Precious Metals Are Looking Strong

02/13/2012 8:00 am EST

Focus: COMMODITIES

Mary Anne & Pamela Aden

Co-Editors, The Aden Forecast

Taking in the way the markets have been moving in recent days, precious metals look like they’re in rally mode, especially relative to industrial metals and energy, write Pamela and Mary Anne Aden of The Aden Forecast.

Gold’s "A" rise is well underway, closing at an 11-week high recently. Silver, gold shares, platinum, and palladium also closed at new highs, which are all reflecting a strong market.

Plus, gold is rising more than most currencies, showing that 2012 is off to a strong start. Gold is strong above $1,685, and it’s poised to rise further.

Silver is starting to break back above its 65-week moving average, and while it’s strong above $32, let’s see if it can now stay above $34. The XAU index would look very strong above $206. Keep your positions.

On the other hand, the strong copper and oil prices are taking a breather. Crude closed at a six-week low last week, and it’s now vulnerable to a further decline if it stays below $98. Copper is resisting below its 65-week moving average at $4, but it will remain in a solid four-month rise by staying above $3.55. For now, the resource and energy sectors are not keeping up with the precious metals.

The stock market remains strong and bullish. Some of the indices have moved up nicely and they re now close to their 2011 resistance levels. These key levels are 2,875 on the Nasdaq and 12,800 for the Dow Industrials, and we’re watching them closely.

If they can rise and stay above these resistance areas, it’ll reinforce the market’s strength and we’ll add to our stock positions. Keep the stocks you now have.

Interest rates turned down again this week. The 30- year yield was unable to hold above its resistance level and rates remain in a neutral trading range. It also looks like the downward correction we’ve been anticipating in bond prices has been postponed. That is, rates could now decline further while bond prices rise. So keep your bonds and TLO and if you want to buy new positions, it’s okay.

The US dollar index is holding. It has support at 78.80 and if it stays above that level, it’ll remain strong. The commodity currencies have been doing well, but it looks like their upside is limited. Currently, we’re watching the markets and staying in dollars for the time being.

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