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Gold Sees Decent Short-Covering Bounce, Some Technical Buying
2015-12-22 04:50:39

Gold Sees Decent Short-Covering Bounce, Some Technical Buying


(Kitco News) - Gold prices ended the U.S. day session with fairly good gains Monday. Some follow-through technical buying was seen from Friday’s gains, and some short covering in the futures market was also featured. A weaker U.S. dollar index today also played in favor of the gold and silver buyers. February Comex gold was last up $14.20 at $1,079.30 an ounce. March Comex silver was last up $0.194 at $14.29 an ounce.

Trading volumes in most markets will start to wind down as the week progresses. The Christmas holiday is Friday.

Crude oil prices are still a focus in the marketplace to start this holiday-shortened trading week. Nymex crude oil futures were weaker Monday and dropped to a nearly seven-year low overnight. Brent crude oil prices overnight hit an 11-year low. The precious metals and the raw commodity sector, in general, will continue to see buying interest limited as long as crude oil remains in a major bear market.  Goldman Sachs has said Nymex crude oil prices could drop to $20 a barrel in 2016.

U.S. economic data released Monday was light and included the Chicago Fed national activity index, which had little impact on market prices.

In overnight news, a general election in Spain that produced no clear consensus on a government sent Spanish stocks and bonds lower and sets the stage for some instability for that nation in early 2016.

Technically, February gold futures prices closed near the session high and hit a two-week high today. If there is good follow-through buying the rest of this week then a bullish double-bottom reversal pattern would form on the daily bar chart, which would be an early clue that a market bottom is in place. But right now the gold bears 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 the December high of $1,088.30. Bears' next near-term downside price breakout objective is pushing prices below solid longer-term technical support at the contract low of 1,045.40. First resistance is seen at today’s high of $1,081.40 and then at $1,088.30. First support is seen at $1,070.00 and then at today’s low of $1,063.10. Wyckoff’s Market Rating: 2.0

March silver futures prices closed nearer the session high and hit a two-week high today, as short covering was featured. The silver market bears still have the firm overall near-term technical advantage. However, sideways to higher price action this week would begin to suggest a market bottom is in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $14.64 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $13.64. First resistance is seen at today’s high of $14.33 and then at $14.50. Next support is seen at $14.00 and then at $13.805. Wyckoff's Market Rating: 2.0.

March N.Y. copper closed up 295 points at 214.20 cents today. Prices closed nearer the session high and hit a four-week high today. Sideways to higher price action the rest of this week would begin to suggest a market bottom is in place. But right now the copper bears have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 225.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 200.00 cents. First resistance is seen at today’s high of 214.40 cents and then at 215.00 cents. First support is seen at today’s low of 210.20 cents and then at 208.00 cents. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff

 





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