Gold, silver jump: who’s in control, bulls or bears?

Gold and silver are moving sharply higher Friday as broader markets steady and some traders grouse that this week’s selloff was overdone.

The SPDR Gold ETF (GLD) rose 1.8% most recently and the iShares Silver ETF(SLV) jumped 2.4%. Miners were also advancing: The Market Vectors GoldMiners ETF (GDX) was up 2.6% and the Global X Silver (SIL) shifted 3.1% higher.

In futures, gold for February delivery rose $11.60 to $1,588.80 an ounce on the Comex. March silver was up 19 cents to $29.46 an ounce.

But even at today’s heightened pace, GLD is heading towards a 7% weekly loss. At the same time, SLV’s facing a better-than 8% fall. The PowerShares U.S. Dollar Index ETF (UUP) was at last glance slightly down while the CurrencyShares Euro ETF (FXE) was slightly up. But despite the dip, the euro remained above the psychologically-important level of $1.30.

Demand from physical buyers is also improving, with demand in India in particular shaping up to be at its strongest weekly level since early October, UBS said in a note. Still, volume remained light on both GLD and SLV. In fact, GLD recorded an outflow of some 14.8 metric tons Thursday, taking holdings to their lowest level in a month.

But Dennis Gartman in his daily newsletter this morning pointed out that despite a robust correction earlier this week, exchange data indicated that “the (gold) longs not only did not liquidate, they added to their trades and the shorts not only did not cover, they increased their positions!”

He added:

“This is astonishing really, and one has to ask oneself which side is in control at the moment.”

If the lows from this week are “taken out” early next week, Gartman fears that “one more cascade to the downside is not only possible but likely.” At that point, he says, his firm will consider re-entering the market.

Silver’s move toward $29.80 an ounce appears to have been rejected, though, with “bold resistance” above at $29.88 an ounce capping gains, technical analysis firm FuturesTechs said in a report noted by Dow Jones Newswires.

“I’d say this is a selling opportunity, as … the first thing we ask upon seeing a bullish reversal pattern is that a bold resistance is taken out,” the firm’s analysts added. - barrons.com

Tags: price of silver, Silver, silver analysis, silver futures, silver futures prices, silver news, silver price, silver prices, silver spot, spot silver

Posted by Silver Guru on Dec 18 2011. Filed under Silver Analysis, Silver prices. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry