Gold prices pop to 5-week high, then drop on Trump tweet
Gold prices are modestly down on a rollercoaster trading day that saw the yellow metal surge to a five-week high on gains of $15.00 on the day, only to rapidly sell off and drop below unchanged on a tweet from President Trump. February gold futures were last down $1.10 an ounce at 1,473.90. March Comex silver prices were last up $0.101 at $16.94 an ounce.
Gold prices started the U.S. day session moderately up, but then extended gains to session highs on some downbeat U.S. economic data. The latest producer price inflation report came in lower than expected, while jobless claims also rose more than forecast. On top of that, gold bulls were cheered when new European Central Bank President Christine Lagarde sounded dovish on ECB monetary policy by saying its bond-buying program would continue as long as it takes.
However, the air quickly came out of the bullish tone in gold when President Trump tweeted that the U.S. and China wanted a trade deal badly, amid reports Trump and his aides are meeting to decide whether to add tariffs on Chinese imports on Sunday, Dec. 15. Traders deemed Trump’s tweet as very positive for a partial trade deal being completed soon, or at least maybe the new tariffs won’t be slapped on China. That put risk appetite back on the table as the U.S. stock market and the U.S. dollar index surged on the news and gold prices slumped.
The marketplace earlier today was still digesting Wednesday’s conclusion of the FOMC meeting of the Federal Reserve, which saw no change in U.S. interest rates and a mostly upbeat assessment of the U.S. economy. The FOMC did tip its hand and say there were no rate-cut plans on the table for 2020 and implied that interest rates could remain stable for a prolonged period of time. The FOMC statement and comments from Fed Chairman Powell were deemed mostly neutral, but the gold and U.S. Treasury markets rallied, while the U.S. dollar index sold off and hit a five-week low in the aftermath of the FOMC statement Wednesday afternoon.
A general election in the U.K. today will help determine the course of Brexit and Prime Minister Boris Johnson’s conservative policies.
In other overnight news, China’s official Xinhua news agency said China will lower “funding costs” for the overall economy.
Euro zone industrial production in October was reported down 0.5% from September and down 2.2%, year-on-year. Those figures were a bit worse than expected.
The key “outside markets” today see the U.S. dollar index solidly higher. Meantime, Nymex crude oil prices are higher and trading around $59.35 a barrel.
Technically, the gold bulls and bears are on a level overall near-term technical playing field amid choppy and sideways trading recently. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,500.00. Bears' next near-term downside price breakout objective is pushing futures prices below solid technical support at the November low of $1,453.10. First resistance is seen at $1,480.00 and then at today’s high of $1,491.60. First support is seen at this week’s low of $1,463.00 and then at $1,456.60. Wyckoff's Market Rating: 5.0
March silver futures bears have the overall near-term technical advantage amid a more-than-three-month-old downtrend in place on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $17.415 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at today’s high of $17.185 and then at $17.415. Next support is seen at this week’s low of $16.565 and then at $16.50. Wyckoff's Market Rating: 4.0.