(Kitco News) -Comex gold futures prices are trading modestly lower in early dealings Monday morning. The market bulls are still trying to regain their footing following last week’s sell off. The bulls need to step up and show fresh power soon to avoid further near-term chart damage, as a bearish pennant pattern may now be forming on the daily bar chart for April gold. The key “outside markets” are also bearish for the precious metals markets early Monday, as the U.S. dollar index is slightly higher and crude oil prices are weaker. April gold last traded down $7.40 at $1,702.30 an ounce. Spot gold was last quoted down $8.80 an ounce at $1,702.75. May Comex silver last traded down $0.135 at $34.39 an ounce.
The U.S. dollar index is trading slightly higher Monday morning and hit a fresh two-week high overnight, on more short covering. The firmer greenback Monday is a bearish outside market force for the precious metals. Meantime, Nymex crude oil futures prices are trading weaker, which is also a negative factor for gold and silver. The U.S. dollar index and crude oil will remain two important outside market forces that will have a daily impact on the precious metals markets.
The raw commodity markets, including the precious metals, got some negative news overnight when China’s prime minister lowered economic growth expectations for China. However, the world’s most populous nation with a voracious appetite for commodities is still forecast to grow its economy at a very respectable 7.5% annual rate.
The European Union sovereign debt crisis front finds no major fresh developments to start the new trading week—just a general, ongoing worry. Fresh, weak economic data coming out of the EU Monday raised worries about the EU slipping back into economic recession. The overall EU debt crisis remains a major underlying bullish factor for safe-haven gold.
U.S. economic data due for release Monday includes manufacturers’ shipments and orders, the ISM non-manufacturing report and the global services PMI.
The London A.M. gold fixing was $1,698.00 versus the previous London P.M. fixing of $1,707.00.
Technically, April gold futures prices are consolidating last week’s big downdraft. However, that sideways consolidation on the daily chart has formed a potentially bearish pennant pattern. The news two or three trading sessions will be extra important for gold, technically. The gold market bulls have faded and need to show fresh power soon to avoid more near-term chart damage. The bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the February high of $1,792.70. Bears' next near-term downside price objective is closing prices below solid chart support at the February low of $1,688.40. First resistance is seen at the overnight high of $1,718.00 and then at $1,727.30. First support is seen at $1,700.00 and then at the overnight low of $1,695.50.
May silver futures bulls have also faded a bit, but no serious chart damage has occurred. Prices are still in a two-month-old uptrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the February high of $37.58 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the February low of $32.715. First resistance is seen at the overnight high of $34.785 and then at $35.00. Next support is seen at $34.00 and then at last week’s low of $33.75.
Source; http://www.kitco.com/reports/KitcoNews20120305JW_AM.html
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