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Gold, silver lower on U.S.-Iran military "stand down," rallying global equities

Kitco News

Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It's a showdown of global proportions, so don't miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

(Kitco News) - Gold and silver prices are lower in midday U.S. futures trading Thursday, as risk appetite has returned to the global marketplace on ideas the U.S. and Iran have stepped back from the brink of an escalating military conflict. February gold futures were last down $6.30 an ounce at 1,553.90. March Comex silver prices were last down $0.187 at $17.98 an ounce.

The precious metals showed no initial reactions to reports that U.S. intelligence has evidence that Iran shot down the Boeing airliner over Iran this week that killed 176 people. Traders are scratching their heads on why the Iranian military would do that. Possibly it was a mistake.

Most market watchers don’t at all expect the U.S. and Iran to become friendly, but more likely is Iran’s clandestine operations against the U.S. that have been carried on by Iran and its proxies for years. Meantime, the U.S. will continue to put the screws to Iran by harsh economic sanctions and working to prevent the nation from developing a nuclear weapon.

Global stock markets rallied Thursday. U.S. stock indexes hit more record highs. That’s a negative for the competing asset class, safe-haven metals. Nymex crude oil prices have come down from a spike high and are trading around $59.50 a barrel. The U.S. dollar index is firmer Thursday as bulls are having a good week.

Traders and investors are getting back to examining economic data and other market fundamentals, including awaiting Friday morning’s December U.S. employment situation report from the Labor Department. Wednesday’s stronger-than-expected ADP national employment report has some leaning toward a stronger non-farm jobs number in Friday’s report, which has been forecast to come in at up 160,000.

Global stock markets were also buoyed Thursday on reports China has confirmed it will sign a “Phase 1” trade deal with the U.S. next week. China’s senior trade official will travel to Washington, D.C. for the signing. A partial trade deal between the world’s two largest economies should work to boost global economic growth in 2020.

The World Gold Council has reported world central banks bought a net 41.8 metric tons of gold in October. That was 16% lower than in September and 29% below August. However, analysts believe the gold purchase pace from the central banks will pick up in 2020.

Live 24 hours gold chart [Kitco Inc.]

Technically, February gold futures were near mid-range at midday today. Price action the past two days scored a big and bearish “outside day” down on the daily bar chart Wednesday, including filling an upside price gap on the daily bar chart. That price action has produced a bearish buying “exhaustion tail,” whereby the bulls have run out of gas and which suggests a near-term market top is in place. The bulls do still have the overall near-term technical advantage as a seven-week-old price uptrend in still 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 last week’s high of $1,590.90. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,530.00. First resistance is seen at today’s high of $1,562.40 and then at the September high of $1,571.70. First support is seen at today’s low of $1,541.00 and then at 1,530.00. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures prices were nearer the session low at midday today. The past two days’ price action hints that the bulls have run out of gas and are exhausted. The silver bulls still have the overall near-term technical advantage but need to show fresh power soon to keep it. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $18.895 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at today’s high of $18.225 and then at $18.75. Next support is seen at today’s low of $17.815 and then at $17.50. Wyckoff's Market Rating: 6.0.

March N.Y. copper closed down 105 points at 280.15 cents today. Prices closed nearer the session low today. The copper bulls have the overall near-term technical advantage. However, a four-month-old uptrend on the daily bar chart is in jeopardy. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 290.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 270.00 cents. First resistance is seen at today’s high of 281.90 cents and 284.00 cents. First support is seen at last week’s low of 275.95 cents and then at 273.00 cents. Wyckoff's Market Rating: 6.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.