Gold, Silver Prices Pop On Big U.S. Dollar Drop

(Kitco News) -Gold and silver prices are solidly higher in early U.S. trading Wednesday. Goldprices have scored a 4.5-month high. A sharply lower U.S. dollar index thatslumped to a 3.5-year low today is providing the precious metals bulls withsome rocket fuel. February Comex gold was last up $15.50 an ounce at $1,352.20.March Comex silver was last up $0.382 at $17.29 an ounce.

Helpingto sink the U.S. dollar index Wednesday are comments from U.S. TreasurySecretary Steven Mnuchin, who said in Davos, Switzerland that a weaker U.S.dollar is beneficial for the U.S. economy.

Someupbeat economic data coming out of the European Union Wednesday helped to liftthe Euro currency to a more-than-two-year high.

Meantime,Nymex crude oil prices are slightly higher, near $65.00 a barrel and not farbelow last week's more-than-three-year high. The rally in the oil market isalso an underlying bullish element for the precious metals markets.

U.S.economic data due for release Wednesday includes the weekly MBA mortgageapplications survey, the monthly house price index, the U.S. flash PMI, theU.S. services PMI, and the weekly DOE liquid energy stocks report.

Technically,Februarygold futures bulls have the firm overall near-term technical advantage.Prices are in a six-week-old uptrend on the daily bar chart. Bulls' next upsidetechnical objective is pushing and closing prices above chart resistance at theSeptember high of $1,365.80. Bears' next near-term downside price breakoutobjective is closing prices below solid technical support at $1,324.30. First supportis seen at $1,345.00 and then at today's low of $1,339.10. First resistance isseen at today's high of $1,353.50 and then at $1,360.00. Wyckoff's MarketRating: 7.0

Marchsilver bulls have the slight overall near-term technical advantage, amid therecent sideways trading. The next upside price breakout objective is closingfutures prices above solid technical resistance at the October high of $17.59an ounce. The next downside price breakout objective for the bears is closingprices below solid support at this week's low of $16.735. First resistance isseen at $17.32 and then at the January high of $17.45. Next support is $17.00and then at $16.80. Wyckoff's Market Rating: 5.5.

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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