzachi Hanegbi, noted Obama's reluctant to heed calls for U.S. military backing for the rebels despite Assad's forces alleged use of poison gas.Given the confusion among world powers, he added, Israel was only trying to protect its own interests and saw little to be gained by trying to influence the outcome of Syria's civil war.

"The world is helplessly looking at events in Syria," he told Army Radio. "That is why, as in the past, we are left with our own interests, protecting them with determination - and without getting too involved."

It was unclear whether Israel sought U.S. approval for the action; in the past, officials have indicated that Israel sees a need only to inform Washington once such a mission is under way.
Netanyahu and Obama have had a fraught relationship in past years, as Washington seeks to hold Israel back from any attack on Iran's nuclear program while diplomatic moves continue.
At a routine public appearance on Sunday, Netanyahu made no direct reference to the strikes in Syria but spoke pointedly of his responsibility to ensure Israel's future.

He maintained a plan to fly to China later in the day, suggesting he did not expect a major escalation. However, a military source said the army had deployed more anti-missile defense systems near the northern borders in recent days.

NIGHT OF EXPLOSIONS

Video footage uploaded onto the Internet by Syrian activists showed a series of blasts. One lit up the skyline of Damascus, while another sent up a tower of flames and secondary blasts.
Syrian state news agency SANA said Israeli aircraft struck in three places: northeast of Jamraya; the town of Maysaloun on the Lebanese border; and the nearby Dimas air base.

"The sky was red all night. We didn't sleep a single second. The explosions started after midnight and continued through the night," one man told Reuters from Hameh, close to Jamraya.
"There were explosions on all sides of my house," he added, saying people hid in basements during the events. In the center of Damascus, people at first thought there was an earthquake.

Hezbollah's Al-Manar television aired footage showing a flattened building spread over the size of a soocer field, with smoke rising from rubble containing shell fragments. It did not identify where the film was shot.The streets of central Damascus were almost empty of pedestrians and traffic on Sunday morning, the start of the working week. Checkpoints that have protected the area from rebel attack appeared to have been reinforced.

Some opposition activists said they were glad strikes may weaken Assad, even if few Syrians have any liking for Israel."We don't care who did it," said Rania al-Midania in Damascus. "We care that those weapons are no longer there to kill us."

But in Israel, Netanyahu ally Hanegbi spoke of relative indifference in its attitude to the rebels and Assad, who had maintained a standoff with Israel that dated from the time of his father, who led Syria in its last war with its neighbor in 1973: "We have no interest because we have no ability to assess what is good for us regarding the future regime," Hanegbi said.

Netanyahu appeared at the dedication of a highway junction in memory of his late father. He made no reference to raids but said his father "taught me that the greatest responsibility we have is to ensure Israel's security and guarantee its future".

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News Source: www.reuters.com

Fed keeps policy unchanged; says it could increase or reduce bond buying...

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The Federal Reserve decided to keep the rate for federal funds at a record low range of 0-0.25% to support the economic recovery. The Committee also voted to maintain the Fed's assts purchases at $85 billion per month and signaled it is prepared to either "increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes".

The Federal Reserve continues to anticipate that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5% and inflation between one and two years ahead is projected to be no more than a half percentage point above the 2% target.

In its policy statement released Wednesday, the FOMC said it continues to see downside risks to the economic outlook.

Regarding the timing to remove policy accommodation, the Fed will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. "When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent".

Voting against the action was Kansas City Fed President Esther George, who was concerned that the "continued high level of monetary accommodation increased the risks of future economic and financial imbalances" and could push long-term inflation expectations higher.

The minutes of this 2-day meeting will be released on May 22.

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News Source: www.cnbc.com

Gold Market To Focus On Central Bank Meetings, Jobs Report, Physical Demand...

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Gold traders will have plenty on their plate next week with central-bank meetings and an always-important U.S. employment report, while also continuing to keep tabs on the strength of demand in the physical market.

The U.S. Federal Open Market Committee and European Central Bank meet. And, as always, traders will be watching economic data to see whether conditions are improving or deteriorating so they can gauge for themselves what officials may do with monetary policy down the road.

Traders also will keep monitoring reports about the voracious physical buying that was unleashed by a sharp price decline in mid-April. Some analysts have described this as pent-up demand in which buyers pounced when presented with lower prices. This helped gold price rise for the week.

“The key for me is I want to see on these accelerated prices if that physical buying is going to continue, or if it’s price sensitive and is going to subside,” said Kevin Grady, president of Phoenix Futures and Options.

