Gold Gets A Respite From Earler Drops, Climbs

The metal got off to a good start in today's regular trading session by leaping up six dollar an ounce. Although the course was choppy, gold ended up with a fairly respectable gain from Friday's close.

A pullback after that initial six-dollar spurt was followed by a push to a new session high. Peaking at 9:20 AM ET, the metal then fell all the way back to $1,366. An Employment Trends Index report was optimistic, but offered little hope for U.S. unemployment to descend below 9% this year. The time of its release was the same as gold's reversal from the pullback.

Although the consequent rise was choppy, it definitely trended up. Most of the rise was over by the time the pit session ended, when gold was around $1,374. Still, there was enough bullishness during the electronic-trading hitch to keep pushing it up. The closing figure was only slightly lower than the high of the day, which was reached just before 5:15. As of the close, the spot price was $1,376.00 for a gain of $6.20 on the day. The Kitco Gold Index split the gain into +$1.80 for predominant buying and +$4.40 due to a strengthening of the greenback.

Its six-month chart, from Stockcharts.com, shows the reversals of last week's five-day string of losses:



The metal's one-month trading range has held up. Support from physical buying, as well as worries over the Eurozone, has added enough bullishness to keep the range from being broken through the floor. Gold's technical position is still shaky, but solid buying has stayed any continutation of last week's rout.

The same day saw another reversal, as the U.S. Dollar Index broke its five-day streak of gains. Riding high at 81.3 just before 8:00 AM, it dropped in a two-stage roll that brought it below 81. For most of the afternoon, after settling down, it traded in a range with 80.9 as the ceiling and 80.8 as the floor. As of 5:30, it was at 80.875.

Its own six-month chart, also from Stockcharts.com, shows both the morning rise and the afternoon pullback; both contributed to its first loss since December:



The Index ended up peaking at about the same level as it did at the beginning of December. Its action since thwn looks like a "W" - not exactly a recognized chart pattern. Like gold, the greenback's in a trading range right now.

As for the metal, its range is now likely to continue. Solid demand has come in to the marketplace, not fickle demand that can waft away with a change in momentum. Worries in the Eurozone still have the power to push gold up. The metal's still far away from a resumption of last fall's ride, but things aren't that bad as they stand right now.