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Gold is trying to hold above $1,600 an ounce despite more strength in the greenback today as the euro dropped to a 15-month low against the American dollar…as of 6:00 am Pacific, the yellow metal is down $9 an ounce at $1,603…Silver is off 22 cents to $28.94…Copper is off a penny at $3.42 a pound…Crude Oil is 21 cents lower at $103.01 while the U.S. Dollar Index has gained two-thirds of a point to 80.77…the next few trading days will be crucial in determining whether the U.S. Dollar breaks out or pulls back…as John’s chart showed yesterday, some consolidation appears to be in order for the Dollar Index which has pushed right up to resistance and is threatening to surge higher…Gold has been benefiting somewhat from heightened tensions between Iran and western countries over its nuclear program…Iran’s sabre-rattling has given a lift to oil prices which unfortunately is a reward for that regime’s bad behavior…the Iranian problem is likely to intensify which means there’s an excellent chance of oil going higher…the problem with that, of course, is the potential impact on global economic growth…equity markets won’t take kindly to a 10% or more jump in crude oil prices from current levels if that were to occur…Gold producers will face pressure as well since oil is such a significant component of their cost structures…

Euro Zone Crisis On Simmer

Of course an even bigger concern for markets right now is the euro zone debt crisis which is on “simmer” at the moment but could start boiling over again at anytime – it is so fluid and unpredictable…this week’s concerns include: the health of the bloc’s financial system as bank borrowing from the European Central Bank stays high and after Italian lender UniCredit had to offer a sharp discount to sell its right issue; the extent of Spanish banks’ bad loans; speculation that Spain could be forced to seek an international bail-out after the regional government of Valencia was late in repaying a 123 million euro debt to Deutsche Bank; and a warning from Greece that it faced the prospect of a disorderly default if negotiations on its second bail-out are not completed by March…ultimately, the European Central Bank will likely have to step in and start printing money faster than Ben Bernanke – a strategy the French are okay with but the Germans fervently oppose…

A French debt auction got decent demand today but yields edged up…markets will be focused like a laser beam on debt sales by Italy and Spain next week…the euro zone has huge refinancing needs during this first quarter…

U.S. Numbers Provide Optimism

U.S. private-sector job creation surged by a stunning 325,000 in December, according to a report this morning which is likely to fuel hopes that the labor market is positioned for a lasting turnaround…the report, from ADP and Macroeconomic Advisors, comes a day ahead of the Labor Department’s monthly report expected to show 150,000 total jobs created in the public and private sectors…in addition, another report this morning showed the number of planned layoffs at U.S. firms declined to its lowest level since June, suggesting ongoing improvement in the labor market although unemployment remains historically high…

Dow futures point to a slightly lower open…the TSX has climbed in 8 out of the last 9 sessions for a total of 686 points or 5.9%…the Venture has posted gains in 7 out of the last 9 sessions for a 109 point advance (7.7%) during that time…a test of the 50-day SMA in the mid-1530’s could occur soon before a slight pullback which would logically likely test the 1500 area, slightly above the current 10-day SMA…

Momentum is a huge factor in day-to-day fluctuations in penny stocks and Canada Rare Earths (CJC, TSX-V) was an excellent example of that yesterday…investors who may have been expecting an immediate jump in CJC to begin the New Year started dumping yesterday when that did not materialize…the short-term simple moving averages (10 and 20-day) have also reversed to the downside which brought in some selling…CJC closed down 9 cents yesterday to 47 cents (its 50-day SMA) after falling a nickel Tuesday to begin 2012…on the positive side, the stock’s 300-day SMA is at 45 cents…both the 300-day and the 50-day SMA’s continue to rise which provides important support…given the technicals and the fundamentals, we continue to see a bullish overall picture with CJC but investor patience is required along with a stomach for volatility…below is an updated chart from John after yesterday’s activity…

Note: John holds a position in CJC (Jon and Terry do not)…