Precious metals are holding above the key psychological levels of $1,200.00 gold and $15.00 in silver after the sharp sell-off earlier in the week. With short term technical support in gold coming from the 10 day moving average which hovers just above $1,200.00, short sellers are not likely to pressure the market unless this level is convincingly breached. While physical demand from our corner of the market has been quite good, overall market volume is falling as many traders and investors have either covered short positions or taken a profit on a long position. Thus, we have a market where “money” is on the sidelines waiting for a sign of where the next 5 plus percent move in the market will take us. Support and optimism for another move on the upside comes from the FOMC minutes from the January meeting where many of the voting members expressed concern over the state of the domestic and international economy along with the extreme volatility in many financial markets. This would seem to indicate the FOMC will remain on the sideline, continue to be data driven and, in my opinion, not raise rates until Q3 at the earliest. Crude oil has recently become a contra-indicator for the gold market, meaning a move up in crude which has historically been good for gold may no longer be the case. As I see it now, a move higher in crude will tell the FOMC the economy is improving and inflation is moving closer to their target which will support an increase in the Fed Funds rate which would strengthen the USD and depress gold. Crude oil continuing to probe lower sends the opposite signal, keeping rates low and unchanged, which supports gold.