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Gold prices Gold Trades Near Steady as Market Pauses


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Gold prices are trading not far from unchanged levels Friday morning, as modest profit-taking pressure is being offset by investor buying interest due to a weaker U.S. dollar. Gold is pausing following recent, more volatile, trading action. February Comex gold last traded down $2.00 at $1,390.80 an ounce. Spot gold last traded up $2.80 at $1,390.25.

The U.S. dollar index is trading weaker Friday morning. The index is still in a four-week-old price uptrend on the daily bar chart and technical odds are increasing the index has put in at least a near-term low. The greenback has benefited recently from ongoing financial woes in the European Union.  Rising U.S. Treasury bond and note yields this week have also boosted the U.S. currency. However, Friday morning bond yields had backed down a bit and the Euro currency was seeing a short-covering bounce, which did put some downside pressure on the dollar index.

Reports overnight said China has again moved to tighten its monetary policy to dampen its domestic demand for raw commodities. The Chinese central bank reportedly raised its banks’ reserve requirement ratios. The move by China Friday is raw-commodity-market-bearish, but is seen as less aggressive than other potential monetary policy tightening measures.

U.S. economic data due for release Friday include import and export price indexes, the University of Michigan consumer sentiment survey and the monthly Treasury budget statement.

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The London A.M. gold fixing was $1,390.00 versus the previous P.M. fixing of $1,391.25.

Technically, February Comex gold futures this week have seen a significantly near-term bearish "key reversal" down confirmed on the daily bar chart, which is one early clue that a near-term market top is in place. The market is now pausing after the sell off earlier this week. This pause is not bullish and suggests there could be another leg down in gold prices early next week. However, solid price gains by the close on Friday would suggest this week’s sell off is just another decent downside price correction in an overall uptrend that remains firmly in place.

Gold market bulls still have the overall near-term and longer-term technical advantage. A four-month-old uptrend is still in place on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above strong technical resistance at the all-time high of $1,432.50. Bears' next near-term downside price objective is closing prices below solid technical support at this week’s low of $1,372.10. First resistance is seen at the overnight high of $1,393.00 and then at $1,400.00. Support is seen at the overnight low of $1,385.30 and then at $1,380.00.

March silver futures last traded down 3.7 cents at $28.78 an ounce Friday morning. Mild profit taking is seen after prices hit a fresh contract and 30-year high of $30.75 on Tuesday. The silver market is also pausing, and this pause is not bullish. The weaker U.S. dollar is limiting selling interest in silver Friday morning. The silver bulls still have the overall near-term and longer-term technical advantage.

Silver prices are still in a four-month-old uptrend on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at $27.00. Bulls' next upside price objective is producing a close above solid technical resistance at this week’s high of  $30.75 an ounce. First resistance is seen at the overnight high of $29.03 and then at $29.29. Next support is seen at the overnight low of $28.63 and then at $28.50.

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http://www.kitco.com/reports/KitcoNews20101210JW_AM.html

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