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Jim Wyckoff P.M. Kitco Metals Roundup: Comex Gold Sees More Solid Price Gains Amid Sharply Lower U.S. Dollar, Higher Crude Oil

26 October 2011, 1:50 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/

(Kitco News) - Comex December gold futures ended the U.S. day session with solid gains, near the daily high and hit another fresh four-week high Thursday. A sharply lower U.S. dollar index and sharply higher crude oil futures propelled the precious metals markets Thursday. December gold last traded up $24.40 at $1,748.00 an ounce. Spot gold last traded up $21.10 an ounce at $1,747.00. December Comex silver last traded up $1.95 at $35.26 an ounce.

The U.S. dollar index traded sharply lower Thursday and hit a fresh six-week low. The dollar index remains in a short-term downtrend on the daily chart and the dollar bears gained more downside momentum Thursday. That’s an underlying bullish factor for the precious metals. Meantime, crude oil prices were sharply higher Thursday, which was also a bullish “outside market” force for the precious metals.

Many market watchers perceive the EU bailout package and further measures to shore up the U.S. economy will amount to more quantitative easing of monetary policy by central banks. That means cranking up the money printing presses for the central banks. This is one reason commodity markets, including precious metals, have seen price strength this week. It’s also why the U.S. dollar index has seen selling pressure recently. When currency markets become over-inflated, hard assets like commodities come into more favor with investors.

World stock and commodity markets rallied Thursday on an agreement reached by EU leaders to address their debt crisis. However, the EU debt mess has not just disappeared and the matter will likely re-emerge as a major market place concern at some point down the road. The safe-haven gold market has and will likely continue to garner at least some underlying investment demand from the ongoing EU debt crisis.

The London P.M. gold fixing was $1,718.00 versus the previous P.M. fixing of $1,715.00.

Technically, December gold futures prices closed near the session high again Thursday and hit another fresh four-week high. Bulls have solid upside near-term technical momentum and have the overall near-term technical advantage. A four-week-old uptrend is in place on the daily bar chart. Bulls' next upside technical objective is to produce a close above psychological resistance at $1,800.00. Bears' next near-term downside price objective is closing prices below solid technical support at this week’s low of $1,636.60. First resistance is seen at $1,765.00 and then at $1,775.00. First support is seen at $1,728.00 and then at Thursday’s low of $1,707.20. Wyckoff's Market Rating: 7.0.

December silver futures prices closed near the session high Thursday and hit another fresh four-week high. The bulls this week have gained solid upside near-term technical momentum and have the overall near-term technical advantage. A four-week-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is producing a close above solid technical resistance at $37.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week’s low of $31.23. First resistance is seen at Thursday’s high of $35.375 and then at $36.00. Next support is seen at $35.00 and then at $34.50. Wyckoff's Market Rating: 7.0.

December N.Y. copper closed up 2,090 points 369.90 cents Thursday. Prices closed near the session high and hit another fresh four-week high. Bulls have gained solid upside technical momentum recently and a bullish double-bottom reversal pattern has formed on the daily bar chart. Copper bulls now have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 390.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support 350.00 cents. First resistance is seen at Thursday’s high of 370.30 cents and then at 372.50 cents. First support is seen at 365.00 cents and then at 360.00 cents. Wyckoff's Market Rating: 6.0.

Follow me on Twitter! If you want daily, or nightly, up-to-the-second market analysis on gold and silver price action, then follow me on Twitter. It's free, too. My account is @jimwyckoff

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

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