Gold Sharply Up on Safe-Haven Demand, Short Covering; Bulls Gain Technical Momentum

P.M. Kitco Roundup: Gold Sharply Up on Safe-Haven Demand, Short Covering; Bulls Gain Technical Momentum

Traders and investors were spooked a bit Tuesday due to several world developments—and the gold and silver markets were keen beneficiaries. Gold and silver prices ended the U.S. day session sharply higher and hit six-week highs Tuesday. Safe-haven demand, short covering and bargain hunting were featured in the yellow metal. Importantly, Tuesday’s price action on the charts is the strongest evidence yet that the gold and silver markets have put in near-term bottoms, if not major lows. February Comex gold was last up $37.00 at $1,232.00 an ounce. Spot gold was last up $28.30 at $1,233.00. March Comex silver last traded up $0.849 at $17.125 an ounce.

World stock markets were under pressure Tuesday, led by sharp declines in Asian shares, as “risk-off” trader and investor attitudes were prevalent in the market place. The falling price of crude oil remains in the spotlight of the market place this week. The big drop in oil prices recently has traders and investors uneasy--even though lower gasoline prices at the pump will support economic growth by increasing consumer spending in other areas.
Nymex and Brent crude oil futures prices hit five-year lows Tuesday. Brent fell to $65.37 a barrel and Nymex fell to $62.25. Both markets have rebounded from their intra-session lows. 

Asian stock markets saw strong selling pressure Tuesday from a move by Chinese officials to tighten regulation of its domestic bond market. And in the European Union, notions that Greece could pull out of the union if more liberal leaders are elected added to the anxiety in the market place.

The other element mentioned as somewhat unsettling was a report that the Federal Reserve at next week’s FOMC meeting could sound a more hawkish tone on U.S. monetary policy.

The World Bank on Tuesday forecast the Russian economy to contract by 0.7% in 2015. The Russian ruble continues under pressure this week and is at a record low versus the U.S. dollar. Reports Tuesday said the Russian central bank is adding more gold to its reserves as the ruble deteriorates.

The London P.M. gold fix was $1,227.00 versus the previous London A.M. fixing of $1,206.50.

Technically, February gold futures prices closed nearer the session high and hit a six-week high today. Price action today produced a bullish upside “breakout” from the recent choppy trading range and the bulls gained good upside momentum today to strongly suggest a near-term market low, and possibly a major market low, is now in place. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,256.20. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,184.00. First resistance is seen at today’s high of $1,239.00 and then at $1,250.00. First support is seen at $1,221.00 and then at $1,210.00. Wyckoff’s Market Rating: 4.0

March silver futures prices closed nearer the session high and hit a fresh six-week high today. Prices also scored a big and bullish upside “breakout” from the recent choppy and sideways trading range, to suggest a near-term, if not a major, market low is in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $17.825 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at this week’s low of $16.165. First resistance is seen at today’s high of $17.23 and then at $17.50. Next support is seen at $16.81 and then at $16.50. Wyckoff's Market Rating: 4.0.

March N.Y. copper closed up 405 points at 292.55 cents today. Prices closed nearer the session high and scored a bullish “outside day” up on the daily bar chart today. Short covering was featured. A lower U.S. dollar index today also supported copper. A bearish pennant pattern has formed on the daily bar chart. The bears still have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 277.75 cents. First resistance is seen at today’s high of 295.05 cents and then at 297.50 cents. First support is seen at 2.9000 cents and then at today’s low of 286.55 cents. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff