Gold Ends Near Steady; Bullish Outside Markets Limit Selling Pressure

Tuesday February 12, 2013 1:53 PM (Kitco News) - Gold ended the U.S. day session near steady levels Tuesday. However, prices did hit another fresh five-week low overnight. Gold had seen some intensified technical selling pressure early this week, but on Tuesday the key outside markets turned bullish for gold and silver (lower U.S. dollar index, firmer crude oil prices), which brought at least a temporary halt to the downside price pressure on the precious metals. April gold last traded up $0.10 at $1,649.10 an ounce. Spot gold was last quoted up $0.10 at $1,649.00. March Comex silver last traded up $0.08 at $30.99 an ounce. The Group of 20 nations meets in Moscow on Friday and Saturday. A main topic will likely be currency values as many industrialized nations have in recent months, or longer, worked to devalue their currencies to revive their economic growth. The Group of Seven nations on Tuesday issued a statement that said their central banks were not attempting to devalue their currencies, but instead trying to boost their economic growth rates. The G-7 nations also said they will not target specific currency exchange rates. The statement was meant to head off growing concerns that “currency wars” could break out if there is not some form of agreement reached soon by the major nations, regarding currency exchange rates. The G-7 statement was mildly supportive to the precious metals and it implies that the major world economies are not going to do much to stop the devaluation of their currencies. Later there were some reports that the G-7 said their statement was misinterpreted and the group reportedly said it is concerned about the depreciation of the Japanese yen. There is still some confusion on that matter. At present, Japan is seen as the major instigator as the yen continues to plummet in value. The fact that the G-7 is attempting to “jawbone” the matter before the G-20 meeting even begins is an indicator the situation is considered serious by the G-7 countries. If the major countries cannot come to meaningful agreement on the matter and continue to work to devalue their currencies, that could become a major bullish force for the gold market. News that North Korea has detonated another nuclear bomb underground, in defiance of United Nations sanctions, had little impact on the market place Tuesday. However, North Korea’s rogue status on the world stage could quickly flare up into an international incident, which would prompt investor demand for perceived safe-haven assets like gold. The Lunar New Year celebration is occurring this week in Asia. China is on holiday all week for the celebration. That is slightly bearish for the gold market as it is limiting physical buying interest from the Chinese this week. However, there were late reports Tuesday that physical demand for gold in Asia may be picking up as the week progresses. The U.S. dollar index was lower early Tuesday but did hit another fresh four-week high overnight. The greenback bulls have gained some upside near-term technical momentum recently, but the bears still have the overall near-term technical advantage. Meantime, Nymex crude oil futures prices were firmer Tuesday. The crude oil bulls have the overall near-term technical advantage. The bullish near-term technical posture in crude oil is a supportive underlying element for the precious metals. The London P.M. gold fixing is $1,647.50 versus the previous London P.M. fixing of $1,652.00. Technically, April gold futures prices closed nearer the session high Wednesday on tepid short covering after hitting a fresh five-week low overnight. Near-term chart damage has been inflicted this week as price has seen a bearish downside “breakout” from a choppy and sideways trading range on the daily chart. Bears have the near-term technical advantage. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the February high of $1,687.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the January low of $1,627.90. First resistance is seen at Tuesday’s high of $1,653.80 and then at $1,660.00. First support is seen at Tuesday’s low of $1,649.50 and then at $1,627.90.