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Gold Weakens Following Stronger U.S. Economic Data

(Kitco News) - Gold prices are selling off and hit a two-week low in early U.S. trading Wednesday, as some upbeat U.S. economic data has increased the odds of a U.S. interest rate hike coming soon. It is a very busy day for U.S. economic data that could make for a more active marketplace today. April Comex gold was last down $6.30 an ounce at $1,218.80. March Comex silver was last down $0.124 at $17.765 an ounce.

U.S. retails sales for January came in at a better-than-expected up 0.4%. The consensus was for a rise of 0.1%. Meantime, the U.S. consumer price index came in at a hotter-than-expected up 0.6% in January, versus expectations for a rise of 0.3%. These numbers fall into the camp of the U.S. monetary policy hawks, who want to see interest rates rise sooner rather than later.

Other U.S. data due out Wednesday include the weekly MBA mortgage applications survey, real earnings, the Empire State manufacturing survey, industrial production and capacity utilization, manufacturing and trade inventories, the NAHB housing market index, Treasury international capital data, and the weekly DOE liquid energy stocks report.

World equity markets were supported in part overnight by Federal Reserve Chair Janet Yellen on Tuesday giving an upbeat assessment of the world’s major economies. She spoke before the U.S. Senate in the semi-annual Humphrey-Hawkins reports. Yellen also hinted the U.S. interest rates will be increased sooner rather than later. The Fed chair speaks to the U.S. House Financial Services Committee Wednesday morning.

The gold and silver markets sold off a bit following Yellen’s comments Wednesday, which were deemed a bit hawkish on U.S. monetary policy.

The key “outside markets” on Wednesday morning find the U.S. dollar index trading higher and hitting a three-week high overnight. The greenback bulls have upside momentum as prices have been trending higher for three weeks. Meantime, Nymex crude oil prices are weaker. Oil prices are back in a sideways trading range that has bound that market for weeks.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Live 24 hours gold chart [Kitco Inc.]

Technically, April gold futures bulls have the overall near-term technical advantage.  Prices are still in a two-month-old uptrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,250.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,200.00. First resistance is seen at $1,225.00 and then at this week’s high of $1,236.00. First support is seen at this week’s low of $1,210.00 and then at $1,200.00. Wyckoff’s Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver bulls have the overall near-term technical advantage. Prices are in a seven-week-old uptrend on the daily bar chart and on Tuesday hit a three-month high. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $18.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at this week’s high of $18.09 and then at $18.25. Next support is seen at Tuesday’s low of $17.73 and then at $17.545. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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