Gold Firmer On Short Covering, Bargain Hunting; Silver Sees Solid Gains

(Kitco News) - Gold prices ended the U.S. day session moderately higher Wednesday, on some short covering in the futures market and some perceived bargain-basement buying in the cash market, following recent selling pressure that pushed prices to a 10-month low earlier this week. Silver prices scored very good gains Wednesday, to begin to suggest that market has put in a bottom. February Comex gold was last up $7.30 an ounce at $1,177.30. March Comex silver was last up $0.43 at $17.24 an ounce.

Markets were somewhat subdued Wednesday as traders and investors are awaiting Thursday’s regular meeting of the European Central Bank. Most expect the ECB to continue its bond-buying program into early next year, but after that there are mixed ideas on what the ECB will do. Market watchers are hoping at Thursday’s meeting and press conference from bank president Mario Draghi that some new clues about ECB monetary policy plans for 2017 will be revealed. The ECB meeting could be a markets-mover Thursday.

The marketplace is also looking ahead to next week’s U.S. Federal Reserve FOMC meeting. Most believe the Fed will raise interest rates for the first time in a year.

The key “outside markets” on Wednesday saw Nymex crude oil prices weaker on some profit taking from recent gains. Oil traders are awaiting the results of this weekend’s meeting between OPEC and non-OPEC oil producers in Moscow, regarding implementing the cartel’s stated intention to cut oil-production levels. Meantime, the U.S. dollar index was weaker in afternoon U.S. trading.

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Technically, February gold futures prices closed nearer the session high today on short covering after hitting a 10-month low on Monday. The gold bears still have the solid overall near-term technical advantage. There are still no early clues of a market bottom. Prices are in a more-than-five-month-old downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,200.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,150.00. First resistance is seen at today’s high of $1,182.30 and then at this week’s high of $1,190.20. First support is seen at today’s low of $1,167.20 and then at this week’s low of $1,158.60. Wyckoff's Market Rating: 2.5

March silver futures prices closed nearer the session high and hit a three-week high today. The silver market bears still have the overall near-term technical advantage as prices are in a five-month-old downtrend on the daily bar chart. However, the bulls today gained some upside momentum to begin to suggest that a market bottom is in place. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $16.245. First resistance is seen at today’s high of $17.30 and then at $17.50. Next support is seen at $17.00 and then at today’s low of $16.705. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed down 365 points at 264.40 cents today. Prices closed nearer the session low today and saw a corrective pullback from recent gains. The copper bulls still have the firm overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 275.30 cents. The next downside price objective for the bears is closing prices below solid technical support at 250.00 cents. First resistance is seen at 267.50 cents and then at this week’s high of 271.30 cents. First support is seen at today’s low of 262.55 cents and then at 260.00 cents. Wyckoff's Market Rating: 7.0.

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