P.M. Kitco Metals Roundup: Comex Gold Ends Weaker on Profit-Taking and Firmer U.S. Dollar Index


P.M. Kitco Metals Roundup: Comex Gold Ends Weaker on Profit-Taking and Firmer U.S. Dollar Index

08 March 2011, 02:08 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/

(Kitco News) - Comex gold futures ended the day session modestly lower as some profit-taking pressure set in following Monday's new all-time record high. A rebound in the U.S. dollar index and weaker crude oil prices also were a bit bearish for the precious metals Tuesday. Comex April gold last traded down $8.80 an ounce at $1,425.70 an ounce. Spot gold last traded down $5.80 at $1,425.75.

While some mild profit-taking pressure occurred in gold Tuesday, which is not at all unexpected following recent strong gains, the yellow metal is still well supported by Middle East tensions, fresh European Union sovereign debt worries and a fully bullish technical posture.

The U.S. dollar index traded firmer Tuesday on short covering after hitting a five-month low Monday. The dollar index bears still have the overall technical advantage, which continues to be a bullish underlying support for the precious metals markets.

Crude oil prices are traded weaker Tuesday, but are still above $104.00 a barrel, as there were no fresh, major developments in the Middle East the past 24 hours. Crude oil prices Monday hit another fresh 2.5-year high near $107.00 a barrel. The stronger crude oil prices are also bullish for the precious metals due to the inflationary implications and the related geopolitical uncertainty that invites safe-haven demand. Precious metals traders and other traders will continue to look to the crude oil market as a gauge of tension in the Middle East.

The London P.M. gold fix was $1,426.25 versus the previous P.M. fixing of $1,437.50.

Technically, April Comex gold futures closed nearer the session low Tuesday. The gold market bulls still have the strong overall technical advantage. There are still no early technical clues to suggest a market top is close at hand for gold. A steep six-week-old price uptrend is still 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 solid technical support at $1,410.00. First resistance is seen at Tuesday's high of $1,437.20 and then at the record high of $1,445.70. First support is seen at Tuesday's low of $1,423.60 and then at $1,418.80. Wyckoff's Market Rating: 8.0.

(NOTE: For a complete explanation of my exclusive Wyckoff's Market Rating system, just send me an email at jwyckoff@kitco.com and I'll attach the explanation and email it back to you.--Jim)

May silver futures closed down 12.0 cents at $35.745 an ounce Tuesday. Prices closed nearer the session low on profit-taking pressure after prices hit a contract and 31-year high on Monday. The silver bulls still have the strong overall near-term technical advantage. There are still no early technical clues to suggest a market top is close at hand. Prices are in a steep six-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 $34.00. Bulls' next upside price objective is producing a close above solid technical resistance at $37.50 an ounce. First resistance is seen at $36.00 and then at Tuesday's high of $36.55. Next support is seen at Tuesday's low of $35.51 and then at $35.00. Wyckoff's Market Rating: 8.5.

May N.Y. copper closed up 140 points at 434.10 cents Tuesday. Prices closed nearer the session high on a corrective bounce following strong selling pressure on Monday. No serious chart serious chart damage has occurred this week, but good follow-through selling pressure on Wednesday would likely inflict fresh chart damage. The bulls have faded this week and prices are in a three-week-old downtrend on the daily bar chart. Bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week's high of 455.40 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the January low of 421.85 cents. First resistance is seen at 437.50 cents and then at 440.00. First support is seen at 432.50 cents and then at 430.00 cents. Wyckoff's Market Rating: 5.5. 
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