Gold Hits 3.5-Mo. High, Bulls Have Good Momentum

(Kitco News) - Gold prices are hovering near unchanged levels in early U.S. trading Wednesday, asthe market pauses after hitting a 3.5-month high overnight. Silver prices are abit weaker but scored a five-week high overnight. Gold and silver bulls havethe technical momentum to suggest more price gains in the near term. February Comex gold was last up $0.70 an ounce at $1,316.70. March Comex silver was lastdown $0.056 at $17.15 an ounce.

Worldstock markets were mostly firmer overnight. U.S. stock indexes are pointedtoward higher openings when the New York day session begins. The U.S. indexesare at or near their record highs. The ability of gold and silver prices torally while the competing asset class of equities is also rising, is impressivefrom the metals bulls' perspective.

Tensionsin Iran are still on the front burner of the market place. Demonstrators inthat country are demanding an overthrow of the ruling government. Severalprotesters have been killed and the situation is not improving, according toreports. This matter is supporting the safe-haven gold and silver markets, aswell as the crude oil market.

NorthKorea is also in the news. The rogue nation made an overture to South Korea fornegotiations, but is also maintaining its plans to become a nuclear power.Reports said North Korea could be ready to launch another ballistic missile.

TheU.S. economic highlight Wednesday will be the release of the minutes of thelast Federal Open Market Committee (FOMC) meeting held on Dec. 12-13. Traderswill parse the statement for clues on the direction and timing of U.S. monetarypolicy in 2018.

Thekey outside markets on Wednesday morning find the U.S. dollar index higher on acorrective bounce from recent strong selling pressure. Meantime, Nymex crude oil prices are higher and hit a 2.5-year high near $61.00 a barrel. The Irandemonstrations are supporting the oil market.

U.S.economic data due for release Wednesday includes the weekly MBA mortgageapplications survey, the weekly Goldman Sachs and Johnson Redbook retail salesreports, the ISM New York report on business, construction spending, the ISMmanufacturing report on business, domestic auto industry sales, and the FOMCminutes from the last meeting.

Technically,Februarygold futures bulls have the overall near-term technical advantage.Prices are in a steep three-week-old uptrend on the daily bar chart. Bulls' nextupside technical objective is pushing and closing prices above chart resistanceat $1,350.00. Bears' next near-term downside price breakout objective isclosing prices below solid technical support at $1,280.00. First support isseen at today's low of $1,313.20 and then at this week's low of $1,304.60. Firstresistance is seen at today's high of $1,323.00 and then at $1,325.00.Wyckoff's Market Rating: 6.0

Marchsilver bulls have the slight overall near-term technical advantage. Prices arein a steep three-week-old uptrend on the daily bar chart. The next upside pricebreakout objective is closing futures prices above solid technical resistanceat the October high of $17.59 an ounce. The next downside price breakoutobjective for the bears is closing prices below solid support at the Octoberlow of $16.435. First resistance is seen at today's high of $17.265 and then at$17.37. Next support is seen at $17.00 and then at last Friday's low of $16.865.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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