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Jim Wyckoff P.M. Kitco Metals Roundup: Comex Gold Scores Record-High Close; Silver at 31-Year High

01 March 2011, 02:45 p.m.
By Jim Wyckoff
Of Kitco News

(Kitco News) - Comex gold futures prices Tuesday closed sharply higher and at a fresh all-time record high close of $1,431.20 an ounce, basis April futures. Meantime, Comex silver futures hit a fresh 31-year high Tuesday. The precious metals are seeing support from bullish technicals and continued safe-haven investment demand from ongoing tensions in the Middle East. A weakening U.S. dollar index is also an underlying bullish factor for the metals. Comex April gold last traded up $21.50 an ounce at $1,431.40. Spot gold last traded up $19.80 at $1,431.50.

The precious metals markets remain in a fully bullish technical and fundamental posture. Fundamentally, the specter of inflationary price pressures worldwide is gaining more attention. Federal Reserve Chairman Ben Bernanke spoke to the Senate Tuesday on U.S. monetary policy. His remarks did nothing to assuage investor concerns about inflationary price pressures. Traders know the Fed is still leaning toward a very accommodative monetary stance, which does augur for more inflation in the coming months. Commodity prices in general are at multi-year highs, while the central banks of the major industrial economies have implemented quantitative easing the past 12 months. Those are two key components for inflationary price pressures. 

The civil unrest in the Middle East today saw a development when it was reported that Iranians were protesting in the streets. Also, the situation in Libya is still tense. Crude oil futures prices surged by over $2.50 a barrel on that news, which was also a positive factor for the precious metals market bulls. The overall Middle East situation and its uncertainty are still inviting safe-haven investment demand into the precious metals markets. Any major flare-up in the Middle East would now likely push gold sharply higher.

The U.S. dollar index hit another fresh four-month low overnight. The index did rebound from its low Tuesday, but the technical posture of the index remains weak. If the dollar index continues to trade sideways to lower, which is what the technical picture is suggesting at present, then that would continue to be gold-market-bullish.

The London P.M. gold fix was $1,420.75 versus the previous P.M. fixing of $1,411.00.

Technically, April gold futures prices closed nearer the session high, hit a fresh 11-week high and closed at a fresh all-time high close Tuesday. Prices came very close to taking out the all-time record intra-day high of $1,434.10 scored in early December. The gold market bulls have the strong overall technical advantage. A steep four-week-old price uptrend is in place on the daily bar chart. 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. Bears' next near-term downside price breakout objective is closing prices below major psychological support at $1,400.00. First resistance is seen at $1,434.10 and then at $1,440.00. First support is seen at $1,420.00 and then at Tuesday's low of $1,409.80. Wyckoff's Market Rating: 8.5.

May silver futures closed up 71.0 cents at $34.53 an ounce Tuesday. Prices closed near the session high and hit a fresh contract and 31-year high today. Tensions in the Middle East are also supporting the silver market. The silver bulls have the strong overall near-term technical advantage and gained more power Tuesday. 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 technical support at last week's low of $31.705. Bulls' next upside price breakout objective is producing a close above solid technical resistance at $35.00 an ounce. First resistance is seen at Tuesday's contract high of $34.57 and then at $35.00. Next support is seen at $34.315 and then at $34.00. Wyckoff's Market Rating: 9.5.

May N.Y. copper closed down 215 points at 447.50 cents Tuesday. Prices closed near mid-range. Recent price action has produced some near-term chart damage, but the bulls did make an impressive comeback to repair some of that chart damage. Bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the all-time high of 465.75 cents, scored two weeks ago. The next downside price breakout objective for the bears is closing prices below solid technical support at the February low of 424.35 cents. First resistance is seen at 450.00 cents and then at Tuesday's high of 452.50. First support is seen at Tuesday's low of 444.85 cents and then at this week's low of 442.55 cents. Wyckoff's Market Rating: 7.0.


By Jim Wyckoff of Kitco News;

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