The following comments were sent to Myra P. Saefong, Financial Writer for Marketwatch.com, at 7:38 AM EST.
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There is a very ominous scenario developing on the daily chart for the April Gold contract. The formation of a potential Head-and-Shoulders top is becoming more and more likely and this could mean trouble for the entire Precious metals complex. With the markets all currently in the loss column after being higher overnight, traders will be watching Gold very closely to see if this chart pattern develops further. Consecutive closes below 545.20, the low set on 1/19, would set the stage for a move all the way back down to the $500 level. Only a close above the contract high of 579.50 will break this pattern and turn the short-term trend back up.
The chart pattern in Silver isn't as well defined as the Gold chart but it too shows the beginnings of a potential top. The next few trading sessions should provide enough evidence for a potential trend reversal. Should Gold begin to see a major shift in sentiment then Silver will most likely follow suit. Support in March Silver lies at 8.75 and 8.25.
Copper's trend should remain positive for the near-term but consecutive closes below 2.24 would send up the caution flag in this market. This will be a good opportunity for Copper to break away from Gold and Silver and to follow its own path to new highs.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
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