Gold, Silver Bulls Bruised By Rebounding Greenback

(Kitco News) - Goldand silver prices were ending the U.S. day session weaker Tuesday. A solid bouncein the U.S. dollar index early this week is putting price pressure on the goldand silver markets. Some normal profit-taking and chart consolidation is alsofeatured after gold prices hit a 3.5-month high last week. February Comex goldwas last down $7.30 an ounce at $1,313.10. March Comex silver was last down $0.139at $17.005 an ounce.

Worldstock markets were mostly firmer Tuesday, including U.S. stock indexes hittingnew record highs, again. There continues to be little risk aversion in theworld marketplace, at present, and that's a negative element for the safe-havengold and silver markets.

Thekey outside markets on Tuesday saw the U.S. dollar index higher on anothercorrective bounce from recent selling pressure. While the greenback bears stillhave the overall near-term technical advantage, the bulls are out of the shootin good fashion so far this week.

Nymexcrude oil prices were solidly higher and hit a three-year high of $62.97 abarrel Tuesday. Traders are waiting to see if the U.S. implements new economicsanctions against Iran, which could limit their oil exports. The recent rallyin oil prices has been a positive development for the precious metals markets.

Importantfor the precious metals and other markets are recent prognostications fromnoted analysts that the long-term bull market runs in U.S. Treasuries are over.Longer-term technical damage has been inflicted on T-Bond and T-Note charts.This suggests rising interest rates and rising inflation. While the tightermonetary policy that generally comes with rising inflation has been bearish forthe metals, per recent history, longer-term history actually shows that hardassets such as precious metals benefit from rising inflation. Times ofproblematic inflation see the investing public general opt for hard assets overpaper assets. The next shoe to drop in this scenario of rising inflation willbe a major top being put in the U.S. stock market. Veteran gold and silvermarket bulls are patiently (well, some maybe not so patiently) waiting.

Technically,February gold futures prices closed nearer the session low. The bulls stillhave the overall near-term technical advantage, amid a four-week-old uptrend inplace on the daily bar chart. Gold bulls' next upside near-term price breakoutobjective is to produce a close above solid technical resistance at $1,350.00.Bears' next near-term downside price breakout objective is pushing prices belowsolid technical support at $1,280.00. First resistance is seen at today's highof $1,321.40 and then at last week's high of $1,327.30. First support is seenat today's low of $1,309.50 and then at the January low of $1,304.60. Wyckoff'sMarket Rating: 6.0

Marchsilver futures prices closed nearer the session low on more profit taking afterhitting a six-week high last week. The bulls still have the overall near-termtechnical advantage, but need to show fresh power soon to keep it. Prices arein a four-week-old uptrend on the daily bar chart, but now just barely. Silverbulls' next upside price breakout objective is closing prices above solidtechnical resistance at the October high of $17.59 an ounce. The next downsideprice breakout objective for the bears is closing prices below solid support atthe October low of $16.435. First resistance is seen at today's high of $17.17and then at last week's high of $17.32. Next support is seen at today's low of$16.945 and then at $16.75. Wyckoff's Market Rating: 6.0.

MarchN.Y. copper closed down 30 points at 322.10 cents today. Prices closed nearerthe session low today. The copper bulls still have the overall near-termtechnical advantage amid some recent, normal profit taking. Copper bulls' nextupside price objective is pushing and closing prices above solid technicalresistance at 335.00 cents. The next downside price objective for the bears isclosing prices below solid technical support at 310.00 cents. First resistanceis seen at today's high of 325.90 cents and then at 327.90 cents. First supportis seen at today's low of 321.25 cents and then at 320.00 cents. Wyckoff'sMarket Rating: 7.0.

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.

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