Gold Stabilizes, Silver Rallies As Greenback Backs Off

(Kitco News) - Gold pricesare holding slight gains in early-afternoon U.S. trading Thursday, while silveris posting a solid rally. Both markets are seeing correctives rebounds aftergold hit a nearly 1.5-year low and silver scored a two-year low earlier today.The U.S. dollar has backed off a bit from its 14-month high scored onWednesday, while crude oil prices are seeing a modest rally today. This hasallowed buyers to step back into the silver market in good fashion, but come inwith some trepidation in the gold market. December gold futures were last up$0.90 an ounce at $1,186.00. September Comex silver was last up $0.296 at$14.75 an ounce.

Goldand silver prices in overnight trading spiked to their new lows, but then movedup from theme. If gold and silver prices can finish the day Thursday nearertheir daily highs, and see some follow-through buying on Friday, such wouldsuggest the bears have run out of gas and that near-term market bottoms are inplace.

Therewas less risk aversion in the world marketplace Thursday, partly on news theU.S. and China are set to hold low-level trade talks later this month-the firstnegotiations in two months. However, the threat of an emerging markets economicand currency crisis is still on the minds of many traders and investors, andthis matter will not just disappear. The Turkish lira, which has garnered themost scrutiny in recent weeks, is trading higher versus the U.S. dollar today.

Theprecious metals markets were hit especially hard Wednesday, on worries about aglobal economic slowdown that could be caused by a secondary currency crisis.The supposedly safe-haven gold and silver markets have not seen any significantdemand surface due to the potential for a currency market contagion. However,if the situation deteriorates further, I do look for gold and silver to catchsafe-haven bids.

Technically,gold bears have the solid overall near-term technical advantage amid a pricedowntrend on the daily bar chart. Gold bulls' next upside near-term pricebreakout objective is to produce a close in December futures above solidresistance at $1,226.00. Bears' next near-term downside price breakoutobjective is pushing prices below solid technical support at $1,150.00. Firstresistance is seen at $1,200.00 and then at Tuesday's high of $1,205.80. Firstsupport is seen at $1,180.00 and then at today's low of $1,167.10. Wyckoff'sMarket Rating: 1.0

Septembersilver futures bears have the solid overall near-term technical advantage.Silver bulls' next upside price breakout objective is closing prices abovesolid technical resistance at $15.50 an ounce. The next downside price breakoutobjective for the bears is closing prices below solid support at $14.00. Firstresistance is seen at $15.00 and then at Tuesday's high of $15.105. Nextsupport is seen at $14.50 and then at today's low of $14.315. Wyckoff's MarketRating: 2.0.

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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