-- Posted Thursday, 6 February 2003 | Digg This Article

©2003 Publishing Concepts

In our most recent gold futures update for Feb. 3, headlined "Gold breakout expected Monday," we noted the bullish factors weighing in gold's favor, including a 2-week uptrend line in the tick chart. Gold rallied strongly this week before meeting selling on Wednesday and is now about to meet that uptrend line. Thursday's gold trading session will be all about gold's interaction with its critical underlying chart pivots.

The latest tick chart above shows the critical support area to watch on Thursday. The most obvious being the uptrend line (dashed line) that intersects $374. At this same level is an important weighted moving average (blue) and underneath the $374 level are two more moving averages (green and red). The net effect of this cluster of trendlines and moving averages is that there is a potential pocket of support between $372.50 and $374 on Thursday.

The pivotal resistance for Thursday would appear to be $377.50 based on our reading of the tick chart, which also represents a downtrend line intersection. Penetrating $377.50 on an intraday basis would relieve gold of its immediate downside pressure and allow a rally up to $380.

Silver

How much luster has silver lost in recent weeks? To answer that question you need only consult a chart of silver prices after today's (Wednesday, Feb. 5) trading session to see how much selling pressure the white metal is under right now. In our previous silver commentary we noted that after achieving an intraday high at the psychological $5.00 level earlier last month, silver has seemingly lost much of its impetus and upside momentum and has lagged the recent action in the gold market, creating a technical divergence.

We further noted that silver broke the rim of that parabolic bowl in the daily chart of the March 2003 contract, which provided a "heads-up" to a likely downside move in silver. Yet despite all this, silver is undergoing merely an immediate-term correction that should end soon and find support above the $4.60-$4.65 area based on our reading of the chart.

--Clif Droke

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-- Posted Thursday, 6 February 2003 | Digg This Article

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