Gold Ends Weaker Amid Strong U.S. Dollar, Bearish Charts

(Kitco News) - Gold prices ended the U.S. day session moderately lower Thursday. A strong U.S. dollar against the world currencies continues to be a significantly bearish weight on the precious metals markets. The technical chart posture for gold also remains firmly negative. February Comex gold was last down $4.10 an ounce at $1,173.40. March Comex silver was last down $0.135 at $17.14 an ounce.

Gold prices did push up to near unchanged on the day just after the European Central Bank announced Thursday morning it is keeping interest rates unchanged and will extend the ECB’s bond-buying program by nine months, to the end of 2017. However, the ECB in April will reduce its monthly bond purchases to 60 billion Euros, from 80 billion currently. The marketplace initially deemed that news as a bit hawkish on ECB monetary policy. The Euro currency rallied sharply and the U.S. dollar index sold off.

However, as ECB President Mario Draghi gave his press conference, traders and investors saw his remarks as favoring the monetary policy doves, as he implied the ECB remains fully ready to stimulate the Euro zone economy, if conditions warrant. The Euro currency and dollar index quickly reversed courses as the Euro dropped sharply and the USDX rallied strongly. The rally in the greenback helped to push gold prices back to near their daily lows.

Trader and investor focus will quickly move to next week's FOMC meeting, where the Federal Reserve is expected to raise U.S. interest rates.

The other key “outside market” on Thursday saw Nymex crude oil prices higher. The gold market bulls have been disappointed the recent solid rally in the oil market has not provided any lift to the yellow metal. 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. Some are still skeptical that OPEC will actually cut its production.

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

Technically, February gold futures prices closed nearer the session low today. The gold bears 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 $1,182.30 and then at this week’s high of $1,190.20. First support is seen at $1,167.20 and then at this week’s low of $1,158.60. Wyckoff's Market Rating: 2.0

March silver futures prices closed near mid-range on a corrective pullback after hitting a three-week high Wednesday. 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 have 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 this week’s high of $17.30 and then at $17.50. Next support is seen at $17.00 and then at $16.705. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed down 195 points at 262.45 cents today. Prices closed nearer the session low today on profit taking. 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 today’s high of 267.10 cents and then at this week’s high of 271.30 cents. First support is seen at today’s low of 261.25 cents and then at 260.00 cents. Wyckoff's Market Rating: 7.0.

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