By Pam and Mary Anne , Posted Friday, February 5, 2010

The gold price jumped up this week from last Friday's 12 week low. Gold is now stable if it can stay above $1109, but the sluggish silver price, together with the weaker copper price tells us to be cautious as the D decline is still underway (see Webextra). Keep an eye on $1083 and $1150; whichever way gold breaks will tell us the next trend direction. If gold closes and stays below $1083, the D decline could push gold down to its next support level at $1060. The major uptrend support is at $970.

Platinum and palladium are very strong, in spite of last week's decline. Both are strong above $1460 and $385, respectively. They could still be leading the way up for gold while the weaker base metals take a break. Silver is clearly weak below $17.20 and a close below $16.20 means it could decline further to possibly test its major uptrend now at $14.60.

Copper fell to a 12 week low today, clearly closing below its 15 week moving average for the first time since the rise began a year ago. It's now vulnerable to a further decline by staying below $3.15. The major trend, however, is up. Overall, copper and the base metals are declining in a normal downward correction following the past year's great rise. This is putting downward pressure on silver... and perhaps it will spill over to gold since gold's tendency is to decline now.

Gold shares, as judged by the HUI index are essentially holding above their October lows. Let's see if the index can now stay above 375, last Friday's low.

Long-term interest rates jumped up today to a more than two week high. The 30 year yield is again very close to its mega trend level, now at 4.65%. So far, it's been resisting at this important area since the new year began. But if the 30 year yield can now rise and stay above 4.65% it'll be a huge deal, signaling that the downtrend in interest rates that's been in force since 1981 is turning up, and rates are going much higher for a long time to come. So watch 4.65% on the 30 year yield this week.

The stock market rebounded this week on better economic news. But that doesn't mean the downward correction is over. The stock market could still decline further, but then again it may not. Remember, the major trends are up for stocks and that's what's most important. Plus, the individual stock indices are still holding near their key 15 week moving averages, which have identified the stronger rises since last March, and that's what we're currently watching (see Webextra). If the Dow Industrials, Nasdaq, Dow Transportations and the S&P 500 can rise and/or stay above 10270, 2190, 4000 and 1100, respectively, stocks are headed higher. But if they decline and stay below these levels, then the markets have further to go on the downside. Keep your stock positions but don't buy new ones yet.

The U.S. dollar index keeps inching higher. It's now at a strong resistance level at 79.50 but if it breaks above this area, it could continue up to about 81. Even if it does, the major dollar trend will still be down. The currency markets remain under downward pressure and they could still decline further before they're oversold, but the major trends remain up. So stay with the currencies you have but don't buy new positions yet.

Pam and Mary Anne