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Gold Rallies On End-Of-Year Short Covering, Bargain Buying

Thursday December 29, 2016 13:23
(Kitco News) - Gold prices ended the U.S. day session solidly higher and hit a two-week high Thursday. A drop in the U.S. dollar index on this day prompted good short covering in the futures market and some bargain hunting in the cash market. If there is decent follow-through buying interest and a technically bullish weekly high close on Friday, such would be an early chart clue that the gold market has put in at least a near-term low, if not a major low. February Comex gold was last up $16.30 an ounce at $1,157.20. March Comex silver was last up $0.162 at $16.20 an ounce.

Marketplace focus was on the weaker U.S. dollar Thursday. However, price action was just a corrective pullback from recent gains that see prices still not far below last week’s 13-year high for the U.S. dollar index. The greenback bulls remain strong.

The other key “outside market” on Thursday saw Nymex crude oil prices trade slightly lower. Oil market watchers are waiting to see if OPEC and Russia oil producers can stick to their agreed-upon plan to reduce production. Many are skeptical. That plan goes into effect January 1.

There have been no major fundamental news developments this week to help drive precious metals markets. As the new year gets under way next week, look for more active trade in many markets.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Technically, February gold futures prices closed near the session high and hit a two-week high today. Follow-through buying on Friday and a bullish weekly high close would suggest at least near-term bottom, if not a longer-term bottom being in place. The gold bears still have the firm overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,180.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the December low of $1,124.30. First resistance is seen at today’s high of $1,160.60 and then at $1,170.00. First support is seen at $1,150.00 and then at today’s low of $1,142.60. Wyckoff's Market Rating: 3.0

March silver futures prices closed near mid-range on more short covering today. The silver market bears still have the solid overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.50. First resistance is seen at today’s high of $16.31 and then at $16.50. Next support is seen at $16.00 and then at this week’s low of $15.755. Wyckoff's Market Rating: 2.0.

March N.Y. copper closed down 125 points at 248.80 cents today. Prices closed near the session low today. The copper bulls have the slight overall near-term technical advantage but have faded recently to suggest a market top is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 265.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 228.00 cents. First resistance is seen at this week’s high of 253.75 cents and then at last week’s high of 256.00 cents. First support is seen at this week’s low of 244.80 cents and then at 242.50 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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