Author: Paul Ploumis
25 Mar 2015 Last updated at 05:51:31 GMT

(Kitco News) - Gold prices ended the U.S. day session modestly higher and hit a 2.5-week high Tuesday. A weakening of the U.S. dollar index recently has worked in favor of the precious metals bulls, although the dollar index posted slight gains Tuesday. Gold and silver market bulls have gained some technical momentum to suggest near-term lows are in place. April Comex gold was last up $5.10 at $1,192.80 an ounce. May Comex silver was last up $0.049 at $16.94 an ounce.

Gold prices did downtick following the U.S. consumer price index report that came in just a bit hotter than expected Tuesday. That gave the U.S. dollar index a boost prompted scattered ideas that the Fed could move to raise interest rates sooner. The February CPI was up 0.2% from January versus pre-report expectations for a reading of up 0.1%. The core CPI index was up 1.7%, year-on-year. However, overall, the CPI data is not real worrisome to inflation hawks and gold prices worked back higher during the trading session.

There was a German jet airliner that crashed in the French Alps and killed 150 people, with no survivors, reports said. Early indications have not given a cause of the crash and terrorism is not being ruled out. The market place will watch this situation very closely the next 24 hours. Reports Tuesday afternoon said the plane’s data recorder has been found.

There was a downbeat economic report coming out of China Tuesday. The preliminary HSBC China manufacturing purchasing managers’ index (PMI) had a reading of 49.2 in March versus 50.7 in February. The March number is an 11-month low. A number below 50.0 suggests contraction in the sector. Since China is a major raw commodity importer, this news is a bearish underlying factor for the raw commodity sector.

Meantime, the European Union reported an upbeat PMI number. The Markit PMI came in at 54.1 in March versus 53.3 in February. The new orders segment of that report showed the largest rise in four years. This news helped the Euro currency continue its rebound versus the U.S. dollar.

The key “outside markets” on Tuesday found the U.S. dollar index lower early on and then a mild rally occurred after the CPI report. Still, the dollar index bulls have faded recently and there are early technical clues of a topping process in the index. The weaker greenback is a bullish underlying factor for the raw commodity sector. In fact, price action in many commodity futures markets on Monday gave the bulls some hope that those markets were at or near price bottoms. Meantime, Nymex crude oil futures were firmer Tuesday but prices continue to hover not far above the six-year low scored last week. Prices are still below $50.00 a barrel. The strong bear market in crude oil remains a major negative for the raw commodity sector.

The London P.M. gold fixing is $1,191.50 versus the previous A.M. fixing of $1,193.25.

Courtesy: Kitco News