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Gold Prices Weaker As U.S. Stocks Set To Rebound

Kitco News

(Kitco News) - Gold prices are modestly lower in early U.S. trading Wednesday. Stabilizing world equity markets and U.S. stock indexes that are set to rebound from Tuesday’s solid losses are working against the safe-haven metals early today. Gold and silver prices dropped to three-week lows Tuesday. The metals traders need a fresh fundamental spark to help drive price direction. February gold futures were last down $2.50 an ounce at $1,280.70. March Comex silver was up $0.02 at $15.345 an ounce.

European and Asian stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. U.S. and world stock markets were hit hard Tuesday on worries about slowing global economic growth and the ongoing trade war between the U.S. and China—the world’s two largest economies. Media reports on Tuesday that the U.S. cancelled a planned mid-level trade officials’ meeting set for this week were denied by the White House, which did allow the U.S. stock indexes to move off of their daily lows.

In overnight news, the Bank of Japan left its interest rates unchanged at its regular monetary policy meeting. However, the BOJ did lower its inflation expectations for the next two years, which continues a worldwide theme of lessening worries about problematic inflationary pressures.

Traders are looking ahead to the European Central Bank’s regular monetary policy meeting on Thursday, including ECB President Mario Draghi’s press conference.

News reports out of the annual World Economic Forum in Davos, Switzerland suggest a somewhat gloomy picture that the elite bigwigs attending are painting, and on several fronts. The U.S., Britain and China governments are not in attendance this year.

The U.S. government remains in partial shut-down mode with no agreement between the Democrats and President Trump to reopen it imminent. This is starting to drag on the U.S. economy, including the lack of fresh economic news to help drive many markets. Many of those markets are seeing some selling pressure due to the uncertainty created by the lack of fresh economic news.

The outside markets today see the U.S. dollar index trading slightly lower. Meantime, Nymex crude oil prices are firmer and trading around $53.50 a barrel.  

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Johnson Redbook and Goldman Sachs weekly retail sales reports, the monthly house price index, and the Richmond Fed business survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the overall near-term technical advantage but have faded recently. Prices are still in a two-month-old uptrend on the daily bar chart, but just barely. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,260.00. First resistance is seen at last Friday’s high of $1,292.20 and then at $1,298.00. First support is seen at Tuesday’s low of $1,276.00 and then at $1,270.00. Wyckoff's Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bulls are fading. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the January high of $15.955 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $15.50 and then at $15.60. Next support is seen at the overnight low of $15.325 and then at Tuesday’s low of $15.195. Wyckoff's Market Rating: 5.5.

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