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A.M. Kitco Metals Roundup: Comex Gold Sees More Selling Pressure on Technical Pullback

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By Jim Wyckoff

Comex April gold futures are trading moderately lower in early U.S. trading Tuesday, on follow-through technical selling from recent losses. This latest price pullback is not surprising to veteran market watchers, and no significant technical damage has occurred even though the bulls have faded a bit. The key “outside markets” are also in a bearish posture for the precious metals Tuesday morning, as the U.S. dollar index is firmer and crude oil prices are weaker. April gold last traded down $8.30 at $1,716.60 an ounce. Spot gold was last quoted down $6.90 an ounce at $1,713.75.  March Comex silver last traded down $0.45 at $33.30 an ounce.

It’s another modest “risk off” trading day in the market place Tuesday as the European Union sovereign debt crisis is back in the financial news headlines. Weaker-than-expected German economic data helped to pressure the Euro currency against the U.S. dollar Tuesday. 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. While the EU debt debacle has the market place in a risk off mood early this week, given that gold is a safe-haven asset the yellow metal could 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 firmer again Tuesday morning as the Euro currency is pressured by the EU debt problems. Crude oil prices are trading lower Tuesday 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 at least some daily influence on gold and silver price moves.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IBD/TIPP economic optimism index, and consumer credit. Fed Chairman Bernanke also speaks to the Senate. The market place will be interested to see if Bernanke’s remarks will change from last week’s speech before the House—in the wake of the much-better-than-expected U.S. jobs report released last Friday.

The London A.M. gold fixing was $1,720.00 versus the previous London P.M. fixing of $1,719.00.

Technically, April gold futures bulls still have the overall near-term upside technical advantage and no chart damage has been inflicted despite the corrective pullback seen recently. 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 $1,732.40 and then at this week’s high of $1,740.90. First support is seen at the overnight low of $1,712.60 and then at $1,700.00.

March silver futures are also seeing a profit-taking pullback and bulls still have the overall near-term technical advantage. No significant chart damage has occurred. 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 $33.83 and then at $34.00. Next support is seen at Monday’s low of $32.985 and then at $32.50.