Gold Gains On Safe-Haven Demand, Weaker USDX
(Kitco News) - Gold prices ended the U.S. session higher and hit a nearly four-month high Wednesday. Safe-haven demand for the yellow metal was featured amid a rise in world government bond yields that troubled the marketplace. A lower U.S. dollar index on this day also provided support to the precious metals. February Comex gold was last up $5.60 an ounce at $1,319.40. March Comex silver was last up $0.025 at $17.035 an ounce.
A feature in the marketplace Wednesday was rising world government bond yields (falling prices). This helped to pressure global stock markets.
Bloomberg news published a story Wednesday about the Chinese government possibly re-evaluating and reducing its purchases of U.S. Treasury securities. China is a massive holder of U.S. Treasuries.
There have been recent proclamations from some veteran 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 saw the U.S. dollar index lower on a pullback from this week’s gains. The greenback bears have the overall near-term technical advantage.
Meantime, Nymex crude oil prices were higher and hit another three-year high of $63.67 a barrel. 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.
Technically, February gold futures prices closed near mid-range today. Prices also scored a bullish “outside day” up on the daily bar chart. The bulls have the overall near-term technical advantage, amid a four-week-old uptrend in place on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,280.00. First resistance is seen at today’s high of $1,328.50 and then at $1,335.00. First support is seen at today’s low of $1,308.90 and then at the January low of $1,304.60. Wyckoff's Market Rating: 6.0
March silver futures prices closed nearer the session low. The bulls have the overall near-term technical advantage, but need to show fresh power soon to keep it. Prices are in a four-week-old uptrend on the daily bar chart, but now just barely. Silver bulls' next upside price breakout objective is closing 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 today’s high of $17.22 and then at last week’s high of $17.32. Next support is seen at today’s low of $16.93 and then at $16.75. Wyckoff's Market Rating: 6.0.
March N.Y. copper closed up 210 points at 323.70 cents today. Prices closed near mid-range today. The copper bulls have the overall near-term technical advantage amid some recent, normal profit taking. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 335.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 310.00 cents. First resistance is seen at today’s high of 327.45 cents and then at 330.00 cents. First support is seen at this week’s low of 321.25 cents and then at 320.00 cents. Wyckoff's Market Rating: 7.0.