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Jim Wyckoff P.M. Kitco Metals Roundup: Comex Gold Rallies on Middle East Unrest, Weaker U.S. Dollar Index

23 February 2011, 02:28 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/

(Kitco News) - Comex gold futures prices ended higher and hit a fresh seven-week high Wednesday on more safe-haven investment demand amid the unrest in the Middle East, and on a weaker U.S. dollar index. The gold market bulls are also technically stronger as prices have moved well above what was psychological resistance at $1,400.00 an ounce. Comex April gold last traded up $8.80 at $1,409.90. Spot gold last traded up $10.50 at $1,410.00.

The gold market has seen safe-haven buying demand amid the instability in the Middle East. Protesting has turned into violence in major oil exporter Libya, while other Middle Eastern countries may be next in line to protest their leadership. There were rumors today that the major social media outlets like FaceBook were seeing calls for protests in Saudi Arabia. Crude oil futures prices have spiked higher rose to $100.00 a barrel Wednesday. Look for gold prices to continue to be supported by the uncertainty in the Middle East.

Gold market bulls are taking note of the fact that the U.S. dollar has so far not seen significant safe-haven buying interest it had enjoyed during past geopolitical unrest. The dollar index traded moderately lower today and is seeing a weakening near-term technical posture. If the U.S. dollar index continues to trade sideways to lower, that's also gold-market-bullish.

The London P.M. gold fix was $1,409.25 versus the previous P.M. fixing of $1,401.00.

Technically, April Comex gold futures prices closed nearer the session high Wednesday. The gold market bulls have solid upside near-term technical momentum. A four-week-old price uptrend is in place on the daily bar chart. The gold market bulls have the strong overall near-term and longer-term technical advantage. Bulls' next near-term upside technical breakout objective is to produce a close above solid technical resistance at the all-time high of $1,434.10, scored in early December. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,390.00. First resistance is seen at Wednesday's high of $1,417.30 and then at the January high of $1,426.30. First support is seen at $1,400.00 and then at Wednesday's low of $1,396.00. Wyckoff's Market Rating: 8.0.

March Comex silver futures closed up 55.8 cents at $33.42 an ounce Wednesday. Prices closed nearer the session high. Prices Tuesday hit a contract and 31-year high of $34.33. The silver bulls have the strong near-term technical advantage. Look for daily higher volatility in the silver market. Prices are in a steep four-week-old uptrend on the daily bar chart. The next downside price breakout objective for the bears is closing prices below solid trend-line support at $32.00. Bulls' next upside price breakout objective is producing a close above solid technical resistance at $35.00 an ounce. First resistance is seen at Wednesday's high of $33.765 and then at $34.00. Next support is seen at $33.00 and then at Wednesday's low of $32.68. Wyckoff's Market Rating: 9.5.

March N.Y. copper closed down 360 points at 431.10 cents Wednesday. Prices closed near mid-range and hit another fresh four-week low. The red industrial metal is pressured by the Middle East turmoil and worries that rising oil prices will cut worldwide demand for copper, due to reduced GDP growth in the major world economies. A bearish "key reversal" down was confirmed on the daily chart last week, which was an early technical clue that a near-term market top is in place. This week's price action has produced more chart damage and is also a clue that a near-term market top is now in place. Bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 450.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the January low of 420.80 cents. First resistance is seen at Wednesday's high of 434.75 cents and then at 437.50. First support is seen at 430.00 cents and then at 427.50 cents. Wyckoff's Market Rating: 5.0.

 

By Jim Wyckoff of Kitco News; jwyckoff@kitco.com

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