Precious Metals Market Comments

By Mike Daly | June 2, 2012 4:27 AM IST

Gold Settles $57.90 Higher ... ($1622.10)

Today's August Gold futures traded a mammoth $78.50 range consisting of a low of $1545.50 and a high of $1624.00. The rally was fueled by a worse than expected Unemployment report. The U.S Department of Labor released Unemployment data that was well under expectations.

The Unemployment rate rose one tenth to 8.2% and payrolls were only up about half the amount projected. These poor readings sent traders and speculators into the precious metal s in anticipation of renewed chatter from the FOMC regarding the possibility of another round of stimulus to help jump start the slowing U.S economy...Printing more U.S dollars is "bullish " precious metals simply because anytime you print more of anything it becomes "WORTH-LESS". A weaker Dollar should mean stronger Gold. It will be interesting to see if this rally will continue in the Asian sector Sunday night. Today's trade annihilated all my resistance levels including the psychological $1600.00 level....This 4 day shortened trading week produced a trading range of $9190.... Truly amazing!

NEWS THIS WEEK:

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Thursday:

Today's Initial Jobless Claims was 10,000 worse than last week's data. The Initial Jobless Claims number was 383,000 well above the 370,000 that had been projected. It is my opinion that many traders were trading very conservatively today and possibly liquidating positions as a poor Unemployment number may resurrect speculation that the FOMC will support more easing...

Wednesday:

The June futures traded as low as $1530.40 around 8:35 am (CST) as traders as the Euro currency dropped to its lowest level since June 30th 2010 therefore boosting the U.S Dollar appeal. However, after the release of April's Pending Home Sales (-5.5% as it was expected to be unchanged) the June futures contract began a mammoth $33 plus Dollar rally prior to settling at $1563.40. The market held the $1530 -$1535 support level and in my opinion prompted short covering, bargain buying opportunities, and a flight to tangible safe haven alternative investments which historically have a history of retaining value better than most commodities during times of crisis. The gold market continues to remain resilient despite almost constant daily pressure. Despite today's weakness in Euro currency, Crude Oil, and the Stock market gold overcame all and settled $14.70 higher...................

Tuesday:

The Gold futures was once again unable to maintain early rally momentum as we seen a mid-late session sell-off taking the June contract as low as $1545.70. Today's sell-off was fueled by several factors. (1) Lower Crude Oil prices dipped as low as $90.25 per barrel today. (2) U.S Dollar strength versus the Euro currency as Egan-Jones cut Spain's rating to B from BB- and showing a negative outlook. The Euro currency traded well below the $1.25 level. (3) The June Gold futures market held resistance levels between $1583.00 - $1585.00 causing traders to take day session profits. The futures market also held downside support levels between $1544.00 - $1545.00 levels...

Traders and investors alike will be eyeing the possibility of China adding more stimulus to its economy which may bring investors back into the precious metals as their: safe haven" investment of choice. Also the United Nations atomic agency found evidence Iran has increased its output of enriched uranium in order to help them achieve nuclear capability.

MY SWING NUMBERS 6/4

August Gold

RESISTANCE # 2.............$1676.00

RESISTANCE 3 1.............$1648.00

PIVOT........................... $1597.00

SUPPORT # 1..................$1570.00

SUPPORT # 2..................$1518.00

VOLUME.........................177,000

July Silver

RESISTANCE # 2............$29.63

RESISTANCE # 1............$29.07

PIVOT...........................$28.12

SUPPORT # 1................. $27.56

SUPPORT # 2................ .$26.67

VOLUME........................45,000

PFGBEST Research Division

mdaly@pfgbest.com

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There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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