February Gold:  Open= 635.8  High= 637.5   Low= 629.4   Close= 637.0   Change: +1.1

Spill over selling from Wednesday carried into this morning’s session, with gold prices pressed against the 200 day moving average around $630 per ounce.  A little bounce in the dollar helped put pressure on bulls.  Surprisingly, the European Central Banks rate hike barely went noticed by the currency and gold market, perhaps the move already factored in.  Late in the session though selling stop and shorts covered.  Tomorrow’s unemployment report will lend its influence to market direction when its announced at 8:30am EST. 

A positive reaction by the USD could send gold bears hunting for lower lows around $623.  A negative reaction could buoy gold prices back up above $640 and possible retest $650.  Today’s price action successfully tested the trend line, dating back to lows made in October.  A break of that trend line could cause a deeper pullback in the market.  Silver also tested the same two month old trend line, closing 42 cents off the overnight low (bulls will try to hold the gap in the daily chart, from 13.40 to 13.60).

Solid technical action today gives bulls a slight edge heading into tomorrow though position squaring ahead of tomorrow’s report is not quite reason enough to be uber bullish.  Much will hinge of the unemployment report.  While the health of the US economy and the strength of the dollar are under pressure from many angles, strong dollar advocates have not rolled over.  One good jobs report won’t cure its ills, but might be cause enough for a rebound in the dollar and a correction in gold prices.

A close above $640 and then $650 are the next upside objectives, though the longer term objectives lay between $670 and $700.  Support comes in at 630.4, 629, and 625.  Resistance is seen at 640, 643, and 645.

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