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A.M. Kitco Metals Roundup: Comex Gold Lower On Corrective, Profit-Taking Pullback

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By Jim Wyckoff

Comex April gold futures are trading solidly lower to start the new trading week, on follow-through selling from price pressure seen Friday. This latest price pullback is not surprising as prices had seen good upside movement in recent weeks—hitting a two-month high early Friday–and were due for a decent downside technical correction. The key “outside markets” are also in a bearish posture for the precious metals Monday morning, as the U.S. dollar index is higher and crude oil prices are lower. April gold last traded down $20.10 at $1,720.20 an ounce. Spot gold was last quoted down $8.50 an ounce at $1,718.00.  March Comex silver last traded down $0.249 at $33.50 an ounce.

It’s a “risk off” trading day in the market place Monday as the European Union sovereign debt crisis is back on the front burner. That is also a bit bearish for the precious metals and most other commodity markets. A debt- restructuring deal between the Greek government and the private sector has still not been reached, after several days of reports saying an agreement is close. The EU debt crisis had appeared to stabilize for a while. Still, given that gold is a safe-haven asset, don’t be surprised to see the yellow metal rally if the EU crisis escalates in the near term—even if the U.S. dollar index rallies, too.

The U.S. dollar index is higher Monday morning as the Euro currency suffers from the rekindled EU debt jitters. The dollar index last week hit a five-week low and bears still have some downside near-term technical momentum. Meantime, crude oil prices are trading lower Monday morning. Crude oil bulls are fading. Crude oil and the U.S. dollar index will remain the two key “outside markets” that will generally have some daily influence on gold and silver price moves.

U.S. economic data due for release Monday is light and includes the employment trends index.

The London A.M. gold fixing was $1,717.00 versus the previous London P.M. fixing of $1,734.00.

Technically, April gold futures bulls still have the near-term upside technical advantage despite the corrective pullback seen Friday and Monday. No significant chart damage has occurred. A five-week-old uptrend is still in place on the daily bar chart. Bulls’ next upside technical breakout objective is to produce a close above solid technical resistance at the December high of $1,769.70. Bears’ next near-term downside price objective is closing prices below psychological support at $1,700.00. First resistance is seen at the overnight high of $1,740.90 and then at $1,750.00. First support is seen at the overnight low of $1,716.30 and then at $1,700.00.

March silver futures are seeing mild profit-taking pressure but bulls still have the overall near-term technical advantage. A five-week-old uptrend is still in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $35.68 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $31.525. First resistance is seen at the overnight high of $33.79 and then at $34.00. Next support is seen at the overnight low of $33.22 and then at $33.00.