Gold Rally Keeps On Chugging

Published on Thursday, 26 January 2012 18:38 Written by Todd Shriber

New York, January 26^th  (TradersHuddle.com) – A slumping U.S. dollar and extension of cheery sentiment regarding the Federal Reserve’s Wednesday comments on low interest rates spurred gold to another day of gains as Comex-traded gold for February delivery climbed $26.60, or 1.6%, to close at $1,726.70 an ounce. After several days of talking about gold at six-week highs, traders can now crow about gold resting at seven-week highs and that the yellow metal looks firmly entrenched above the psychologically important $1,700 an ounce area.

The Fed’s comments have lifted gold futures by $60 combined on Wednesday and Thursday. On the other side of the coin, the PowerShares DB US Dollar Index Bullish (NYSE: UUP) has been whacked, giving up its 20- and 50-day moving averages in the past week.

With today’s pop, the iShares Gold Trust (NYSE: IAU) has a clear runway back to the $17.50 area and should find support just below $16.50 in the event of a pullback. Silver was more tame today with the iShares Silver Trust (NYSE: SLV) adding just 0.2%. It’s worth noting that the SLV is up over 9% in the past week and may be due for a breather. In a note to clients, Barclays said both metals might be a bit overbought in the near-term and forecast a correction.

The Global X Silver Miners ETF (NYSE: SIL) overshadowed SLV today posting a strong volume gain of 2% that enabled the ETF to reclaim its 200-day moving average. There might still be some value left with SIL as the ETF remains more than 22% below its 52-week high.

Speaking of an improving technical outlook, there is the case of the ETFS Physical Platinum Shares (NYSE: PPLT). PPLT added $2.61, or 1.7%, to close at $159.02, the ETF’s first close in the $160 area since November. Today’s gains for PPLT came on volume that was a third higher than normal and ETF is now up almost 13.5% year-to-date. Palladium was a laggard as the ETFS Physical Palladium Shares (NYSE: PALL) closed fractionally lower.

Gold miners continued to build on recent gains as well as the Market Vectors Gold Miners ETF (NYSE: GDX) was up 1% as was the unheralded Global X Pure Gold Miners ETF (NYSE: GGGG). GGGG’s gains came on volume that was more than triple the daily average. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) added almost 1.4% and more gains could be on the way because as of Jan. 13, almost 3.1 million shares of GDXJ were sold short, according to NYSE data. The more the ETF rises, the more pressures shorts are going to feel to cover and that will only strengthen GDXJ’s rally.