Comex Gold Trades Near Steady amid General Commodity Market Sell Off, Japan Earthquake Uncertainty


Comex Gold Trades Near Steady amid General Commodity Market Sell Off, Japan Earthquake Uncertainty 
11 March 2011,8:17 a.m.


Comex gold futures prices are trading near steady Friday morning, after a major earthquake that hit Japan overnight. The quake has injected uncertainty into the market place, which has led to selling pressure in many markets, including commodities. Comex April gold last traded down $1.00 an ounce at $1,411.50. Spot gold last traded down $0.20 at $1,411.50.

The Japan temblor was reportedly the largest ever recorded in that region, with the resulting tsunami devastating the earthquake region. There is a nuclear plant in Japan that may be in danger of a meltdown, and there are tsunami warnings as far away as the U.S. western coastline. Most traders and markets do not like uncertainty, and the result has been selling pressure in many markets. Gold, however, has seen some buying support Friday on safe-haven moves by investors, amid the uncertainty in the market place.
There should be less uncertainty in the market place by the time U.S. markets close Friday afternoon.

Crude oil prices are trading sharply lower Friday morning and fell below $100.00 a barrel on the Japan quake news and on reports that the "day of rage" in Saudi Arabia has not produced major demonstrations by the public. This is a bearish factor for the gold market. This week crude oil traders also focused more on the plentiful supplies of crude oil presently in the U.S. Traders will still closely watch the price of crude oil as a gauge of the tensions in the Middle East.

The U.S. dollar index is trading near steady Friday. Dollar index bears still have the overall technical advantage, which continues to be an underlying overall bullish factor for the precious metals markets. A bullish weekly high close in the dollar index Friday would provide the dollar bulls with some fresh upside near-term technical momentum, which in turn would be a bearish development for the precious metals.

U.S. economic data due for release Friday includes retail sales, the University of Michigan consumer sentiment survey and manufacturing, trade and inventory sales data.

The London A.M. gold fixing was $1,409.75 versus the previous P.M. fixing of $1,413.25.

Technically, April gold futures on Thursday closed lower and hit a fresh two-week low. While the gold market bulls still have the overall technical advantage, a six-week-old price uptrend on the daily bar chart was at least temporarily negated Thursday. Bulls did fade a bit Thursday and do not want to see a bearish weekly low close on Friday. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at this week's all-time high of $1,445.70. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,400.00. First resistance is seen at the overnight high of $1,419.30 and then at $1,425.00. First support is seen at Thursday's low of $1,403.00 and then at $1,400.00.

May silver futures last traded down 68.6 cents at $34.38 an ounce Friday. The market is seeing profit-taking pressure from recent gains. No serious chart damage has been inflicted in silver, but the bulls do not want to see a bearish weekly low close on Friday. The silver bulls still have the overall near-term technical advantage. Prices are in a steep six-week-old uptrend on the daily bar chart, but more selling pressure Friday would likely negate that near-term uptrend. The next downside price breakout objective for the bears is closing prices below solid technical support at $34.00. Bulls' next upside price objective is producing a close above solid technical resistance at this week's high of $36.745 an ounce. First resistance is seen at $35.00 and then at the overnight high of $35.48. Next support is seen at  $34.00 and then at $33.50. Wyckoff's Market Rating: 8.0.
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