Gold is Processing Bernanke’s Remarks


Reported by Kitco News- In early U.S. trading Thursday, Comex gold futures prices are higher. There are stronger “risk-off” trader outlooks in the market Thursday, which showed a worthy safe-haven demand in the gold market, something gold hasn’t experienced in quite some time. Comex June gold last traded up $24.50 at $1,392.20 an ounce. Spot gold was last cited up $23.00 at $1,393.25.

The Japanese stock market dropped overnight and the Japanese yen rallied in the wake of the U.S. stock market losses Wednesday, on weak economic data released from China. On Thursday, Japan’s Nikkei stock index dropped by 7%. European stock markets also dropped, which on Thursday morning led to follow-through selling in the U.S. stock indexes in pre-market electronic trading.

China manufacturing data reported on Thursday came in weaker than predicted. The preliminary China HSBC manufacturing PMI fell to a 7-month low of 49.6 in May. The number under 50.0 indicates shrinkage. The point that gold rallied in front of this commodity-market-bearish China news recommends there is a strong safe-haven demand for gold Thursday.

The world market is still processing Wednesday’s statements by the U.S. Federal Reserve Chairman Ben Bernanke, where he stated that probably the Fed might begin to back off on its quantitative easing of monetary policy at this summer. Bernanke’s remarks and the Fed’s FOMC minutes Wednesday were far-off from conclusive on the timing of the Fed ending QE. Yet, the market read the changes as leaning to the aggressive side and gives a small advantage for the Fed curving down QE sooner than later.

There was weaker economic data came out on Thursday in the European Union. The Market purchasing managers’ review for the Euro zone came in at 47.7 in May from 46.9 in April; under the 50.0 edge, which recommends reduction. There is no progress seen for the EU economy. The EU economy has been shrinking for the past year and a half, Ewald Nowatny said, a member of the European Central Bank’s governing council.

Thursday morning, the U.S. dollar index is strongly lower, on a corrective technical pullback from recent increases that pressed the USD to a 9.5-month high this week. The daily positive for the precious metals markets came from the weaker greenback Thursday.

U.S. economic data released Thursday contains the monthly house price index, new residential sales, the weekly jobless claims report, the flash manufacturing PMI and the Kansas City Fed manufacturing survey.

The London the previous P.M. fixing of $1,408.50 and A.M. gold fixing is $1,386.00.

Talking technically , on the daily bar chart, prices are in a 7.5-month-old downtrend. June gold futures bears still have the near-term technical advantage, but the bulls are showing compact. Yet, strong improvements in gold to finish out this week would create the starts of a big and bullish double-bottom setback pattern on the daily bar chart. The gold Bears’ next near-term downside breakout price objective is closing prices below solid technical support at the April low of $1,321.50. Bulls’ next upside near-term price breakout objective is to create a close above solid technical resistance at $1,400.00. First resistance sighted at $1,400.00 and then at $1,410.00 and as for the first support sighted at $1,380.00 and then at the overnight low of $1,355.00.