Gold finds buyers, but bears still in control

Gold futures prices are trading near steady in early U.S. dealings Friday. The market is pausing following the recent downside rout in prices that saw gold hit an 8.5-month low Thursday. The bears are still in near-term technical command in gold and silver markets.

The U.S. dollar index is slightly lower early Friday but is hovering near a three-month high. The U.S. dollar bulls have gained strong upside technical momentum recently, to suggest the dollar index has put in a market bottom and that prices can trend sideways to higher in the near term. Meantime, Nymex crude oil futures prices are slightly higher early Friday but hovering near a six-week low. The crude oil bulls have faded badly this week. The recent sell off in crude oil and the recent stronger U.S. dollar index are bearish factors for the raw commodity sector, including the precious metals.

Technically, April gold futures have seen serious near-term technical damage inflicted recently. Gold prices are in an accelerating five-week-old downtrend on the daily bar chart. However, the gold market is still oversold, technically, on a short-term basis, and due for at least a corrective upside bounce very soon. The gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at this week's high of $1,618.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the May 2012 low of $1,538.70. First resistance is seen at the overnight high of $1,587.00 and then at $1,600.00. First support is seen at $1,570.00 and then at $1,560.00.

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