In overnight news there was a mixed bag of economic data released by the European Union Tuesday. Most of it was downbeat, highlighted by the Euro zone seeing record high unemployment in November, at 11.8%. Traders are awaiting Thursday’s monthly European Central Bank meeting. Asian traders are awaiting a fresh batch of Chinese economic data due out later this week and during the upcoming weekend.

The U.S. dollar index is firmer early Tuesday. The dollar bulls still have some upside near-term technical momentum to begin to suggest the dollar index has put in a near-term market bottom. That is a bearish fundamental factor for the precious metals markets. Meantime, Nymex crude oil futures prices are firmer Tuesday morning. The crude oil bulls still have some upside near-term technical momentum, and that’s a bullish underlying factor for the metals markets. These two key “outside markets” will continue to impact the precious metals markets on a daily basis.

Recently, there have been a number of banks and investment firms that have lowered their price expectations for gold in the coming months or longer. Such is not surprising given the “herd” or “bandwagon” mentality that influences so many prognosticators. If gold had just gained $50 an ounce over the past 10 days, one would have likely seen these same firms raising their future gold price expectations.

Reports overnight said demand for gold from China has increased markedly as the new year is under way. Chinese traders and investors are taking advantage of the recent dip to do some bargain hunting.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, and consumer installment credit.

The London A.M. gold fixing is $1,653.75 versus the previous London P.M. fixing of $1,645.25.

Technically, February gold futures still see a three-month-old downtrend in place on the daily bar chart. Near-term chart damage has been inflicted just recently. Gold bears have the overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,695.40. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,626.00. First resistance is seen at the overnight high of $1,657.50 and then at Monday’s high of $1,663.00. First support is seen at Monday’s low of $1,642.60 and then at the December low of $1,636.00.

March silver bears have the overall near-term technical advantage. However, price action last Friday and early this week has produced a bullish selling “exhaustion tail,” whereby selling interest dried up at lower prices and the market has drifted higher. This is an early chart clue that the silver market has put in a near-term bottom. A six-week-old downtrend on the daily bar chart remains in place for silver. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $31.535 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $29.00. First resistance is seen at Monday’s high of $30.475 and then at $30.79. Next support is seen at $30.00 and then at $29.635.

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