PRECIOUS METALS RECAP

12/16/2011

February Gold closed up 22.9 at 1600.1. This was 28 up from the low and 3.4 off the high.

March Silver finished up 0.397 at 29.671, 0.139 off the high and 0.366 up from the low.



The gold market showed some impressive initial gains before sliding into and through the US CPI report window. However, the gold market arrested the pre-report profit taking and managed to consolidate modest gains into the afternoon action. Limiting the upside in gold today were residual concerns that the Euro zone situation was still set to push the European economy back into a recession. On the other hand, some players were also hopeful that support for the IMF from outside of the EU would help to shore up the Euro zone bailout fund that many think was under sized in the last EU summit. Most traders thought the gold market was largely fueled by short covering today and therefore the early action next week might be seen as an important junction.

The silver market forged some impressive short covering action early today and in the process the March silver contract managed to climb within close proximity to the $30.00 level. Silver was initially assisted in the bounce by gains in equities, a weaker dollar and positive leadership from the gold market. Like gold, parts of the silver market was hopeful that some outside support might be coming together for the Euro zone, while the bear camp continued to hold out hope that the Euro zone crisis was set to drag silver and other physical commodity markets lower in the coming trading sessions. Surprisingly the silver market wasn't markedly undermined by the rumors of ratings downgrades for Europe.