P.M. Kitco Metals Roundup: Comex Gold Ends Solidly Higher as U.S. Dollar Index Slumps

28 October 2010, 2:15 p.m.
By Jim Wyckoff
Of Kitco News
www.kitco.com

Comex gold prices finished solidly higher Thursday, as the U.S. dollar index sold off sharply. The precious yellow metal and greenback continue to possess a keen inverse trading relationship. December Comex gold last traded up $20.80 at $1,343.40 an ounce. Spot gold was last quoted up $18.60 at $1,344.00.
           
The U.S. dollar index was trading moderately lower early Thursday and then sold off sharply at mid-morning, allowing gold prices to rise to their session highs. Trading in the dollar index has become choppy recently. The U.S. dollar-bullish story Wednesday in the Wall Street Journal that suggested the Fed may not employ a large quantitative easing effort in November was short-lived. Traders today chose to focus on the dollar-bearish and gold-bullish inflationary implications that could come from the U.S. central bank essentially printing dollars. The U.S. dollar index could get no buying support today from a better-than-expected report on weekly U.S. jobless claims.

Trading in many markets, including precious metals, may be more tentative until after the Federal Reserve's FOMC meeting next Wednesday. Also, this Friday is the last trading day of the month, which may find profit-taking and position-evening occurring to end the week.

The London P.M. gold fixing was $1,333.50 versus the previous P.M. fixing of $1,324.50 an ounce.

Technically, December gold futures closed near the session high Thursday. Trading in gold has turned choppy this week. A bullish weekly high close in gold on Friday would provide the bulls with some fresh upside near-term technical momentum. Bulls do still have the overall near-term and longer-term technical advantage. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,366.00. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,315.60. First resistance is seen at Thursday's high of $1,346.20 and then at this week's high of $1,349.50. Support is seen at $1,340.00 and then at $1,330.00. Wyckoff's Market Rating: 7.0.

December silver futures closed up 50.1 cents at $23.905 an ounce Thursday. Prices closed nearer the session high. Silver also benefited from a weaker U.S. dollar Thursday. Silver bulls have the overall near-term technical advantage and have mostly repaired last week's chart damage. A bullish weekly high close on Friday would provide the silver bulls with better upside near-term technical momentum. The next downside price objective for the bears is closing prices below solid technical support at last week's low of $22.84. Bulls' next upside price objective is producing a close above solid technical resistance at last week's high of $24.515 an ounce. First resistance is seen at Thursday's high of $24.04 and then at this week's high of $24.295. Next support is seen at Thursday's low of $23.50 and then at $23.35. Wyckoff's Market Rating: 7.5.

December N.Y. copper closed up 125 points at 378.80 cents Thursday. Prices closed nearer the session low. There was not good follow-through selling pressure on Thursday and a bearish "key reversal" down on the daily chart was not confirmed. The copper bulls have the overall near-term technical advantage. Prices are in a five-month-old uptrend on the daily bar chart. Bulls' next upside objective is pushing and closing prices above major psychological resistance at 400.00 cents. The next downside price objective for the bears is closing prices below solid technical support at last week's low of 372.00 cents. First resistance is seen at 380.00 cents and then at today's high of 382.95 cents. First support is seen at this week's low of 376.05 cents and then at 375.00 cents. Wyckoff's Market Rating: 7.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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