Gold At 3.5-Mo. High As Global Bond Market Rout Spooks Marketplace
(Kitco News) - Gold prices are solidly higher and hit a 3.5-month high in early U.S. trading Wednesday. Safe-haven demand is in play for the gold and silver markets at mid-week, amid a sharp sell-off in world government bond markets. A lower U.S. dollar index on this day is also providing a boost to the precious metals. February Comex gold was last down $9.30 an ounce at $1,323.10. March Comex silver was last up $0.12 at $17.135 an ounce.
The feature in the marketplace Wednesday is rising world government bond yields. This has helped to pressure global stock markets, while boosting safe-haven gold and silver prices. World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. U.S. stock indexes hit record highs on Tuesday and some profit-taking pressure is not unexpected.
Bloomberg news reportedly published a story about the Chinese government possibly re-evaluating its massive holdings of U.S. Treasury securities.
There have been recent prognostications from noted financial market analysts that the long-term bull market runs in U.S. Treasuries are over. Longer-term technical damage has been inflicted on T-Bond and T-Note charts. This suggests rising interest rates and rising inflation. While the tighter monetary policies that generally come with rising inflation have been bearish for the commodity markets, per recent history, longer-term history actually shows that hard assets benefit from rising inflation. Times of problematic inflation see the investing public generally opt for hard assets over paper assets. The next shoe to drop in this scenario of rising inflation will be a major top being put in the U.S. stock market.
An auction of German government bonds Wednesday saw the highest yields fetched since last July, amid weak investor demand.
The key outside markets on Wednesday morning see the U.S. dollar index lower on a pullback from this weekâ€™s gains. The greenback bears have the overall near-term technical advantage.
Meantime, Nymex crude oil prices are higher and hit another three-year high of $63.57 a barrel overnight. Traders are waiting to see if the U.S. implements new economic sanctions against Iran, which could limit their oil exports. The recent rally in oil prices has been a positive development for the raw commodity sector, including the precious metals.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, import and export prices, the monthly wholesale trade report, and the weekly DOE liquid energy stocks report.
Technically, February gold futures bulls have the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Bullsâ€™ next upside technical objective is pushing and closing prices above chart resistance at $1,350.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,300.00. First support is seen at $1,312.70 and then at $1,307.10. First resistance is seen at todayâ€™s high of $1,328.60 and then at $1,335.00. Wyckoffâ€™s Market Rating: 6.0
March silver bulls have the overall near-term technical advantage. Prices are still in a four-week-old uptrend on the daily bar chart. The next upside price breakout objective is closing futures prices above solid technical resistance at the October high of $17.59 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the October low of $16.435. First resistance is seen at last weekâ€™s high of $17.32 and then at $17.50. Next support is seen at todayâ€™s low of $16.93 and then at $16.75. Wyckoff's Market Rating: 6.0.