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Gold Up On More Safe-Haven And Chart-Based Buying

(Kitco News) - Gold prices are moderately higher in early U.S. trading Monday, on continued safe-haven demand and technical buying interest. The market price is not far below last week’s nearly three-month high. April Comex gold was last up $6.10 at $1,122.40 an ounce. March Comex silver was last up $0.047 at $14.29 an ounce.

There was more downbeat economic data coming out of China Monday. The January official China manufacturing purchasing managers index (PMI) was reported at 49.4 versus 49.7 in December, for the sixth month in a row of a lower reading than the previous month. A number of 49.6 was expected for the January report. A reading below 50.0 suggests contraction in the sector. The services sector, or non-manufacturing, PMI for China came in at 53.5 in January versus 54.4 in December. Chinese stock indexes fell on the PMI reports.

Meantime, the Euro zone manufacturing PMI came in at 52.3 versus 53.2 in December. The January number was right in line with forecasts. European stocks were slightly lower in midday dealings Monday.

U.S. stock indexes were pointed toward weaker openings Monday morning. The weaker worldwide stock market postures Monday are supportive for safe-haven gold.

Nymex crude oil prices are modestly lower to start the trading week and hovering near $33 a barrel. The other key “outside market” finds the U.S. dollar index weaker Monday morning.

U.S. economic data due for release Monday includes personal income and outlays, the U.S. manufacturing PMI, the global manufacturing PMI, construction spending, and the ISM manufacturing report on business.

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Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated today.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).

Technically, April gold futures prices are in a choppy six-week-old uptrend on the daily bar chart and recent price action suggests a market bottom is in place. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,150.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,100.00. First resistance is seen at $1,125.00 and then at last week’s high of $1,128.70. First support is seen at the overnight low of $1,115.30 and then at $1,108.50. Wyckoff’s Market Rating: 4.0

March silver futures bears have the overall near-term technical advantage. However, the recent sideways trading at lower price levels appears to be “basing” action that puts in a market bottom. Silver bulls’ next upside price breakout objective is closing December futures prices above solid technical resistance at the December high of $14.64 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $13.62. First resistance is at the overnight high of $14.36 and then at $14.50. Next support is seen at $14.07 and then at $14.00. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff, contributing to Kitco News;
Follow me on Twitter @jimwyckoff



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