Gold, Silver See Corrective Pullbacks From Recent Good Gains
Thursday January 19, 2017 08:25
(Kitco News) - Gold and silver prices are moderately lower in early U.S. trading Thursday, on downside corrections and some profit taking following recent good gains that have seen both markets hit two-month highs this week. Both precious metals remain in near-term price uptrends. February Comex gold was last down $8.20 an ounce at $1,203.90. March Comex silver was last down $0.284 at $16.99 an ounce.
The U.S. dollar index is seeing more of a corrective bounce Thursday following sharp losses on Tuesday that saw the index hit a four-week low. Fed Chair Janet Yellen in a speech Wednesday sounded hawkish, saying the Federal Reserve is likely to raise U.S. interest rates a few times in the next couple years, to ward off inflationary price pressures. This helped to boost the dollar index and put some downside pressure on gold.
The other key “outside market” on Thursday sees Nymex crude oil prices trading higher. The International Energy Agency reported Thursday that OPEC appears to be cutting back its collective production, as it said it would do. There remain stiff technical chart resistance layers that lie just above the crude oil market.
The conclusion of the European Central Bank’s regular monetary policy meeting Thursday saw no change in monetary policy, as expected. As usual, focus will be on ECB President Mario Draghi’s press conference after the meeting that is set to begin shortly.
U.K. Prime Minister Theresa May delivers a speech in Davos, Switzerland Thursday. Traders and investors want to see if she makes any remarks on the pace of the U.K.’s exit from the European Union (Brexit). Gold has benefitted from worries about just how and when the U.K. will exit the EU.
The world marketplace is a bit anxious as Donald Trump is set to be inaugurated as the next U.S. president in just over 24 hours. Trump’s stated ambitious economic growth plans have so far lacked specifics, which is worrisome to many market watchers. Trump has also made remarks that have ruffled the feathers of top Chinese government officials. China is the world’s second-largest economy.
U.S. economic data due for release Thursday includes the weekly jobless claims report, new residential construction, the Philadelphia Fed business survey, and the weekly DOE liquid energy stocks report. Fed Chair Janet Yellen gives another speech in California later today.
(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)
Technically, February gold futures bulls and bears are on a level overall near-term technical playing field but the bulls have some upside momentum. Prices are in a four-week-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 $1,175.00. First resistance is seen at $1,210.00 and then at this week’s high of $1,218.90. First support is seen at the overnight low of 1,197.10 and then at $1,187.50. Wyckoff’s Market Rating: 5.0
March silver bears still have the overall near-term technical advantage, but the bulls have momentum on their side as prices hit a four-week high Wednesday. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.25. First resistance is seen at the overnight high of $17.125 and then at this week’s high of $17.36. Next support is seen at the overnight low of $16.865 and then at $16.61. Wyckoff's Market Rating: 4.0.