Recently in metals Category

The Gold market during the past seven months has truly been incredible. Flash back to mid-September 2007 and you will find Gold trading in the $680.00 range, while six months later in mid-March '08 it was trading $1,030.

The volatility in the commodity markets has been tremendous and in my opinion can be traced to several factors. These factors include such items as high energy prices, the ongoing mortgage debacle and ensuing credit crunch, the possibility of future rate cuts, and geo-political tensions, just to name a few. These have all combined in some sort to keep pressure on the U.S Dollar. Recently the crude oil futures looked certain to trade $100.00 per barrel and Gold was on its way to $900 per ounce, however both markets have since pulled back.

The gold futures market recently backed off sharply from the early-November contract and 27-year high of $848 an ounce. Profit-taking pressure was featured. The past few trading sessions have seen the precious yellow metal in a solid price rebound as the bulls have regained fresh upside technical momentum. The early-November high of $848 is now stiff overhead resistance for the bulls to overcome. However, a push and close above that key price level would be significantly bullish and would open the door to a challenge of the all-time high of $873 an ounce, scored in 1980. On a further corrective pullback there is now solid trend-line support at the $790 area.

December gold futures were under strong selling pressure Thursday morning on profit-taking pressure from recent gains. No serious chart damage has occurred recently. See that the shorter-term moving averages I follow (9- and 18-day) are still in a bullish mode, as the 9-day is above the 18-day moving average. The recent higher volatility at higher price levels--both on the upside and on the downside--does slightly favor the bearish camp and is one very early technical clue of a topping process in the gold market. But I would not call it a strong technical clue. However, and more importantly at present, the price uptrend in December gold futures remains in place on the daily bar chart.

After four months of a resilient uptrend in the Gold market, it appears traders are beginning to feel the pressure to take profits. I believe Gold traders are keeping a close eye on the recent turmoil in the Stock Market and it brings back memories of the mass Metals liquidation to cover margins in their Stock portfolios. Despite a very weak U.S. Dollar, Geopolitical tension, and the signs of a weakening economy, it is my belief the gold trading community is content to take profits. After all, the Holiday markets are just around the corner.

December gold futures last Friday hit a fresh 17-month high of $776.90 an ounce. Trading has recently become a bit more volatile at higher price levels, but the steep uptrend line on the daily bar chart remains intact and the bulls still have the solid near-term technical advantage. The gold market bears would gain a bit of fresh downside near-term technical momentum by pushing and closing December futures prices below solid support at this week's low of $749.00. Gold traders will continue to monitor the value of the U.S. dollar against the other major currencies very closely.

During the past two months the price of Gold has traded from $652.00 on August 16th to $765.50 on October 15th. This has truly become a "Bull" traders dream. Most of this tremendous upside, in my opinion, can be attributed to a very weak U.S. Dollar caused primarily to the credit crunch in the housing sector.

December gold futures on Tuesday saw a steep sell off on profit-taking pressure from recent strong gains and on a solid rebound in the value of the U.S. dollar versus the other major currencies. A steep uptrend line on the daily chart for December gold was penetrated on the downside and negated Tuesday, but no serious chart damage has yet occurred. However, strong follow-through selling pressure on Wednesday would likely begin to inflict some near-term technical damage to begin to suggest that a near-term market top is in place.