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Gold hit its lowest levels in several months this morning but is attempting to consolidate above $1,250…as of 8:20 am Pacific, bullion has bounced off its lows of the day and is now unchanged at $1,259…momentum indicators are slowly ticking into oversold territory and some key technical support levels ($1,250 and $1,220 to $1,240), as John showed in a 6-month daily chart yesterday, should keep additional near-term downside action limited…in addition, physical interest could see a resurgence if there’s a dip below $1,250 which may also help put a floor on prices…Silver is up 1 cent at $19.04…Copper has slid 3 pennies to $3.16…Crude Oil is up 44 cents at $103.16 while the U.S. Dollar Index has fallen more than one-tenth of a point to 80.39…

Citi Research looks for Gold prices to improve from current levels in the second half of this year…the bank issued a pair of research reports on Gold and Silver today…Citi said it expects the Gold price to average $1,337 an ounce in the second half of 2014, then rise to $1,365 in 2015…in particular, Russia-Ukraine tensions may help provide a lift, Citi said.  “Overall, we expect a 5% increase in Gold jewelry demand this year, principally driven by strong Chinese and recovering Indian demand, which combined with a moderating rate of ETF (exchange-traded-fund) outflow points to support from a tightening physical market,” Citi said, adding that it also expects growth in Gold mine production to stall this year…that’s an important point…

In a separate report on Silver, Citi said it anticipates that the physical take – in the form of ETF and physical bar holdings – “will not be sufficient” to offset muted industrial demand and largely price-inelastic mine supply expansion, ultimately pressuring Silver prices…still, Citi sees Silver averaging $21 an ounce by the fourth quarter, which is up from current prices…

Chinese buyers are seeking out foreign Copper-mine assets as rule changes and expanded Copper smelter capacity mean are generating demand for Copper raw materials, a metals consultancy stated today…SNL Metals & Mining cited a recent rule change which took effect May 8, allowing foreign deals valued under $1 billion to avoid governmental approval…before, deals above $100 million needed approval from China’s National Development and Reform Commission, the consultancy said…Chinese acquisitions are focused more on assets set to enter production, such as the Las Bambas Project in Peru…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 10 points overnight to close at 2041 while Japan’s Nikkei closed slightly higher at 14682…

Europe

European markets were mixed today…

North America

The Dow is up 13 points as of 8:20 am Pacific…the TSX is off 46 points while the Venture is down a point at 983…

The U.S. economy contracted in the first quarter for the first time in three years as it buckled under the weight of a severe winter, but there are signs activity has since rebounded…the Commerce Department this morning revised down its growth estimate to show GDP shrinking at a 1% annual rate – the worst performance since the first quarter of 2011…the weakness reflected a far slower pace of inventory accumulation and a bigger than previously estimated trade deficit…meanwhile, a separate report this morning showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a strengthening labor market…initial claims for state unemployment benefits declined 27,000 to a seasonally adjusted 300,000 for the week ended May 24, the Labor Department said…

Magor Corp. (MCC, TSX-V) Update

We continue to keep a close eye on Magor Corp. (MCC, TSX-V), a tech play we like for the long-term and one that has also consistently proven to be a smart short-term buy in the half dozen or so occasions over the past year when it has dipped below 30 cents…investors could see an important breakthrough in Magor during the second half of this year after the company first went public in March of 2013 and continues to carve a niche…Magor is a “visual collaboration” company led by an all-star management team that includes some of the same senior personnel that guided Newbridge Networks…encouragingly, Magor’s software-based Aerus service delivery platform is gaining traction with global partners, especially now with Windows desktop support and new services that provide a greater level of flexibility for enterprise-grade visual collaboration by combining cloud computing, peer-to-peer networking and media stream switching…interestingly, Magor is making significant inroads into the Middle East where it recently opened an office in Dubai…last week, the company announced a $200,000 follow-on order from an unidentified Middle Eastern government agency.  “This prestigious regional reference is proving to be very helpful as we expand into this important region,” stated Mike Pascoe, Magor President & CEO…

Below is an updated MCC 1-year weekly chart…the drop this month from the mid-30’s was on low volume, and indicators are pointing to a probable “bottoming out” in the mid-20’s…as always, perform your own due diligence…MCC is up half a penny at 26 cents as of 8:20 am Pacific…

TSX Gold Index Chart Update

Not only is the Venture underpinned by very strong support, but so too is the TSX Gold Index – so now is not the time to be throwing producers overboard…below is a 6-month Gold Index daily chart showing oversold RSI(14) conditions (the Index is down nearly 6% this week) and a strong support band between 160 and 165 with resistance between 170 and 175…the Fib. 38.2% support level at 175 was recently breached…

The Gold Index is up 2 points at 168 as of 8:20 am Pacific…

Gold Seasonality Chart

Based on seasonality patterns, there’s a good chance we’ll see a bottom in Gold next month as we witnessed last year before a rebound in Q3 beginning in July…historically – at least going back to 1995 – June has been Gold’s worst month of the year with an average price decline of 1.5% (two out of every three June’s have been negative)…this has usually been followed, however, by a strong July-August-September run…

Probe Mines Ltd. (PRB, TSX-V) Update

After a spectacular run from just above $1 in May of last year to nearly $4 in mid-March, Probe Mines (PRB, TSX-V) experienced a healthy Zenyatta-like correction and plunged to strong support just above $2 (the rising 300-day SMA) before rebounding…the company has started an aggressive summer drill program at its Borden Lake Project in northern Ontario with four drills focused on an infill program in the high-grade zone…regional exploration, including drilling, will also be carried out…Borden Lake is already a multi-million ounce system that has shown consistent improvement in both size and grade…we expect that pattern to continue…previous sell-offs in PRB have been followed by powerful moves to the upside, so it’ll be interesting to see what unfolds in the coming months…immediate resistance is at $2.60 with a falling 50-day SMA near $2.90…

PRB is up a penny at $2.59 as of 8:20 am Pacific…

Emerging Markets On The Rebound

Low bond yields in the U.S., Europe and Japan are pushing waves of investor cash into emerging markets, some of which suffered significant losses as recently as this past winter…many investors are focusing on places such as India and Indonesia where growth is healthy, economic overhauls are beginning and business-friendly leaders are taking power…other markets are doing well even though change is more of a hope…in Thailand, one of the best-performing markets in Asia this year, a military coup last week barely rattled investors who have largely stayed put…money is flowing into emerging markets (currencies, stocks and bonds) at the fastest pace in more than a year, driven in part by a global chase for yield…mutual and exchange-traded funds focused on emerging markets added a net $13.2 billion in April and May, according to data from EPFR Global through May 26…that is the biggest two-month rise since February and March 2013, and follows 10 straight months of net selling…

Growth has held steady in most emerging markets…the International Monetary Fund expects developing economies as a group to grow by 4.9% this year, compared with 2.2% in advanced economies…

Bombay Stock Exchange 10-Year Monthly Chart

A bullish Indian stock market generally coincides with a favorable environment for commodities…note the important confirmed breakout late last year in the Bombay Stock Exchange (BSE), a breakout that interestingly also occurred around the time the Venture Exchange clawed above a long-term downtrend line…Fib. analysis shows that the BSE still has plenty of upside potential with measured resistance just below 30,000…

Note:  Jon holds a share position in MCC.