Gold, Silver Prices Rally On Short Covering, Bargain Hunting

(Kitco News) - Gold and silver prices were ending the U.S. day session with solid gains Monday. The precious metals were supported by a weaker U.S. dollar index and a rebound in crude oil prices. Some short covering in the futures market and bargain hunting in the cash market were featured in both metals, following last week’s selling pressure. Impressively, the metals were able to post good price gains despite a big rally in the U.S. stock market, as of this writing early Monday afternoon. April Comex goldfutures were last up $10.10 an ounce at $1,325.80. March Comex silver was last up $0.406 at $16.545 an ounce.

World stock markets were also higher Monday, on a bounce from last week’s strong losses. The big question still on traders’ minds to start the trading week is if the recent period of very high daily price volatility has ended. Price action early this week will go a long way in answering that question. Still, major chart damage has been inflicted on the U.S. stock indexes to suggest those markets have topped out. Such a scenario is a bullish underlying element for the precious metals markets.

The key outside markets on Monday saw the U.S. dollar index weaker on a corrective pullback from recent good gains. However, there are early technical clues the USDX has put in a near-term market bottom. Meantime, Nymex crude oil prices were firmer on a corrective bounce from recent solid losses and on the rebound in world stock markets. However, there are chart clues the oil market has topped out for at least the near term.

Technically, April gold futures prices closed the day session nearer the session high. The gold bulls have the slight overall near-term technical advantage, but need to show more power soon to keep it. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at today’s high of $1,330.00 and then at $1,335.00. First support is seen at today’s low of $1,316.30 and then at last week’s low of $1,309.00. Wyckoff's Market Rating: 5.5

March silver futures prices closed nearer the session high today. The silver bears still have the 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 $16.00. First resistance is seen at $16.75 and then at last week’s high of $16.955. Next support is seen at today’s low of $16.28 and then at last week’s low of $16.19. Wyckoff's Market Rating: 3.5.

March N.Y. copper closed up 520 points at 308.55 cents today. Prices closed nearer the session high on short covering after hitting a seven-week low on Friday. The key “outside markets” were bullish for copper today as the U.S. dollar index was lower and crude oil prices were higher. The copper bulls have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at last week’s high of 325.75 cents. The next downside price objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at 311.90 cents and then at 315.00 cents. First support is seen at today’s low of 304.25 cents and then at last week’s low of 302.60 cents. Wyckoff's Market Rating: 6.0.