Strong gains for gold, silver on safe-haven buying, lower USDX

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(Kitco News) – Gold and silver prices are sharply higher in early US trading Tuesday, supported by a solid drop in the US dollar index. There is also some safe-haven demand for gold and silver following a surprise policy move by a major central bank that rattled the marketplace. February gold was last up $31.20 at $1,828.90 and March silver was up $1.031 at $24.24.

The Bank of Japan on Tuesday made an unexpected move to tighten its monetary policy by raising the cap for the interest rate on its 10-year bond by 0.25%. The Japanese yen surged against the US dollar in the foreign exchange market. Bond and stock markets were jolted on the news because Japan is a big player in global bond markets. Japanese citizens are big savers and put much of their money into global stocks and bonds. With the higher domestic bond yield cap, Japanese citizens and companies may opt to keep more of their money at home. Speculators worldwide had for years been putting on a yen-based “carry trade” that suddenly became very shaky. With world financial markets so highly intertwined, all of the above likely worked to boost gold and silver on safe-haven buying.

Global stock markets were mixed to weaker overnight. US stock indexes are slightly up at midday. The S&P and Nasdaq stock indexes hit new five-week lows overnight as the bulls continue to fade.

The key outside markets today see the US dollar index sharply lower on the BOJ news. Nymex crude oil prices are near steady and trading around $75.00 a barrel. Meanwhile, the yield on the benchmark US 10-year Treasury note is presently around 3.7% and is on the rise.

Technically, February gold futures prices were poised to close at four-month-low close today. Bulls have the firm overall near-term technical advantage. A six-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the December high of $1,836.90. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at $1,836.90 and then at $1,850.00. First support is seen at $1,820.00 and then at $1,800.00. Wyckoff’s Market Rating: 7.0

March silver futures prices were set to close at an eight-month-high close today. The silver bulls have the firm overall near-term technical advantage. Prices are in a choppy 3.5-month-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the December low of $22.19. First resistance is seen at the December high of $24.39 and then at $24.75. Next support is seen at $23.50 and then at $23.00. Wyckoff’s Market Rating: 7.5.

Market NY copper closed up 140 points at 379.70 cents today. Prices closed nearer the session high today. The copper bulls have the slight overall near-term technical advantage. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at 400.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 354.70 cents. First resistance is seen at 386.75 cents and then at the December high of 392.90 cents. First support is seen at today’s low of 372.30 cents and then at 370.00 cents. Wyckoff’s Market Rating: 5.5.