Gold Loses Most Of Overnight Gains As Greenback Rallies

(Kitco News) - Gold and silver markets are trading slightly up in early morning price actionTuesday. However, good overnight gains were mostly erased when the U.S. dollarindex suddenly pushed higher. Still, sellers in the precious metals markets arevery timid amid the meltdown in world stock markets early this week. April Comex gold futures were last up $2.10 an ounce at $1,338.50. March Comex silver was last up $0.014 at $16.68 an ounce.

Worldstock markets tumbled sharply overnight, following the strong losses in theU.S. stock indexes Monday. The Dow Jones Industrial Average saw its largestpoint decline ever, at one point in afternoon trading Monday. However,percentage-wise, the drop did not come close to the 1987 crash. U.S. stockindexes are pointed toward solidly lower openings again, when the New York daysession begins. Worries about rising interest rates and inflation worldwidehave really spooked the global equities markets.

Somewhatironically, world bond markets yields are falling Tuesday on some safe-havendemand from the steep downdraft in world stock markets. Still, don’t look forthe world bond markets to make a sustainable recovery in prices.

Goldprices posted good gains overnight on safe-haven demand, after showing just amodest uptick Monday during the U.S. stock market pounding in the day session.Look for gold to continue to make gains if the world stock markets continue toerode.

SomeAsian-based stock market volatility indexes that are tied to exchange tradedfunds had to immediately close down due to the huge spike in stock marketvolatility early this week.

Inother news, a Bank of International Settlements official said Tuesday thatbitcoin and other crypto currencies have become “a combination of a bubble, aPonzi scheme and an environmental disaster” and could undermine the broaderworld financial system. Bitcoin prices have tumbled sharply the past coupleweeks, losing about two-thirds of its value during that time.

Thekey “outside markets” on Tuesday morning see the U.S. dollar index firmlyhigher after trading steady to slightly lower overnight. The greenback alsorallied Monday when the U.S. stock market sold off, on safe-haven demand. Meantime,Nymex crude oil prices are lower and trading just above $63.00 a barrel. Thevery shaky world equity markets have prompted selling pressure in the crude oilmarkets.

U.S.economic data due for release Tuesday includes the weekly Johnson Redbook andGoldman Sachs retail sales reports, the international trade in goods andservices report, and the IDB/TIPP economic optimism index.

Technically,Aprilgold futures bulls still have the overall near-term technical advantage,but are fading and need to show fresh power soon. An uptrend on the daily barchart has been at least temporarily halted. Bulls’ next upside technicalobjective is pushing and closing prices above chart resistance at the Januaryhigh of $1,370.50. Bears' next near-term downside price breakout objective isclosing prices below solid technical support at $1,300.00. First support isseen at last week’s low of $1,330.10 and then at $1,325.00. First resistance isseen at $1,350.00 and then at $1,354.30. Wyckoff’s Market Rating: 6.0

Marchsilver prices hit a five-week low Monday. Bears have the overall near-termtechnical advantage. The next upside price breakout objective is closingfutures prices above solid technical resistance at the January high of $17.705an ounce. The next downside price breakout objective for the bears is closingprices below solid support at $16.00. First resistance is seen at $17.00 andthen at $17.25. Next support is seen at Monday’s low of $16.51 and then at $16.25.Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Monetary-driven precious metals outperform major base metals

Gold stocks hit by plunging equities markets

Gold stocks down as metal and equities momentum fades

Another Kazatomprom guidance announcement shakes uranium price

Major monetary drivers still supporting gold