FB: Comex Solidly Higher on Bargain-Hunting, Weaker U.S. Dollar Index, Higher Crude Oil
(Kitco News) – Comex February gold futures prices are solidly higher in early U.S. trading Tuesday morning. On this first trading day of the new year, bargain hunters are stepping in to buy the recent dip in prices. The precious metals markets are also seeing a corrective technical bounce from the strong selling pressure seen last week. The key “outside markets” are also bullish for the precious metals early Tuesday—a weaker U.S. dollar index and higher crude oil prices. February gold last traded up $28.10 at $1,594.80 an ounce. Spot gold was last quoted up $26.80 an ounce at $1,593.75. March Comex silver last traded up $0.85 at $28.77 an ounce.
It’s a “risk on” trading day in the market place so far Tuesday—as indicated by higher U.S. stock index and higher commodity prices. Recent history has seen the better investor risk appetite be supportive for the precious metals markets.
The U.S. dollar index is trading lower early Tuesday on some profit taking, but is still trading near its recent high. The dollar index bulls still have the overall near-term technical advantage, which is a bearish underlying factor for the precious metals. The dollar index has been and likely will continue to be a major “outside market” force for the precious metals.
Crude oil prices are trading sharply higher Tuesday morning and are trading above the $100.00-a-barrel level. Saber-rattling between the U.S. and Iran are supporting crude oil and also lending a bid to the precious metals. The firmer crude oil prices and the better technical posture of the crude market are a bullish factor for the precious metals.
Commodity markets, overall, have a positive tone Tuesday, following some upbeat economic data coming out of China Tuesday. A stronger-than-expected manufacturing report from China bolsters notions China will continue to be a commodity-consuming juggernaut. This also has bullish implications for the precious metals markets.
The London A.M. gold fixing was $1,590.00 versus the previous London P.M. fixing of $1,531.00.
U.S. economic data due for release Tuesday includes construction spending, the ISM manufacturing report and the FOMC meeting minutes release.
Technically, February gold futures prices suffered fresh, serious near-term technical damage last week and are seeing a corrective bounce Tuesday. Prices last week hit a fresh six-month low and dropped below what was major near-term technical support at the September low of $1,543.30. Prices are still in a six-week-old downtrend on the daily bar chart. Importantly, no serious longer-term technical damage has occurred in gold recently. It would take a move in nearby gold futures prices below major psychological support at the $1,500.00 level to begin to nick the longer-term bullish technical posture in gold. Bulls’ next near-term upside technical breakout objective is to produce a close above solid technical resistance at $1,643.70. Bears’ next near-term downside price objective is closing prices solid technical support at last week’s low of $1,523.90. First resistance is seen at $1,600.00 and then at $1,620.00. First support is seen at the overnight low of $1,566.80 and then at this week’s low of $1,550.00.
March silver futures prices are also seeing a short-covering bounce Tuesday. Prices hit a fresh 14-month low last week and pushed below what was very strong near-term technical support at the September low of $26.185. That did produce serious near-term technical damage. Silver prices are also in a six-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $30.21 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $26.145. First resistance is seen at $29.00 and then at $29.50. Next support is seen at $28.50 and then at $28.00.
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