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

02 March 2011, 01:59 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/

(Kitco News) - Comex gold futures prices ended modestly higher Wednesday and scored a fresh all-time record high of $1,441.00 an ounce, basis the April contract. Meantime, Comex silver futures notched another fresh 31-year high. The precious metals bulls are benefiting from inflation fears, safe-haven investment demand and a weakening U.S. dollar index. Comex April gold last traded up $5.30 an ounce at $1,436.50. Spot gold last traded up $3.00 at $1,436.75.

The precious metals markets remain in a fully bullish technical and fundamental posture, and the bulls have gained more power this week. Fundamentally, the specter of inflationary price pressures worldwide has moved to the front burner after simmering for months. Federal Reserve Chairman Ben Bernanke has spoken to U.S. lawmakers this week on monetary policy. His comments did little to ease concerns about rising inflationary pressures. The U.S. central bank is still leaning toward a very accommodative monetary policy, commodity prices in general are at multi-year highs, and the central banks of the major industrial economies have implemented quantitative easing the past 12 months. Those are elements for serious inflationary price pressures in the coming months. Gold and silver markets are responding to the upside.

The tensions in the Middle East are also still on the front burner in the market place. There were reports Wednesday of intense fighting between rebels and Gadhaffi loyalists in Libya. This drove crude oil futures prices back above $100.00 a barrel Wednesday. The overall Middle East situation and its uncertainty are still inviting safe-haven investment demand into the precious metals markets. Any new flare-up in the Middle East would now likely push gold prices sharply higher. Precious metals traders and other traders will continue to look to the crude oil market as a gauge of tension in the Middle East. Today's sharply higher crude prices reflect an escalation in tensions in that critical region of the world.

The U.S. dollar index was lower again Wednesday and set a fresh four-month low. The technical posture of the dollar index remains very weak at present. 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 bullish for gold and silver.

The London P.M. gold fix was $1,435.50 versus the previous P.M. fixing of $1,420.75.

Technically, April Comex gold futures closed nearer the session high. The gold market bulls have the strong overall technical advantage. There are no early technical clues to suggest a market top is close at hand for gold. A steep five-week-old price uptrend is in place on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,450.00. Bears' next near-term downside price breakout objective is closing prices below major psychological support at $1,400.00. First resistance is seen at Wednesday's record high of $1,441.00 and then at $1,450.00. First support is seen at Wednesday's low of $1,428.20 and then at $1,418.80. Wyckoff's Market Rating: 9.0.

May silver futures closed up 38.8 cents at $34.815 an ounce Wednesday. Prices closed nearer the session high and hit another fresh contract and 31-year high. Tensions in the Middle East, inflation concerns along with the weaker U.S. dollar index are also supporting the silver market. The silver bulls have the strong overall near-term technical advantage. There are no early technical clues to suggest a market top is close at hand. Prices are in a steep five-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 $33.00. Bulls' next upside price objective is producing a close above solid technical resistance at $36.00 an ounce. First resistance is seen at Wednesday's contract high of $34.975 and then at $35.50. Next support is seen at Wednesday's low of $34.35 and then at $34.00. Wyckoff's Market Rating: 9.5.

May N.Y. copper closed down 170 points at 449.25 cents Wednesday. Prices closed near mid-range. Recent price action has produced some near-term chart damage, but the bulls have made a comeback to repair some of that chart damage. However, the bulls have more work to do in the near-term to suggest an uptrend can be re-established. 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 this week's high of 452.50 cents and then at 455.00. First support is seen at Wednesday's low of 445.40 cents and then at this week's low of 442.55 cents. Wyckoff's Market Rating: 6.5.

 

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

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