10 March 2010

Kitco Metals Roundup: Gold Firmer Amid Steady U.S. Dollar, Firmer Stock Indexes

by Jim Wyckoff

Gold prices are modestly higher in early trading Wednesday, on some short covering and a corrective bounce from losses absorbed earlier this week. A steady U.S. dollar versus the other major currencies and firmer U.S. stock index futures prices are adding to buying interest in the precious metals early Wednesday. April Comex gold was last traded up $4.50 an ounce, at $1,126.80.

Spot gold in Europe was firmer Wednesday on higher equity markets and a slightly higher Euro currency. Traders in Europe continue to exhibit buying interest in gold as a hedge against the euro currency, amid the European Union economic and financial problems.

Traders are still digesting the news reports Tuesday that quoted China's currency regulator as saying his nation would not likely be making further purchases of gold to add to China's existing gold reserves. The Wall Street Journal on Wednesday featured a story titled, "Gold Doesn't Shine for China."

Look for the precious metals traders to continue to closely track the currency and stock markets for their own price direction. More risk appetite among world investors will support the metals, while any fresh, unexpected fundamental news that incites keen investor uncertainty is likely to limit buying interest in the metals.

In overnight trading, the London A.M. gold fix was $1,124.50 versus the previous afternoon fixing of $1,115.75. The London silver fixing was $17.47 an ounce, versus $17.05 the previous trading session.

Technically, April Comex gold remains in a five-week-old price uptrend on the daily bar chart. The triple moving averages overlaid on the daily bar chart (4-, 9- and 18-day) are in a mostly bullish posture for April gold. While the 9-day is above the 18-day moving average, the 4-day moving average has moved below the 9-day. This suggests near-term trading has become choppy but that the overall path of least resistance for April gold remains sideways to higher. One early clue that the near-term price uptrend in April gold is ending would be if the 9-day crossed below the 18-day moving average. For April gold, shorter-term technical resistance is seen at the overnight high of $1,128.30 and then at $1,130.00. Buy stops likely reside just above those levels. Sell stops likely reside just below shorter-term support at the overnight low of $1,120.90 and then at $1,105.00. Today's key near-term Fibonacci pivot level for April gold: $1,117.00.

Comex silver futures are higher in early trading Tuesday. May silver last traded up 11.2 cents an ounce at $17.42. Prices remain in a five-week-old uptrend on the daily chart. Bulls maintain the near-term technical advantage in silver, as prices hover near six-week highs. May silver finds shorter-term technical resistance at this week's high of $17.53 an ounce, and then at $17.75. Buy stops likely reside just above those levels. Shorter-term technical support for May silver is located at the overnight low of $17.235 and then at $17.00. Sell stops are likely placed just below those levels. Today's key Fibonacci pivot level for May silver futures is located at $17.08.

By Jim Wyckoff, contributing to Kitco News; jim@jimwyckoff.com