June gold finished with a gain for the week of $58, or 4.2%, to $1,453.60 an ounce on the Comex division of the New York Mercantile Exchange, helped by bargain hunting, particularly as the market took notice of the strong physical buying. The technical-chart posture also improved. In fact, the June contract has now risen in seven of the nine sessions since the historic sell-off of more than $200 an ounce earlier this month. May silver gained 79.8 cents for the week, or 3.5%, to settle at $23.758.
In the weekly Kitco News Gold Survey, out of 35 participants, 24 responded this week. Fourteen see prices up, while eight see prices down, and two see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

The FOMC meets on Tuesday and Wednesday. When gold first faltered early in the year, improving economic conditions had many financial-market participants thinking about an eventual FOMC withdrawal of the bond-buying program meant to push down long-term interest rates, referred to as quantitative easing. But much of the economic data for March was softer than expected, which, if it continues, likely would mean increased expectations for continued QE.

The soft March U.S. data included a rise of just 88,000 in non-farm payrolls and 0.4% decline in retail sales. A report on Friday showed the U.S. economy grew 2.5% in the first quarter, below forecasts mostly around 2.9% to 3%.

Traders will find on May 3 out if the labor market has picked up, when the Labor Department releases the April report. Consensus forecasts call for a rise of around 160,000 to 166,000 in non-farm payrolls, with the jobless rate expected to remain at 7.6%.

“The last time, we expected 195,000 new jobs and it was only 88,000,” Grady said. “So the jobs number is going to be paramount.”Some of the other key U.S. economic indicators next week include personal income and spending Monday, Chicago Purchasing Managers Index and consumer confidence on Tuesday, ADP private-sector employment report and Institute for Supply Management manufacturing PMI Wednesday, and initial jobless claims Thursday.

Meanwhile, the European Central Bank’s governing council meets Thursday. Recently disappointing economic news in the 17-nation eurozone fueled expectations that the bank may cut interest rates further from the record low of 0.75%. If so, this could pressure the euro, which could impact gold due to its inverse correlation with the U.S. dollar.

“After the disappointing string of economic data over the past couple of weeks, the conditions set out by the ECB for a further easing in rates have likely been fulfilled,” said Alex Thorndike, senior trader for precious metals and foreign exchange with MKS Capital. “Many economists have now changed their tune from earlier in the year expecting a 25(-basis-point) cut in the main refinancing rate at the May meeting, but no change to the deposit rate.”

Meanwhile, traders will also keep tabs on the physical market. Demand for coins and bars worldwide has soared since the mid-April price plunge, which has helped unleash demand, a number of analysts have said. U.S. Mint gold bullion coin sales have hit 203,500 so far in April, the most of any month since December 2009.

“The reaction of the people (to the gold sell-off) was to start buying,” said Chris Blasi, CEO of Neptune Global Holdings. “The fundamentals of gold and silver haven’t changed. The global economy is still weak; banks are still printing money. The break gave people a chance to add to their positions. Now as gold climbs, you might start to see the momentum traders come in, which helps gold go higher.
“If we see a pullback, people who were buying before might come back in and buy again to buy it cheaper.

The only thing that might be not so good for gold is if prices went flat. There are some people…who are waiting for a pullback. They’ve put half their money in, but are holding back for a $25, $30, $50 break. If we do pull back to the lows from last Tuesday (the $1,321 area), it’s going to be less shocking. When prices fell as hard as they did at the time, it was shocking.”
The mid-April price decline also came at a key period for seasonal demand due to spring weddings in India, as well as the May 13 Akshaya Tritiya festival, auspicious for gold buying. Buying surged there and in other emerging-market nations.

However, some observers also caution that a three-day holiday in China next week could at least temporarily curb some of the global buying. China is the world’s second-largest consuming nation, behind India, according to World Gold Council data.

“What I would be a little wary of is when they do go on holiday, a significant amount of demand will be pulled from the market and could induce bigger players to step in and sell,” Thorndike said. “Without the cushion of SGE (Shanghai Gold Exchange)/Chinese demand, we could swoop lower.”
Traders will also look closely at the most recent release of the Commodity Futures Trading Commission’s weekly commitments of traders data, said Bob Haberkorn, senior commodities broker with RJO Futures. The report is released late on Fridays and shows how speculators are positioned as of the previous Tuesday. Should the data show fresh buyers returning to the market, this would be a bullish sign, he said.

“Are there new longs coming into the market?” he asked rhetorically. “Is this (recent rally) a short-covering move? It could be a combination of both.”As always, technically oriented factors could accelerate any moves.

"I think we're going to consolidate next week,” said Charles Nedoss, senior market strategist with Kingsview Financial. “It closed nicely over the 10-day (moving average) and consolidated there. It got a little ahead of itself at the 20-day (moving average).”
As of the Comex pit-session close, the 10-day average for June gold stood at $1,408.90 an ounce, while the 20-day was at $1,486.60.

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News Source: www.cnbc.com

Gold Now Testing Key Support Levels At $1555

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 The sorry state of affairs for gold bugs continued once again yesterday, with the June gold futures contract ending the electronic session with a wide spread down candle, having fallen over $25 per ounce in the session and closing at $1558.80 per ounce. Not only was it yet another negative day for gold, the daily chart has also delivered some worrying signals which do not bode well for the gold price in the short term.

