Gold sees solid price gains on bullish outside market forces

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(Kitco News) - Gold and silver prices are higher, with gold solidly up and hitting a six-week high in early U.S. trading Friday. A weaker U.S. dollar index, firmer crude oil prices and a dip in U.S. Treasury yields are friendly outside market elements for the metals markets on this day. The technical charts are also bullish for gold and silver, which is inviting more speculators to the long sides of these markets. April gold was last up $21.50 at $1,944.40 and May silver was up $0.383 at $22.08.

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. While risk aversion has receded a bit late this week, by no mean is trader/investor risk appetite robust, amid the U.S. and European banking turmoil that is playing out. The latest development is First Republic Bank getting a $30 billion lifeline from other major U.S. banks, as well as support from the U.S. government. Reads a Wall Street Journal headline Friday: "Bank failures, like earlier shocks, raise odds of recession." Safe-haven demand for gold and silver is still a bullish factor supporting the two precious metals.

In overnight news, China's central bank eased its monetary policy by lowering its reserve requirement ratio for banks by 0.25%. This follows a move by the European Central Bank on Thursday to raise its main interest rate by 0.5%. The Federal Reserve's FOMC meets next week and there is a debate in the marketplace regarding whether the Fed will raise its main interest rate by 25 basis points, or stand pat amid the U.S. and European banking crises. The rate hike by the ECB makes a 0.25% increase by the FOMC more likely.

Meantime, the Eurozone consumer price index for February came in up 8.5%, year-on-year, which was in line with market expectations and compares to the January CPI reading of up 8.6%.

The key outside markets today see the U.S. dollar index weaker. Nymex crude oil futures prices are higher and trading around $69.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.541%.

U.S. economic data due for release Friday includes industrial production and capacity utilization, leaning economic indicators and the University of Michigan consumer sentiment survey.

Technically, the gold futures bulls have the solid overall near-term technical advantage. Bulls' next upside price objective is to produce a close in April futures above solid resistance at the February high of $1,975.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,875.70. First resistance is seen at $1,950.00 and then at $1,965.00. First support is seen at the overnight low of $1,922.30 and then at Thursday's low of $1,911.50. Wyckoff's Market Rating: 7.5

The silver bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing May futures prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $22.25 and then at this week's high of $22.525. Next support is seen at the overnight low of $21.785 and then at $21.465. Wyckoff's Market Rating: 6.0.

By

Jim Wyckoff

For Kitco News

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jwyckoff@kitco.com

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