Gold Firmer, at 2.5-Mo. High, As Bulls Gaining More Confidence

(Kitco News) - Gold prices were modestly higher in late U.S. dealings Tuesday, and just below the 2.5-month high hit on Monday. The precious metals bulls worked to shrug off a stronger U.S. dollar today, which had kept the metals bulls somewhat subdued overnight and in very early U.S. trading. The near-term chart postures for gold and silver markets have significantly improved recently, which have the bulls feeling more comfortable than they have been in months. April Comex gold was last up $4.40 an ounce at $1,236.40. March Comex silver was last up $0.077 at $17.77 an ounce.

A feature in early trading Tuesday was sharp gains in the U.S. dollar index. However, prices backed down from the daily highs as the session progressed. The greenback was supported in part by comments from a Federal Reserve Bank official on Monday, who said a U.S. rate hike could come at the March FOMC meeting.

The Euro currency was under selling pressure Tuesday on concerns that upcoming French elections could elect the nationalist candidate Marine Le Pen, who has threatened to pull France away from the European Union. However, the Euro regained some of its overnight losses in U.S. trading hours. European election worries are a bullish underlying factor for the safe-haven gold market.

The other key “outside market” on Tuesday saw Nymex crude oil prices trade lower. Oil prices are still trading in a sideways and choppy range. Stiff technical resistance layers are located just above the market. Rising U.S. shale oil production levels, as reported in weekly rig counts, are a bearish element for the crude oil market.

Technically, April gold futures prices were nearer the session high and poised to close at 2.5-month high close today. The gold bulls have the slight overall near-term technical advantage. Prices are in a six-week-old uptrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,265.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00. First resistance is seen at today’s high of $1,237.50 and then at $1,250.00. First support is seen at today’s low of $1,229.20 and then at $1,225.00. Wyckoff's Market Rating: 5.5

March silver futures prices were nearer the session high and hit a nearly three-month high today. The silver market bulls have the slight overall near-term technical advantage. Prices are in a six-week-old uptrend on the daily bar chart. 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 $17.00. First resistance is seen at $18.00 and then at $18.25. Next support is seen at this week’s low of $17.46 and then at $17.26. Wyckoff's Market Rating: 5.5.

March N.Y. copper closed down 195 points at 263.20 cents today. Prices closed nearer the session low on profit taking. The copper bulls still have the 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 this week’s high of 265.70 cents and then at 267.50 cents. First support is seen at last week’s low of 261.20 cents and then at 258.15 cents. Wyckoff's Market Rating: 6.5.

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