The first of these is the isolated pivot high which has now been posted on the daily chart at $1590 per ounce, and this in itself will add further downward pressure to gold. Second, the volume associated with yesterday’s wide spread down candle was well above average, sending a clear signal of selling pressure, and once again, if we are to see any reversal in the short to medium term, we will need to see evidence of stopping volume, coupled with the required price action.

We saw an example of this last week with the hammer candle and high volume, a clear signal that the volume here was predominantly buying, which duly pushed the commodity higher and back to test the $1600 per ounce level. However, as I wrote at the time, one swallow does not make a summer, and for any sustained recovery, this needs to be matched with a sustained period of buying, which is certainly not the case at present.

The key technical level, which has been on the daily chart for some time, is the yellow dotted line of potential support in the $1555 per ounce area. This was tested again yesterday, and is being tested once more this morning.

If this is breached in trading today, or indeed in the next few days, with a clear hold below, then expect to see gold prices sell off sharply and test the $1500 per ounce level in due course.

These are not happy times for gold bugs, but rest assured they will return, with North Korea being one possible catalyst in the short term. Longer term, with countries increasingly desperate to drive some much needed inflation into their economic systems, gold will once again become the ultimate hedge, as the economic cycle begins it’s inevitable journey once more.

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News Source: www.dailynews.com

Gold Pops Higher after Weak U.S. Employment Report..

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Gold prices are moderately higher in active early-morning U.S. dealings Friday. The yellow metal was immediately boosted in the aftermath of a surprisingly weak U.S. employment report, which suggests the Federal Reserve will keep its foot on the easy-money accelerator for some time to come.

 Short covering and bargain hunting are featured in both gold and silver markets Friday morning, following strong selling pressure seen earlier this week. Gold had been trading near steady levels just prior to the jobs report’s release. June Comex gold rates last traded up $11.50 at $1,563.90 an ounce. Spot gold was last quoted up $9.60 at $1,563.75.  May Comex silver last traded up $0.163 at $26.92 an ounce.

The U.S. Labor Department reported non-farm payrolls rose just 88,000 in March, which was well below trade expectations. Other components of the jobs report were also alarmingly weak. The consensus forecast for the report called for the key non-farm payrolls figure to have risen by around 200,000 in March.

This week’s decline in gold price today has also prompted some better demand for physical gold that may continue into next week, especially from India and China, reports said.
In overnight news, the Japanese yen hit a 3.5-year low against the U.S. dollar following Thursday’s conclusion of the Bank of Japan meeting, which saw the central bank implement more aggressive monetary stimulus measures. The Euro currency was supported Friday by a better-than-expected report on German manufacturing orders, which rose 2.3% in February. However, Euro zone retail sales dropped in February by 0.3%.

North Korea and its bellicose rhetoric toward the U.S. and South Korea this week continues to attract the attention of the market place. North Korea has publicly threatened to attack the U.S. with nuclear missiles and is also threatening South Korea. The U.S. is taking North Korea’s threats seriously and has dispatched military assets to the region surrounding North Korea. The market place is digesting this news fairly well this week. However, that could change very quickly if the North Korea situation turns from just rhetoric to military conflict.

The U.S. dollar index is trading lower Friday morning on the weak jobs data and on some profit taking. The U.S. dollar bulls still have the overall technical advantage. Meantime, Nymex crude oil futures prices are lower Friday morning. The crude oil bulls have faded badly this week and the bears have near-term momentum. These two key “outside markets” will continue to have a significant daily influence on gold and silver prices.

Other U.S. economic data due for release Friday includes the international trade report, and consumer installment credit.

The London A.M. gold fix is $1,552.75 versus the previous P.M. fixing of $1,546.50.
Technically, June gold futures are seeing short covering and a corrective bounce after
prices hit a 10-month low on Thursday. Serious near-term technical damage has been inflicted this week. The gold bears still have the overall near-term technical advantage. Prices are in a six-month-old downtrend on the daily bar chart. Importantly, the “line in the sand” for the gold market, on a longer-term technical basis, is major psychological support at $1,500.00. Multiple daily closes below $1,500.00 would produce serious longer-term chart damage to then also call into question the 12-year-old uptrend in gold prices.

 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 major technical support at $1,500.00. First resistance is seen at the overnight high of $1,576.00 and then at $1,580.00. First support is seen at the overnight low of $1,549.00 and then at this week’s low of $1,539.40.  

May silver futures prices hit a nine-month low Thursday. Silver bears have the solid overall near-term technical advantage as serious near-term technical damage has been inflicted this week. Prices are in a four-month-old downtrend on the daily bar chart.

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 major technical support at $26.00. First resistance is seen at the overnight high of $27.20 and then at Wednesday’s high of $27.315. Next support is seen at this week’s low of $26.575 and then at $26.50.

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